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A new app could help hourly workers that experience significant income swings -- nearly a third of American households. The app, Even, smooths the irregular, up-and-down paychecks of hourly workers into the steady flow of a simulated salary. On good weeks, when users outearn their “average” salary, the company banks the surplus into a separate savings account. When users fall short, they still get their salary, thanks to past surpluses or to interest-free credit from Even. The service charges an annual fee of $156 – which could be preferable to the billions America’s poor spend each year on stopgap measures to smooth their incomes — including $3.4 billion in fees on payday loans alone. Even will be available to all customers by January.
Small banks and credit unions are trying to upend the industry practice in which Visa and MasterCard negotiate settlements with breached merchants and then distribute the proceeds to affected financial institutions. The smaller firms say the process favors big banks. A survey of 535 banks found that nearly three-quarters of banks with assets below $1 billion didn’t receive any reimbursement for breaches between 2009 and 2014, while all banks with assets above $50 billion were reimbursed. Yet fraud is can cost small banks more than $10 to replace a card, compared to $3 for the nation’s biggest banks. A group of small banks has filed a motion in court objecting to terms of a settlement Target reached with MasterCard and are now pursuing additional compensation.
An SBA loan from Durango, Colorado-based First Southwest Bank has helped Colorado Malting Company expand its operation to become the largest craft malt house in the United States. Founders Jason and Wayne Cody say the bank’s work was instrumental in their business’s success. "The first day we were open for business, running a tank that would hold about 400 gallons of wheat, we got an order for 40,000 pounds of malt. So we just kind of went, 'We're going to need some financing help!'” said Jason Cody. “[First SouthWest Bank] has worked tremendously hard and went to bat for us right away trying to figure out how to value malting equipment... I don't know what bank would have been willing to work with us like First SouthWest has."
The FDIC has announced it is accepting applications for the second phase of its Youth Savings Pilot Program, which fosters financial education through safe low cost savings accounts for school aged children. Pilot participants will benefit from the FDIC’s technical assistance and resources for best practices. Participants’ programs will also be featured in an FDIC report on the pilot in the fall of 2016. Any bank is eligible so long as it intends to launch a new youth savings account and financial education program or expand an existing program. Applications for Phase II of the pilot are due by June 18, 2015. Interested applicants should email youthsavingspilot@fdic.gov.
A new report from National Community Investment Fund (NCIF) finds that CDFI banks are substantially more likely than mainstream institutions to provide financial services in underserved areas. The report finds that 53.6 percent of the median CDFI bank’s HMDA loans were made to low income districts, compared to 25.5 percent for the median U.S. bank. In addition, the median CDFI bank had a greater proportion of branches in low income communities — 75 percent, compared to 40 percent for the median U.S. institution. NCIF also surveyed a sample of 24 CDFI banks for more detailed information, including many CDBA members. In addition to developing innovative products to help underserved customers, these banks have created an estimated 10,609 jobs in 2013 alone.
Technology consulting service Impact Makers has given ownership of the company to Virginia Community Capital and The Community Foundation Serving Richmond and Central Virginia. The 75 employee company has previously won acclaim for donating all of its profits to charitable causes. The total value of the equity gift to the two organizations is about $11.5 million. Virginia Community Capital will own 30 percent of the stock, while The Community Foundation will own 70 percent. “It is truly rare that a business would give away its economic value to help the community, but that is what Michael Pirron and Impact Makers did,” said Terri Lovelace, senior vice president for community investments and impact at Virginia Community Capital.
Beneficial State Bank, Sunrise Banks and Virginia Community Capital were recognized by B Lab's Best for the World 2015 List in both the Overall and Best for Communities categories. The list honors companies that create the most positive impact for their environment, their communities and their employees. Virginia Community Capital was commended for its commitment to local, sustainable and fair trade suppliers. Beneficial State Bank was noted for its dedication to environmental sustainability and for giving more than 50% of its corporate profits to charity. Sunrise Banks was praised for its local majority ownership and its excellence in tracking impact lending performance.
Noah Bank has completed a capital raise resulting in approximately $10.96 million of net proceeds to the bank. Of the shares of common stock sold in the offering, 1,210,000 were sold to “friends and family” through the efforts of Noah Bank CEO Edward Shin. The remaining shares of common stock and subordinated shares were sold to several institutional investors. “We are very pleased to complete this capital raise,” said bank chairman Young Man Kim. “This is a demonstration of the support that Noah Bank enjoys in the local community, as well as the institutional market.”
The New York Times this week featured a debate on the role of social goals in the profit-oriented corporate environment. David Yosifon of the Santa Clara University School of Law writes that Delaware corporate law holds that directors must make stockholder welfare their sole end, a premise which Lynn Stout of Cornell Law rebuts. She writes that the malleability of “shareholder interest” affords directors ample leeway for incorporating social goals. Stephen Bainbridge of the U.C.L.A. School of Law writes that enforcing shareholder wealth maximization is the only concrete way to ensure accountability. But Tamara Belinfanti of the New York Law School and Jean Rogers of the Sustainability Accounting Standards Board argue that the division between profit and social good is an illusion, as social goals can produce positive business outcomes.
Cybercriminals are increasingly taking advantage of the online payday marketplace to steal people's account information and use it to drain their savings, apply for credit cards or perform other forms of theft. Cybersecurity company IntelCrawler obtained several databases from a seller on a hacking forum who claims to have access to lending information on more than 105 million people. Bloomberg News contacted dozens of individuals listed in the databases and confirmed that their data came from payday loan applications. In September, the Federal Trade Commission halted a scam in which scammers allegedly bought payday loan data and deposited $28 million into victims' bank accounts for loans they didn't ask for—and took out more than $46 million in finance charges and other fraudulent fees.