Well, that didn’t age well…
A new UT-Austin study further emphasizes that the #PPP, designed to serve the needs of struggling businesses during the worst of the pandemic, suffered from high rates of fraud made possible with the help of FinTechs. papers.ssrn.com/sol3/papers.cf…
Per the study:
- 15% of PPP loans (~1.8M loans/$76 billion) were potentially fraudulent.
- FinTechs were 5x more likely to have issued a potentially fraudulent loan than traditional lenders.
- 9 / 10 of the top lenders with fraud or poor underwriting and documentation practices in the program were FinTechs (or community bank/FinTech partnerships).
- 19 / 20 were all nonbanks. The 20th is a community bank.
- The 3 most prolific lenders of potentially fraudulent loans each pocketed over $900 million in processing fees.

This is just another example that FinTechs can’t be trusted to police themselves. keepbankingsafe.com

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More from @bankpolicy

6 Mar 19
Shoddy reporting by @bloomberg in this story. It uses misleading statistics to falsely imply that banks are pulling back from lending to LMI community. Here comes a tweet storm cc: @MichelleF_Davis @MooreMichaelJ @dcraiggordon
The suggestion made in this article that large backs are leaving poor neighborhoods is simply false. cc: @MichelleF_Davis @MooreMichaelJ @dcraiggordon
The fact that a bank closes a branch in a low-and moderate-income (LMI) neighborhood does not mean they stopped serving that neighborhood if they have a branch nearby (within a 10-mile radius, the standard measurement used by academic and Fed researchers)
Read 7 tweets

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