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Stepped-up demands from liberal Democrats and conservative Republicans are threatening prospects for the Johnson-Crapo mortgage market reform legislation. Liberal Democrats want to add mandates requiring private lenders to offer loans to minority groups. Conservative Republicans are insisting that Fannie and Freddie be entirely eliminated. Too much motion in either direction would kill the bill's bipartisan support. Analysts expect the bill to pass through the Senate Banking Committee, but its prospects for passing the chamber are dim with elections looming. Legislators increasingly are willing to hold on to Fannie and Freddie as cash cows for the government, and the companies’ shareholders are getting bolder about asserting their rights to share in their good fortunes.
Walmart has announced a new service allowing customers to make store-to-store money transfers within the United States at cut-rate fees. The offering is aimed largely at lower-income shoppers who often rely on check-cashing stores for simple transactions. Walmart has become a big player in alternative financial products including prepaid debit cards and check cashing. Walmart's new service will offer transfers of up to $50 will cost $4.50 and transfers of up to $900 costing $9.50. In comparison, sending $900 via Western Union could cost as much as $76. But Western Union and MoneyGram pointed out that their hundreds of thousands of global affiliated locations overshadow Walmart's roughly 4,000 U.S. locations.
The shuttered Urban Partnership Bank building in Chicago's South Shore neighborhood will become a canvas for artists until it is redeveloped. The art installations are part of a partnership with The Neighborhood Foundation, a local nonprofit that helps improve vacant buildings with public art. The organization plans to paint a tableau of the neighborhood’s landmarks on the building's boarded up windows, including a bike trail and southbound train. The bank closed on March 22 and many community groups expressed interest in using art to beautify the building. Urban Partnership spokesman Brian Berg said the bank liked the idea. “We wished it had been done sooner, but it was part of our plan all along,” he said.
The discovery of the Heartbleed computer bug has led regulators to raise alarms over the effect of cybersecurity threats on consumer confidence. The Financial Stability Oversight Council's 2013 annual report highlighted that in the prior year more than a dozen financial institutions "were subject to sustained and persistent cyberattacks." Thomas Curry, head the Office of the Comptroller of the Currency, noted the financial sector is one of the most attractive targets for cyberattacks. It is increasingly dependent on technology--often provided by third-party vendors, creating additional potential entry points for attacks. As the biggest banks build defenses, attackers may target the less sophisticated barriers of smaller banks, Curry said.
Opponents of payday lending worry that a recent Supreme Court decision has removed class-action lawsuits from their arsenal. In the April 2011 case AT&T Mobility v. Concepcion, the Supreme Court upheld the ability of cellular service providers to insert fine-print provisions banning participation in class-action lawsuits into their contracts with customers. Payday lenders often use similar clauses to evade class-action suits. Before the Supreme Court Ruling, lower courts in North Carolina and California ruled those provisions unlawful. In North Carolina, that ruling allowed for a class-action suit that resulted in a $37.5 million settlement. Advocates worry that such victories are no longer possible as class-action bans force more compaints into individual arbitration.
Virginia Community Capital Vice President of Community Investments and Impact Teri Lovelace and Small Business Manager Wayne Waldrop were keynote speakers at the Colonial Beach Virginia Chamber of Commerce Annual Membership Dinner and Awards Ceremony. Waldrop explained that Virginia Community Capital is willing to take on more risks than a traditional bank in order to serve the needs of the community. Ms. Lovelace stressed that VCC believes, “Small businesses are the economic engine of a community,” which is why the bank is committed to providing advisory services which support economic expansion in the state.
Urban Partnership Bank partnered with Mercy Hospital and Roseland Senior Center in support of Money Smart Week, a nationwide event aimed at helping consumers learn to better manage their personal finances. Information Security Manager Donna Pfeil was on hand at the Mercy Hospital event, sharing information about identity theft. Marcus Bennett, Urban Parnership's Pullman Financial Center Manager, spoke with members of the Roseland Senior Center about recovering from financial disasters. The bank also provided a document disposal service, inviting community members to shred and dispose of waste documents containing sensitive information.
CDFI data and analysis nonprofit CARS Inc. is launching a financial reporting system for CDFI loan funds. The nonprofit intends the ratings to simplify CDFI finances for investors, including banks looking for credit under the Community Reinvestment Act. CDFI loan funds are unregulated and investors often struggle to gain timely and accurate data, a major obstacle to attracting non-philanthropic capital. CARS currently has ratings and data available for institutions that manage 55% of all CDFI assets. Jeannine Jacokes, CEO of loan fund Partners for the Common Good (and CDBA Senior Policy Advisor) commented, "The more CDFIs that participate in the reporting system makes the whole system stronger."
Chicago Mayor Rahm Emanuel has announced a new $26 million loan pool led by Community Investment Corp. and backed by lenders including First Eagle Bank. The fund seeks to increase the supply of affordable units in Chicago communities by enticing local investors to buy abandoned rental buildings. Community Investment Corp. will vet developers with proven track records to take on projects in which renovation costs far outweigh property value. When the rehab is complete the investor will receive a 10-year loan. 11 area banks, including First Eagle, back the loans. "It's hard to get conventional money into the neighborhoods... We've done some (loans), we'd like to do more," said Andy Salk, president and CEO of First Eagle Bank.
Senate Banking Committee leaders may delay the April 29 vote on their mortgage finance reform bill as they struggle to secure additional votes. Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) are said to be trying to attract as many as four more votes. The situation has even sparked rumors about whether the original coalition of committee members from both political parties remains intact. Johnson and Crapo's bill would eliminate Fannie Mae and Freddie Mac and create a new housing finance system. But the bill, which would preserve a government guarantee for the mortgage market in the event of catastrophic losses, needs more support from Democrats to have enough momentum to make it to the Senate floor this year ahead of the November elections.