Recent News
A newly discovered security bug nicknamed Heartbleed has exposed millions of usernames, passwords and credit card numbers — a major problem that hackers could have exploited during the more than two years it went undetected. Unlike most security breaches, which affect a single website or organization, this flaw affects code used across the web to keep servers secure. The bug could affect thousands of websites including online banking portals, marketplaces and social media sites. A fix has been circulated, but it is unclear how quickly and widely it was being implemented. Use ... Read more
A new report by Pew Charitable Trusts finds that nearly half of banks, including four of the nation’s five largest, still "reorder" checking account transactions -- a practice that can dramatically increase overdraft fees by processing larger withdrawals first, leaving smaller transactions to pile up fees. The practice is particularly onerous for low-income consumers who are unable to maintain high average balances. The study also found that an increasing number of banks are imposing new limits on... Read more
The White House is reviewing individuals with community banking experience for an open seat at the Federal Reserve Board. Administration officials have mentioned Ann Marie Mehlum and Rebeca Romero-Rainey as potential candidates. Ms. Mehlum, who currently works for the Small Business Administration, previously served as the chief executive of Summit Bank in Eugene, Ore. Ms. Romero-Rainey is the chief executive of the Centinel Bank of Taos in New Mexico. Senate Banking Committee members from both sides of the aisle, including Sens. Heidi Heitkamp (D-N.D.) and Mark Kirk (R-Ill.), have also... Read more
A new study by the FDIC found steadily improving trends for small community banks. According to the report, the number banks with assets between $100 million and $1 billion in assets has actually increased since 1985, but the number of banks with under $100 million has declined. Much of that decrease was due to consolidations and mergers. The pace of consolidation has steadily increased since 2010, when Congress passed the Dodd-Frank law.... Read more
Regulators from the FDIC and the Oregon Division of Finance and Corporate Securities have terminated the consent order issued against Albina Community Bank. The regulators determined the bank has met all the conditions of the consent order by reducing problem loans and maintaining higher capital levels. A stock purchase transaction with One PacificCoast Bancorp allowed Albina to return its regulatory capital ratios to the level required by regulators. “Having our regulatory consent order lifted is a very positive and significant step for the bank... [We]... Read more
Virginia Community Capital has deployed a new loan to Glade Green Grocer, a whole foods retailer and food cooperative located in Glade Spring, Virginia. The new store will provide retail shelf space, marketing and commercial canning for local growers throughout the year, responding to increased demand for fresh foods by consumers. This loan is the latest in Virginia Community Capital's comprehensive revitalization effort in Glade Spring, Virginia as well as the first loan deployed by their Virginia Fresh Food Loan Fund, a $10 million fund earmarked for addressing the unmet... Read more
Sen. Sherrod Brown (D-Ohio) predicted the plan to revamp the U.S. housing finance system sponsored by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) would not become law this year. The proposed legislation would phase out Fannie Mae and Freddie Mac in five years and replace them with a government re-insurer. The bill requires support from key Democrats on the banking panel, including Brown, before moving on to the Senate, where it will need to attract broad backing among Democrats to persuade Majority Leader Harry Reid (D-Nev.) to schedule a vote. Brown said the current bill is too... Read more
Warren Buffett has released his latest annual letter to Berkshire Hathaway shareholders. Since 2012, Berkshire has not repurchased shares at a price higher than 1.2 times book value. According to former investment banker Harvard Winters, this implies that banks and thrifts with ROE far below that of Berkshire buying shares at that book value multiple or higher are acting recklessly. Winters finds three takeaways for banks from the Buffett letter: care deeply about the price of an investment, don’t be overly-optimistic about... Read more
Illinois Attorney General Lisa Madigan has filed a new lawsuit against MoneyMutual, a lead generator familiar to daytime television viewers from ads pitched by TV personality Montel Williams. MoneyMutual is one of dozens of lead generators that drum up business for payday lenders by taking customer information, such as bank-account numbers and email addresses, and selling that information to payday lenders. The suit alleges that the company is operating as an unlicensed lender, arranging loans that violate Illinois's law limiting the fees that can be charged to borrowers. MoneyMutual was... Read more
The Consumer Financial Protection Bureau is in the late stages of formulating the first nationwide rules for payday lending and industry observers have begun speculating on what changes will be made. The CFPB is barred by the Dodd-Frank Act from setting a nationwide interest-rate cap, but the bureau is likely to set a regulatory floor below which the states may not fall. The CFPB has not signaled whether the new rules will include ability-to-pay standards or whether they will include restrictions on requesting access to customers' bank accounts. The rulemaking process will continue for at... Read more
