I’ve always thought it would make sense to attach specific penalties to this type of legislation. Something akin to “If you lie on an application, your loans won’t be forgiven and you will need to pay a 50% penalty. If you’re a bank and you knowingly facilitate this fraud, you will lose Federal backing for the loans and your employees and executives will be subject to minimum 1 year sentences in Federal custody.”
It’s unfortunate we live in such a weird carceral state yet white collar crimes that would probably be the type most deterred by the threat of prison are so rarely prosecuted.
If those kind of risks were imposed on banks they would only work with businesses they knew very well or not at all. As it is there were significant questions from the banks side on what they would be liable for if the loan was ultimately found to be invalid, or fraud.
Mark Cuban actually had an equally interesting idea as yours - just let every business overdraw their account by some amount.
I like your idea better, but either way, there is zero possibility that congress could do it in a simple way - they just don’t have the DNA for simple.
A year later, we can hire lots of investigators to verify the loans and pursue any fraud.