Recent News
In a new interview, Microsoft cofounder Bill Gates described how he hopes mobile payments can serve the unbanked, particularly in the developing world. Gates hopes his initiative will reduce overhead costs for small transactions between users, bringing down the barriers for secure transactions. Gates praised Apple Pay and said he hoped Microsoft would soon introduce a mobile payment solution of its own. Gates foresees mobile payments eliminating many bank transaction... Read more
Britain's new financial regulator, the Financial Conduct Authority (FCA), has taken action against online payday lender Wonga. Wonga positioned itself as a tech startup with ‘affordability algorithms’ that allowed it to make lending decisions in minutes. In fact, that speed relied on lax underwriting standards and insufficient credit checks which allowed borrowers to take out plainly unaffordable loans. The company has now agreed to entirely write off the debts of 330,000 customers, a total... Read more
Dominik Mjartan has been named CEO of Southern Bancorp Community Partners and Executive Vice President of Southern Bancorp, Inc. Mjartan previously served as Senior Vice President, charged with managing corporate strategy and other corporate functions. He will retain these responsibilities as Executive Vice President of Southern’s holding company. “Dominik’s financial acumen, strategic thinking and commitment to our... Read more
The U.S. Treasury marked the 20th anniversary of the CDFI Fund with speeches from Treasury Secretary Jacob Lew and former Treasury Secretary Robert Rubin. The event also included a panel featuring Brian Argrett, President & CEO of City First Bank of D.C. Secretary Lew’s comments focused on the Obama Administration’s commitment to expanding the community development goals of the CDFI fund. “By working together—government, private sector, nonprofits, faith institutions and community leaders—we can change the odds, we can overcome dim expectations and we can make America... Read more
In a surprise announcement, e-commerce giant eBay said it would spin off digital payment service PayPal. The move, an apparent reaction to Apple’s entry into mobile payments, is meant to make PayPal more nimble. PayPal has more than 150 million regular users and generated $6.6 billion in revenue last year. A number of large retailers as well as payment startups Square and Stripe have already agreed to accept Apple Pay, which is expected to be available within a month. Apple says its service, which will allow iPhone users to pay with their phones and authenticate purchases with via... Read more
The CFPB has asserted its authority over “captive” finance companies that belong to the auto companies. Until now, finance companies that aren’t primarily banks, like Ford Motor Credit Co., were regulated by the states. First on the CFPB's agenda is reforming "dealer markups" on auto loans. The markups compensate dealerships for helping generate loans for the finance companies by tacking on a small amount of interest, which becomes part of the customer’s total interest rate. Most lenders impose caps of 2 or 3 percentage points on dealer markup, but dealerships have the discretion to charge... Read more
The CFPB has set a number of precedents with an enforcement action against Flagstar Bank. The action not only marks the first time the CFPB has enforced its new mortgage servicing rules, but also the first time it has banned a servicer from servicing new loans. The CFPB cited Flagstar for taking too long to process applications for foreclosure relief and permanent loan modifications—up to nine months per application. Flagstar also failed to inform... Read more
Secret recordings made by New York Fed examiner Carmen Segarra offer an intimate study of the New York Fed's culture as it attempted to become a more forceful financial supervisor. The recordings, Segarra says, reveal the Fed had become too risk-averse and deferential to the banks it supervised. The recordings back up the image of Fed culture detailed in a 2009 Fed report which describes extensive regulatory capture, documenting lengthy meetings and discussions of systemic risk that rarely resulted in supervisory action. Segarra was fired form the New York Fed in 2012 after, she claims,... Read more
Developers have been scrambling to patch a newly discovered vulnerability in Bash, a widely used piece of code that interprets user commands for a computer. Bash has existed for 25 years and is utilized by the hundreds of millions of computers worldwide running Unix, Linux and Mac OS X operating systems. The flaw allows hackers to access a device and slip in malicious code, taking over the computer. The hacker can make the device or server do just about anything from becoming part of a botnet to stealing customer account information. Banks' core systems and servers often run on Linux or... Read more
The Department of Defense has proposed an overhaul of rules regulating predatory lending to military personnel. The proposal would expand the 36% APR cap on payday, auto-title and tax refund anticipation loans to cover all closed- or open-end loans, ending the current practice of lenders evading the rate cap by offering slightly longer or more expensive loans. The new rules would also require creditors to provide military borrowers with additional disclosures, including a document encouraging the service member to seek options other than high-cost credit. Creditors would also be prohibited... Read more
