July 17, 2020

5 things to know this week

Capitol HillNAFCU's widely-read NAFCU Today is credit union leaders' go-to source for the latest on issues impacting the credit union industry. For those short on time, here's a roundup of this week's top need-to-know news related to the bitcoin scam on Twitter, discriminatory mortgage lending practices, and more.

Scammers keep scamming

Following a bitcoin scam Wednesday that targeted high-profile, verified Twitter accounts, the Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions about the convertible virtual currency (CVC) fraud. FinCEN called on financial institutions to identify and report suspicious transactions associated with this CVC fraud as quickly as possible.

"Financial institutions should include any relevant technical cyber indicators related to cyber events and associated transactions within the available structured cyber event indicator fields on the Suspicious Activity Report (SAR) form," the alert says. "Any data or information that helps identify the activity as suspicious can be included as an indicator. Examples include chat logs, suspicious IP addresses, suspicious email addresses, suspicious filenames, malware hashes, CVC addresses, command and control (C2) IP addresses, C2 domains, targeted systems, MAC address or port numbers."

The alert also includes six red flags to help detect, prevent, and report suspicious activity related to this scam.

CFPB sues creditor for discriminatory practices

The CFPB this week sued a Chicago-based nonbank retail-mortgage creditor for violating the Equal Credit Opportunity Act, Regulation B, and the Consumer Financial Protection Act. The bureau alleges that Townstone Financial, Inc., engaged in:

  • acts or practices, including making statements during its weekly radio shows and podcasts through which it marketed its services, that illegally discouraged prospective African-American applicants from applying to Townstone for mortgage loans;
  • illegal redlining by engaging in acts or practices that discouraged prospective applicants living in African-American neighborhoods in the Chicago MSA from applying to Townstone for mortgage loans, including by making discouraging statements during its weekly radio shows and podcasts through which it marketed its services; and
  • illegal redlining by engaging in acts or practices that discouraged prospective applicants living in other areas from applying to Townstone for mortgage loans for properties located in African-American neighborhoods in the Chicago MSA, including by making discouraging statements during its weekly radio shows and podcasts through which it marketed its services.

PPP data reveal errors, workarounds

The Small Business Administration's (SBA) release last week of expanded data on its paycheck protection program (PPP) has been scrutinized by journalists – and recipients of loans – who have found the reports contain errors and reveal a strategy of some large businesses to obtain more money than the program was supposed to allow.

American Banker found that more than 75,000 loans made to businesses that retained only one employee received amounts higher than maximum loan amount of $20,833. In addition, almost a million loans list the number of jobs retained as "0" or are left blank, and seven loans showed negative numbers. One business owner quoted in the article said he received a PPP loan for $3,700, but the report showed he received as much as $5 million.

In a separate investigative piece from ProPublica, several large businesses used limited liability companies or other entities to appear as separate businesses and receive numerous PPP loans. While the PPP capped loans at $10 million, ProPublica found that 15 organizations received as much as $516 million combined using this strategy.

Lawmakers propose ways to support smallest biz

During the House Small Business Committee's Wednesday hearing focused on long-lasting solutions for small business recovery, several lawmakers sought improvements to existing programs to provide more support to businesses, including those that are minority-owned. Committee Chairwoman Nydia Velázquez, D-N.Y., raised concerns about the SBA capping economic industry disaster loans (EIDLs) at $150,000 – the program allows for loans up to $2 million – for coronavirus relief and said legislation is being worked on to address this issue. Credit unions can qualify to receive an EIDL.

In addition, Velázquez called for half of the remaining PPP funds to be reserved for minority-owned businesses. NAFCU, in its advocacy for ensuring PPP loans get to small businesses in need, has supported set asides for women-, minority-, and veteran-owned businesses, and credit unions and other community development financial institutions.

CUs participate in Treasury, NCUA cybersecurity exercise

Several NAFCU-member credit unions participated in a virtual cybersecurity tabletop exercise with the Treasury Department and NCUA. The exercise included a hypothetical situation of the disruption of a major service provider, with participants walking through each stage of what their response would be. As the NCUA prioritizes cybersecurity initiatives within the agency and industry and flags coronavirus-related issues for credit unions, it is working closely with the Treasury Department, Department of Homeland Security, U.S. Secret Service and FBI to inform its guidance.