News
The CFPB is facing a balancing act as it attempts to expand the massive Home Mortgage Disclosure Act (HMDA) mortgage database. The Dodd-Frank Act requires the CFPB to expand data requirements, but the agency went beyond what was suggested by the law, proposing to add fields for home equity lines of credit, reverse mortgages and multi-family properties. Now, lenders are protesting that the CFPB went too far, while consumer advocates argue it hasn't gone far enough. The proposal was designed to make lenders provide more details on why a loan was accepted or rejected and disclose more information on the loan, including the age and credit score of homebuyers, the property value and details on the interest rate.
A new report finds a number of problematic trends in the online payday loan market including consumer harassment, threats, dissemination of personal information, fraud, unauthorized accessing of checking accounts and automated payments that do not reduce loan principal. Pew found that many online loans are designed to promote renewals and long-term indebtedness. Thirty percent of online payday loan borrowers report being threatened by a lender or debt collector. Thirty-two percent of borrowers reported unauthorized withdrawals and 20 percent received a loan or product they did not authorize. Nine in 10 payday loan complaints to the Better Business Bureau are made against online lenders, although online loans account for only about one-third of the market.
Two Indian tribes with online lending operations have dropped a lawsuit filed against New York State, abandoning an effort to block the state from restricting their businesses. New York’s top banking regulator, Benjamin Lawsky, last year urged banks in his state to stop processing payments for lenders that violate the state’s cap on interest rates. The Oklahoma-based Otoe Missouria Tribe and Michigan-based Lac Vieux Desert Band of Lake Superior Chippewa Indians responded with a federal lawsuit against the state, arguing the state's campaign was trampling on their rights as sovereign tribes. But the tribes suffered a setback when a federal appeals court denied an injunction that would have barred New York from restricting tribal lending during litigation.
A national survey of unbanked and underbanked households found that 7.7 percent of households in the US were unbanked in 2013 — nearly 9.6 million households. Twenty percent of households were underbanked. The unbanked rate peaked in 2011, when the percentage of households without a bank account hit 8.2 percent. Compared to 2011, households in 2013 had slightly higher levels of employment and income and were slightly older and better educated. Employment was the single largest determinant of banking status; among households that recently became unbanked, 34.1 percent had experienced either a significant income loss or a job loss. Among households that recently became banked, 19.4 percent reported that a new job motivated them to open an account.
The Federal Reserve has announced it will end its bond-purchase program, ending a quantitative easing experiment that stirred debate even as the central bank said it accomplished its goal of reducing unemployment. The move is a vote of confidence in the U.S. economy, which many economists peg to have grown at an annual pace near 3% or more in the third quarter. Officials will now turn their attention to determining when to start raising interest rates. The Fed has plans to maintain its current level of bond holdings until after it starts raising rates. Eventually, officials expect to reduce the holdings by letting securities mature without reinvesting the proceeds.
More than 50 companies that are members of the Merchant Customer Exchange (MCX) -- including retail giants like Walmart and Target -- are refusing to accept Apple's new mobile wallet. At stake is the future of their favored rival, CurrentC, a wallet app that will connect directly to customers’ bank accounts. The app bypasses the credit card companies, allowing merchants to avoid the high fees they pay on each credit transaction. CurrentC would also give retailers the ability to track shopping habits across all MCX's member stores, a data set that has traditionally been held by credit card companies, not merchants. Unlike Apple Pay, CurrentC relies on optical QR code scanning, rather than NFC chips and won’t be available until 2015.
A $140,000 Affordable Housing Program grant made by The Federal Home Loan Bank of Dallas through The First – A National Banking Association will help counseling agency Hancock Resource Center rehab 20 low-income, owner-occupied homes in Mississippi's rural Hancock County. At least 50 percent of the homes that will be selected for rehab are owned by people with special needs. All are low-income, and many are senior citizens. "This is our community, and many of our residents who benefit from programs such as this are our customers," said The First senior vice president and director of community development Jerome Brown.
CFPB director Richard Cordray signaled a more comprehensive approach to regulating bank operations at a forum on access to checking accounts earlier this month. Cordray focused on how financial institutions may use specialty credit scores to bar risky customers from opening accounts, or to target customers who are most likely to use overdraft protection as a credit product. Cordray criticized specialty consumer reporting agencies, which collect databases of “derogatory” information on customers, including how many times a consumer overdrew their account. Although the CFPB has raised these concerns individually in the past, the speech marks the first time the regulator has taken a system-wide dive into how banks operate rather than as part of remarks on the underbanked or underserved.
Virginia Community Capital, parent of Community Capital Bank of Virginia, is an organization with an uncommon history and exceptional impact. Their story starts in 2005, when Governor Mark Warner (D-Va.) proposed a measure to send more capital to distressed areas of Virginia by granting $15 million in housing and small business loan fund assets to a CDFI. Today, projects completed with VCC loans have created 2,066 jobs and retained 1,098 jobs; created or preserved 4,824 affordable housing units; and built or improved 1.9 million square feet of commercial space. “We’re testing out a new capital model that says you can do business and you can do good,” said VCC CEO and CDBA Chair Jane Henderson.
Industrial Bank will be recognized for its significant contributions to the Washington D.C. community at the annual D.C. Chamber of Commerce Awards Gala. The Chamber praised Industrial Bank as a family success story, with leadership that has sustained success for both the bank and its city. “This award is presented to an individual or company that has contributed significantly to the progress and advancement of the District of Columbia, and Industrial Bank has done that and more,” said Barbara B. Lang, D.C. Chamber president and CEO. “It is businesses like Industrial Bank that allow our community to evolve economically for generations.” Entertainment at the event will be provided by funk sensation George Clinton.