A new study finds that many homeowners neglected a chance to save money by refinancing their mortgages. After the recession, the Fed took action to boost the economy by pushing interest rates to record lows. In December 2010, 20 percent of American households with fixed-rate mortgages should have taken advantage of the low rates by refinancing—but didn’t. The median homeowner could have saved over $45,000 over the life of the loan. When lending non-profit Neighborhood Housing Services of Chicago organized a mailing campaign offering refinancing help, just 17 percent of recipients... Read more
The imminent replacement of magstripes with EMV chips in credit and debit cards will end a golden age of identity theft brought on by flaws inherent in the decades-old infrastructure. Most card scams take advantage of the magstripe’s basic security flaw: that static characters encoded into the stripe hold all the authentication information needed to produce a flawless counterfeit card. In contrast, EMV transactions, which rely on single-use cryptograms, make eavesdropping with a simple card reader fruitless to criminals. Since the UK deployed EMV cards in 2004, card fraud has fallen 32... Read more
Subprime auto lenders have adopted a dystopian method for extracting payments from their customers: installing remote GPS trackers and kill switches into borrowers' cars. The so-called starter interrupt devices allow lenders to remotely disable the ignition until borrowers return calls from debt collectors. The devices can also alert lenders to signs of trouble — for instance if the borrower is no longer traveling to their regular place of employment. Some borrowers say their cars were disabled when they were only a few days behind on their payments, leaving them stranded in unfamiliar... Read more
Former President of Citibank Illinois Darryl Hendricks has come out of retirement to become director of consumer banking at Chicago-based Urban Partnership Bank. A Harlem native, Hendricks spent 30 years with Citibank, the last 10 of them as Illinois president. “I'm going back to the kind of community I once came out of... We want to be a reasonable alternative to payday loans and check cashing operations in our marketplace,” Hendricks said. He's the latest African-American veteran of larger Chicago financial institutions to join Urban Partnership in order to support... Read more
Walmart is teaming up with Green Dot, known for its prepaid payment cards, to supply checking accounts available nationwide by the end of October. The new accounts, called GoBank, are intended as low-cost alternatives to traditional bank checking accounts, with no fees for overdrafts or bounced checks and no minimum account balance. The accounts will cost $8.95 a month for customers with direct deposits totaling less than $500 a month. To help attract customers, Walmart and Green Dot will forgo a screening system many banks use to vet potential customers and rely instead on a proprietary... Read more
A survey of community bankers by the Conference of State Bank Supervisors finds banks striving to adapt to new developments in technology and regulation at a time of steady growth. The report also contains insights gleaned from town hall discussions in 30 states. Bankers expressed concern about new qualified mortgage regulations but continue to issue residential mortgages, suggesting the rules may generally be in line with bank practices while still requiring significant changes in operations. Banks are now looking to expand primarily in technology, including mobile banking, online loan... Read more
A large data breach at Home Depot has started to trigger fraudulent transactions that are rippling across financial institutions and draining cash from customer bank accounts. The fraudulent transactions are showing up across the U.S. as criminals use stolen card information to buy prepaid cards, electronics and even groceries. Home Depot has said that 56 million cards may have been exposed in a five-month attack on its payment terminals. The size of the Home Depot breach makes the attack significantly larger and lengthier than the 40 million cards that were compromised in the Target... Read more
Southern Bancorp in Arkadelphia, Ark. is using mobile technology to offer consumers outside the mainstream a better alternative to payday loans. "The product that strips more wealth and assets from the most vulnerable people in America is predatory lending or payday lending," says Dominik Mjartan, senior vice president of the bank. But payday products have a stubborn appeal; regulatory constraints and disclosure requirements make it difficult for banks to compete with their speed. Now, Southern is closing the convenience gap with a new core-processing system and app... Read more
The CDFI Fund has opened the FY 2015 funding round for the CDFI and NACA Programs. The Administration’s FY 2015 Budget for the CDFI Fund requests $201 million in Financial Assistance and Technical Assistance awards, including $151 million for CDFI Program awards, $35 million for the Healthy Food Financing Initiative awards and $15 million for NACA Program awards. The awards support CDFIs providing affordable financing and related services to low-income communities and populations that lack access to credit, capital and financial services. The deadline for submission of the CDFI Program and... Read more
Broadway Financial, parent company of Broadway Federal Bank in Los Angeles, plans to raise nearly $10 million through a private placement. The company said it intends to sell about 8.9 million shares of common stock, including 1.9 million voting shares. "Upon consummation of these transactions, we will have completed the restructuring of the company's balance sheet, enhanced the liquidity of the company and positioned the bank for growth," CEO Wayne Bradshaw said. The announcement comes a year after Broadway shed roughly $25 million... Read more