News
The Consumer Financial Protection Bureau has issued a report highlighting illegal actions by payday lenders, debt collection companies and consumer reporting agencies. CFPB examiners found instances of payday lenders deceiving consumers and illegally harassing borrowers to collect debts. The report also criticized debt collection agencies often used by those lenders, claiming the agencies misled consumers about litigation, made excessive calls to consumers and failed to investigate credit report disputes. CFPB examiners found that certain consumer reporting agencies were not handling consumer credit report dispute documents properly.
Panelists offer perspectives on the legacy of the bank bailout. Lee Sachs, former counselor to the Secretary of the Treasury, argues that the bailout was a success; higher capital requirements and new regulations have led to a substantially safer financial system. Other panelists critique that view, arguing that Treasury missed an opportunity to force the big banks to downsize to smaller, safer institutions. Several panelists argue that the bailout failed altogether in its primary mission of preventing another financial crisis by focusing too narrowly on banks while failing to reform mortgage refinancing or the mechanisms that spread financial contagion.
An FDIC report has found that rural community banks located in depopulating areas are coping with a shrinking pool of customers better than expected. Rural counties that experienced outflows lost 14.8 percent of their population on average. But community banks in those areas actually fared better, on average, than banks in metro areas. Unusually strong performance in the agricultural sector beginning in 2006 resulted in community banks in depopulating rural areas posting higher asset growth rates than community banks elsewhere from 2006 through 2012. Asset growth was accompanied by strong deposit growth as farmers placed their high earnings into their local institutions.
A recent spate of lawsuits accuse 10 banks and a credit union of helping online payday lenders break usury laws by processing debt collection transactions. Payday lenders depend on those transfers, which are more reliable than debit and check transactions. The financial institutions are accused of violating federal anti-racketeering laws, federal banking regulations and industry standards and rules established by NACHA. The plaintiffs argue that the banks should have known that their customers were acting illegally and thus were helping them break the law. Targeted financial institutions include large and small banks alike, from BMO Harris Bank to the North American Banking Co. in Roseville, Minn.
The CDFI Fund is holding an application webinar on the 2014 CDFI Bond Guarantee Program application today at 2:30 PM. The webinar will touch on a variety of topics, including the application review process, application evaluation criteria, bond proceed use restrictions, program costs and reporting requirements. In addition, CDFI Fund staff will discuss the upcoming outreach sessions being held across the country for the CDFI Bond Guarantee Program, as well as the qualified issuers that have already been approved for the FY 2014 round of the program. Advance registration is not required to participate in the webinar. After the webinar, the presentation will be made available on the CDFI Fund's website.
Debra McGee, a senior vice president and director of minority business development for BankPlus, discusses her career and the bank's work in Mississippi: "When we decided to build a BankPlus branch near Jackson State [University], some individuals thought we were crazy. Of course, BankPlus had a special vision to serve this community... We invested more than $3 million in this venture. We are proud of what we created in Jackson and making a difference in the community and our state... One of the services or products I helped create is CreditPlus, a program to help consumers get on the right track to financial freedom."
At a summit on small business credit innovations held at the Federal Reserve Bank of New York earlier this month, executives from high-cost alternative lenders responded to criticism of their business loan pricing. Asked whether their average loan's 54% APR was fair, Andrea Gellert of alternative lender OnDeck responded that, “APRs somewhat distort the true economic costs and the cost-return relationship on the loan. If I buy that inventory for a dollar and sell that inventory for $2 in a six-month period, that’s a 200 percent return. So my 54 percent cost makes absolute sense.” Industry executives argue their loans should be judged by customer satisfaction, pointing out that their high renewal rates show the loans are serving borrowers.
OneUnited Bank is piloting revamped branches featuring roaming staffers armed with iPads loaded with real-time information about their walk-in customers. Staffers can see the customers' recent calls, open loan referrals and recent transactions. That information allows the bank's sales representatives to quickly identify each person's financial needs and to make relevant suggestions. The new branch model employs the recently introduced Salesforce 1 for Financial Services customer relationship management software. OneUnited Bank introduced the software late last year to monitor the success of its Unity Visa Card, a product aimed at helping customers build strong credit scores.
The Senate Banking Committee has approved a White House-supported bipartisan measure to overhaul Fannie Mae and Freddie Mac on a 13-9 vote. But analysts say that is short of the majority needed to compel Senate Majority Leader Harry Reid (D-Nev.) to bring the bill up for a floor vote. It is an open question whether the Johnson-Crapo bill will become the base from which legislative efforts resume in the next Congress, or if Sens. Brown, Schumer or Shelby will seek to start anew. Liberal lawmakers have felt less urgency to advance an overhaul given the new direction towards maintaining the organizations' roles being charted by FHFA Director Mel Watt.
Southern Bancorp is rolling out a new quarterly publication, Mission News, which reports on the bank's community impact. In this issue: How Southern Bancorp helped the Clarksdale, Miss. Municipal School District become one of five districts nationwide selected for a $10 million U.S. Department of Education Race to the Top grant; the revitalization and entrepreneurship initiatives enacted by Southern Bancorp and the U.S. Department of Housing and Urban Development in Helena, Ark.; and a financing effort that helped a local coffee shop expand while giving new life to a historic 1890's-era building.