The Banks Served Their Own Customers First, and Courts Shrugged

The complaint had a basis: some large banks limited access at launch to existing customers or prioritized parts of their own client base. Bank of America's early portal rules, challenged in Profiles v. Bank of America, required an existing business-checking and borrowing relationship as of February 15, 2020.¹ Smaller borrowers and non-customers saw a public program moving through private bank gates.

Then the cases reached court.

In Profiles, the court denied emergency relief. The CARES Act did not create a private right of action allowing borrowers to force Bank of America to process applications in a different order or accept them on different terms.² JPMorgan borrower-priority cases went a different procedural route: arbitration clauses pushed claims out of court rather than producing a broad merits ruling.³

The result was the same in practical terms. Borrowers lost the courthouse as a way to police sequencing.

Congress created a public emergency program but delivered it through private lenders. When borrowers said the private gatekeepers favored their own clients, courts largely asked whether the statute gave those borrowers a private enforcement tool. It did not.

The legal answer may be right. Emergency statutes do not automatically create private rights. Courts are cautious about rewriting a rushed statute into a lender-liability code.

But if a bank can decide which borrowers enter the line, and no borrower can sue over that decision, then access to public relief depends partly on preexisting banking relationships. The first round of PPP rewarded legibility to incumbents: existing accounts, existing credit, existing paperwork, existing banker contact.

The courts did not necessarily bless that as fair. They said there was no remedy in the statute or the contracts before them.

The borrower-priority cases are the mirror image of the agent-fee cases. Agents could not force banks to share fees. Borrowers could not force banks to open or sequence the line.

Notes

1. Profiles, Inc. v. Bank of America Corp., No. SAG-20-0894 (D. Md.), Memorandum Opinion, Apr. 13, 2020, at 2–3 (quoting the bank's eligibility notice). ↩
2. Profiles, Inc. v. Bank of America Corp., No. SAG-20-0894 (D. Md.), Memorandum Opinion, Apr. 13, 2020 (denying a temporary restraining order). ↩
3. Hyde-Edwards Salon & Spa v. JPMorgan Chase & Co., No. 3:20-cv-00762-DMS-MDD (S.D. Cal.), Doc. 22, Order Granting Defendants' Motion to Compel Arbitration, Nov. 23, 2020. ↩