Angela Martin, a senior enforcement attorney at the Consumer Financial Protection Bureau, told lawmakers at the House Financial Services Committee that she was discriminated against by managers. When she complained, she said, she was punished by being isolated from the workforce and stripped of responsibility. Martin also claimed that she had heard from dozens of other CFPB employees who felt similarly mistreated. Committee Ranking Member Rep. Maxine Waters (D-Calif.) has called for a full committee hearing on issues at the CFPB with appearances from top management, including Director... Read more
Teri Williams, President & COO of OneUnited Bank stopped by Orlando Florida's Captain and Company Morning Radio Show to discuss the new Unity Visa Card, a program designed to help people build healthy credit: "That’s something important for people to not get upset or in the mindset that, you know, 'I have bad credit. I’m a bad person.' Absolutely not. What has happened, usually, is that something has happened in your life that in some cases you don’t even have control over. And so you have been doing fine, but you hit a bump in the road... [The Unity Visa] is a credit... Read more
A new study from the St. Louis Fed concludes that there is a strong future for community banks and that those most likely to prosper will be those most committed to maintaining risk control standards and whose business plans are well-tailored to their communities. The study uses balance sheet and income statement ratios to identify features that are most associated with thriving community banks. The banks most likely to thrive were small (less than $100 million in assets), rural (agricultural loans have been unusually strong lately), had lower total loan-to-total assets ratios, had more... Read more
Big bank executives are opening experimental branches which use technology to provide more services in less space than a traditional branch. The pilot programs engineered by Bank of America and Citigroup resemble Apple stores, with employees holding tablets and tending to customers. JPMorgan found its customers headed to branches for advice rather than to simply go to the tellers. So their experimental branches focus on new express banking kiosks – A.T.M.s, with additional functionality and large flat screens – rather than the teller line. JPMorgan is also testing new... Read more
The Minneapolis Fed profiled Sunrise Banks' investments in local arts and culture in a recent article. Since 2002, Sunrise Banks has worked with Free Arts Minnesota, an organization that uses arts-based mentorship to help at-risk youth express themselves. Sunrise Banks CEO David Reiling advocates a multifaceted approach to community development: “Banks can make loans, which is more straightforward. But they can also provide contributions or offer volunteer time.” Sunrise provides Free Arts a line of credit and operating accounts. The has bank also contributed through its... Read more
Assertions that virtual payments and currencies are on the verge of displacing greenbacks may be premature. More greenbacks are now in circulation than at any time in recent history. Since January 2006, the amount of United States currency in circulation rose about 64 percent, to $1.2 trillion. But at the same time, cash transactions are declining as consumers rely more on debit and credit cards, suggesting that demand for dollars may be driven by hoarders rather than spenders. Americans are also writing half as many checks as they did a decade ago. The... Read more
Alternative lenders such as OnDeck and CAN Capital still rely on old-fashioned loan brokers to find their borrowers despite their high-tech packaging. These loan brokers are independent agents who funnel cash-strapped business owners to be sold high-cost loans. They charge sky-high commissions, usually hidden from merchants, which can double the cost of the loan. Some worry the brokers steer costly loans to small businesses that can’t afford them. “It’s a direct parallel to what happened in the subprime mortgage space,” says Mark Pinsky, CEO of CDFI advocacy group... Read more
The Delta Bridge Project, an initiative backed by Southern Bancorp which coordinates community and economic development efforts in three Arkansas and Mississippi counties, recently unveiled new tourist-friendly way-finding signs in Helena, Ark. The signs are part of Civil War Helena, a tourism promotion which highlights Helena’s numerous Civil War attractions. Southern Bancorp and its partners have invested heavily in Phillips County’s tourism industry in order to diversify the economy and create new economic opportunities in the region. “Civil War Helena is expected to attract over 60,000... Read more
Maria Contreras-Sweet, founder and chair of CDFI Bank ProAmérica Bank, has been confirmed by the Senate as the new head of the U.S. Small Business Administration. ProAmérica Bank, which she founded in 2006, serves small and mid-size Latino businesses in the Los Angeles area. Contreras-Sweet fills a role vacated by Karen Mills, who stepped down from the post in August. "Small Business will have a strong advocate in Administrator Contreras-Sweet, a leader with her finger on the pulse of small-business lending," Sen. Maria Cantwell, D-Wash., chairwoman of the Senate Committee on Small... Read more
When Carlos Schulte contributed $300 on Kickstarter to Oculus VR, a small but ambitious virtual reality gaming startup, he never expected it to sell out to Facebook for $2 billion. The $300 contribution bought him an early version of the company's gaming platform, but no equity in the company. The passionate online response against the Facebook purchase illustrates how the ethos of crowdfunding can clash with the corporate world. Some contributors fear the purchase will steer the company away from the gamer-friendly vision they had contributed to.... Read more