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A special issue of The Journal of Consumer Affairs examines the effect of financial education programs on the financial inclusion and well-being of children. Contributors find that even children as young as three years old can benefit from financial education, which might be as simple as teaching children the value of delayed gratification. By age five, children are capable of applying savings behaviors to money. Children in grades four and five were able to retain lessons on financial knowledge, behavior and attitudes after even modest financial lessons. Among the authors’ recommendations are involving parents in their children's financial education and leveraging teachable moments – such as when teens receive their first paycheck.
Industrial Bank President and CEO Doyle Mitchell won the National Newspaper Publishers Association Torch Award for Business, an award that honors black business leaders. Industrial Bank, which was founded in 1934 in Washington, D.C., is the only remaining African American-owned institution of its kind in the district. “Our service and our staff are better because we sincerely care about our customers more than other banks do,” said Mitchell. “And that’s pretty obvious, given what happened in the economy in the last five years. Clearly mortgage bankers and a lot of other bankers took advantage of a lot of people. We simply don’t do that. We don’t have that culture in our banks.”
Millions of Americans unable to obtain credit cards, mortgages and auto loans from banks will receive a boost with the launch of a new credit score from Fair Isaac Corp. (FICO) aimed at risky consumers. The new metric is currently being tested in a pilot phase with credit-card issuers, but is set to be announced as soon as this week and rolled out nationwide by year’s end. The new score will be calculated based on consumers’ payment history with their cable, cellphone, electric and gas bills, as well as how often they change addresses and other factors. Fair Isaac said it hopes to make as many as 53 million people who don’t have credit scores more acceptable to lenders, enabling banks to boost lending volumes.
Beneficial State Bank appears poised for expansion after making several new hires and opening a new loan production office in Santa Rosa, California. The bank has recruited Scott Affens as Senior Vice President, Multifamily Division Head to lead the office’s expanded multifamily housing lending. Beneficial State Bancorp will also hire Jennifer Finger as Executive Vice President of Strategy and Development. “Jennifer brings with her a wealth of experience having presided over multiple M&A transactions,” said Beneficial State Co-Founder and Co-CEO Kat Taylor. “We are so lucky to have her talent… as we explore new product and service offerings that enhance our mission and M&A opportunities that grow our impact,”
Representatives of 38 community development banks from across the Mid-South convened in Mississippi last Friday for an orientation event on Community Development Financial Institutions (CDFI) Fund programming. The meeting, held at the BankPlus Training Center in Ridgeland, Mississippi, was hosted jointly by the Community Development Bankers Association (CDBA), Southern Bancorp, BankPlus, United Bank and Guaranty Bank.
The Mid-South region, including Alabama, Arkansas, Louisiana and Mississippi, has seen a rapid increase in the number of banks that have received CDFI Certification from the U.S. Treasury Department’s CDFI Fund in recent years. Of the 109 banks that are certified CDFIs, 38 became certified in 2014 alone. Of those newly certified banks, 33 were in the Mid-South.
Many banks represented at the meeting have served distressed communities for years but only recently have become certified CDFIs. CDFI Certification signifies that a financial institution maintains a social mission of providing responsible financial services in distressed communities that are underserved by traditional financial institutions.
The agenda was designed to familiarize the newly-certified community development banks with the resources available through the CDFI Fund. Meeting sessions included introductions to the Bank Enterprise Award (BEA), Financial Assistance (FA) awards and the New Markets Tax Credit (NMTC) Program. These programs provide essential support to community development banks and enable them to better serve their communities.
Speakers at the event included experienced community development bank executives as well as representatives of the CDFI Fund and FUND Consulting. Representatives of law firms Jones Walker, Butler Snow, Sandall, Segrest, Weeks, Reeves & Sones and McKay Lawler Franklin & Foreman provided further advice on the award application processes.
“CDBA was proud to organize this meeting, which comes at a critical time for the community development banking sector,” said CDBA Chief Executive and Senior Policy Advisor Jeannine Jacokes. “Our industry is expanding rapidly and it is critical that we ensure newly certified banks are fully informed about the benefits of CDFI certification.”
The CFPB has outlined their first draft of regulations to rein in payday loans. The proposal gives lenders two underwriting options designed to limit unsustainable debt. Under the first option, the lender would need to verify customers’ ability to repay by assessing income, other financial obligations and borrowing history. Under the second option, the lender would forgo those checks and accept safety limits on the loan products, including a $500 cap on loan size. Under this option, lenders would also be prohibited from rolling over loans more than two times during a 12-month period. The proposal would apply to payday loans as well as certain loans backed by car titles and some installment loans that stretch longer than 45 days.
Promontory Financial Group has opened the 2015 round of its Empowerment Awards, a program designed to recognize and support projects that increase access to responsible banking services in underserved communities. The awards will be offered in two categories: the Community Development Banking category aimed at certified CDFI banks, and the Access category aimed at CDFIs, nonprofit organizations and small to midsize entrepreneurs. Each winner will receive a financial award of $100,000 and pro bono consultations with Promontory. Information about the Empowerment Awards and application materials are available online at empowerment.promontory.com. Applications are due June 12, 2015.
The House Financial Services Committee approved 11 regulatory reform bills for community banks and credit unions last week with bipartisan support. The legislative package includes bills intended to streamline privacy notifications and check-clearing as well as a measure to keep privileged information shared between state and federal regulators confidential. The panel also passed bills that would refigure how the CFPB calculates certain points and fees under its "qualified mortgage" rule, require the CFPB to hold open meetings, create a small business advisory board at the agency and establish an appeals process for areas to be designated as "rural" under the QM rule. Additional legislation in the package is intended to streamline and expand mortgage lending.
Special Needs Assistance Program (SNAP) grants from BankPlus and FHLB Dallas are helping income-qualified special needs homeowners pay for home repairs. Jenice Luckett, 60, had been living on disability after suffering an injury to her back. She didn't have enough money to repair a roof so leaky that her grandchildren would joke it was raining in the living room. A $6,000 SNAP grant from BankPlus and FHLB Dallas allowed Luckett to pay for a new roof. "I am delighted to work with FHLB Dallas each and every year," said Mark Ouellette, first vice president and director of Affordable Housing at BankPlus. "By giving members access to meaningful programs like SNAP, we are able make a significant, visible impact on the lives of our neighbors and communities."
According to a report by Pew Charitable Trust, nearly two million American’s spent a total of $3 billion at auto title storefronts across the country to borrow money against the value of their cars. Predatory auto loans can be even more dangerous than payday loans because they are much larger; the typical auto title loan averages $1,000 and comes with an annual percentage rate of about 300%. The typical auto title loan represents nearly 50% of a borrower’s gross monthly income. Pew proposes several regulations for safe auto lending, including measures that would ensure that the borrower has the ability to repay the loan, restrict the use of balloon payments and eliminate harmful collection practices.