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A U.S. grand jury has subpoenaed a company that the Federal Trade Commission has said is at the center of a deceptive payday lending scheme. The grand jury is looking at possible violations of statutes covering wire fraud, money laundering and racketeering. The FTC lawsuit accuses the companies and Tucker of deceptive practices, including failing to disclose to borrowers the true costs of loans and falsely threatening consumers with arrest or prosecutions if they failed to pay. In a complaint filed in April 2012, the FTC said AMG and its allegedly related companies operate online payday lenders, including 500FastCash, AmeriLoan and USFastCash.
Promontory Financial Group is sponsoring the Empowerment Awards to highlight the good work of CDFIs and others that support access to safe, fair financial services in underserved communities. The awards will recognize projects in two categories: The Community Development Banking category for CDFI banks and the Access category for financial and technology firms with less than $10 billion in assets. Prizes will include five pro bono consultations with senior Promontory officials on strategic and regulatory issues, as well as a financial prize of $100,000. CDFIs chosen in either category will receive the financial prize as a direct grant. Applications will be accepted until May 31, 2014. More information is available at www.empowerment.promontory.com.
The Senate Banking Committee is continuing negotiations on legislation to overhaul Fannie Mae and Freddie Mac, but it remains unclear when panel leaders will reschedule a vote on the bill. Committee Chairman Tim Johnson (D-S.D.) and Sen. Mike Crapo (R-Idaho) postponed the vote to win additional support within the committee. Supporters hope the bill will attract several more Democrats to the coalition, showing the support necessary to bring the bill to the Senate floor. Failing that, Johnson and Crapo may choose to pass the bill out of the committee without hope of seeing it on the Senate floor simply to set a milestone for later debate. A third possibility: the vote could be postponed indefinitely and the bill allowed to die in committee.
As the peer-to-peer lending industry matures, the big financial firms peer-to-peer had set out to bypass have come to dominate the industry's investor pool. More than 80 percent of the loans issued on peer-to-peer marketplace Prosper went to those firms. The big players’ entry runs counter to the original notion of the sector as a populist alternative to the high stakes world of Wall Street. The original investors are now outgunned by the cash-rich, algorithm-wielding financial firms. Like high-frequency trading, peer-to-peer lending has become a game of speed. The dynamics taking shape — high demand for riskier loan categories, hedge funds leveraging and securitizing their investments — have inspired comparisons to the mortgage crisis.
The Federal Reserve Bank of San Francisco's latest issue of Community Investments focuses on the theme of collective action -- the model of change in which various sectors coordinate efforts and share resources in pursuit of social, economic and environmental goals. Articles included explore best practices for building cross-sector partnerships, methods of structuring coalitions, findings from the Department of Housing and Urban Development's Sustainable Communities Initiative and several case studies of applied collective action initiatives in California.
In remarks to the Independent Community Bankers of America 2014 Washington Policy Summit, Fed Chairwoman Janet Yellen addressed the regulatory challenges they face. She said the Fed would "tailor" the regulator's oversight of community banks to ensure they don't face an unfair burden. Yellen also said the Fed is working to use technology make examinations of community banks less disruptive and burdensome. She also adressed the role she sees for community banks in the economy. "I believe a healthy financial system relies on institutions of different sizes performing a variety of functions and serving different needs," Yellen said.
Urban Partnership Bank CEO William Farrow discussed bank regulation in an interview with Bloomberg. According to Farrow, the regulations “have created a series of challenges” for community banks. He discussed the “fear factor” community development banks feel that any mistake will prompt severe regulatory repercussions. But labor costs for compliance officials can be high in the current competitive market. Technological necessities also pose big challenge as bank must ensure their third party vendors are also compliant. Farrow says Urban Partnership so far has had more than 70 regulatory-related visits, requiring the attention of employees who otherwise would be serving customers.
A collaboration of public and private partners in Mississippi County, Arkansas, including Southern Bancorp, has culminated in the unveiling of the county’s first Delta Bridge Project Strategic Plan. The Delta Bridge Project is a community-led initiative aimed at revitalizing the county’s social and economic sectors. “We’re excited to be part of this new phase in Mississippi County’s social and economic growth,” said Steve Jones, Senior VP of Programs for Southern Bancorp Community Partners. “Southern Bancorp has seen the impacts firsthand that the Delta Bridge Project can have on a community, from increasing opportunities for youth to building stronger economic development supports to creating a safer place to live."
In a report on the Community Development Capital Impact (CDCI) Program, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) urged the Treasury to tighten oversight of recipients. CDCI injected $570 million into 84 CDFI-certified banks and credit unions serving minority and low income communities. The inspector general's report faulted the Treasury for not doing enough to ensure that these lenders were using their federal money to boost lending to local businesses. The report found that eight banks and credit unions have never returned surveys reporting on how they used the funds. In nine instances, institutions missed dividends or interest payments, but six of those lenders are now current in their payments.
The Western Independent Bankers Association has named Community Bank of the Bay winner of its annual Community Bank of the Year award. The award highlighted the San Francisco Bay Area bank’s newly redesigned Bay Area Green Fund, which attracts capital and deposits that are exclusively loaned to local environmentally sustainable projects and companies. The association also praised the bank’s sponsorship of local nonprofit Mindblown Labs, which has included three years of free office space. Mindblown teaches underserved students at two Oakland high schools app development, helping them learn valuable skills and make money on the apps they create. Mindblown’s latest game, Thrive N Shine, is a financial literacy app geared toward teenagers and college-age youth.