The stimulus act provides opportunities for short-term shoring up of core economic vulnerabilities and shortfalls. It is also an unprecedented government giveaway with endless possibilities for abuse. Wachtell Lipton attorneys Jonathan M. Moses, Elaine P. Golin, Graham W. Meli, Getzel Berger and Daniel J. Brenner write:

As with the stimulus initiatives following the 2008 financial crisis, the CARES Act imposes significant conditions on recipients of this aid and creates a new inspector general [already replaced once by President Trump] dedicated to enforcing compliance with these conditions. All businesses should therefore be mindful of the compliance and enforcement risks that accompany participation in these stimulus initiatives….Other provisions in the CARES Act also present litigation and enforcement risks, even though they fall outside the focus of the Special Inspector General. The Paycheck Protection Program invites financial institutions to issue small business loans guaranteed by the Small Business Administration (“SBA”) and permits eligible borrowers to apply for loan forgiveness. Financial institutions are to act as key conduits between the borrowers and the SBA in this process, but the legislation does not specify what due diligence, if any, is required from the lenders, nor does it specify the required contents of any submissions from the lenders to the SBA. While the legislation includes a limited safe harbor for lenders who rely on borrower submissions, it protects only against enforcement actions by the SBA, leaving lenders exposed to potential liability under the False Claims Act and other anti-fraud statutes in the event of misrepresentations about borrower eligibility and compliance. The CARES Act also permits the sale of certain loans into the secondary market. Again, the aftermath of the 2008 financial crisis saw aggressive government use of the FCA and FIRREA to extract large settlements from financial institutions in connection with what were alleged to be reckless lending and securitization practices. It remains to be seen what will be achieved by industry efforts with the SBA to mitigate risks.