News
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 hacking that occurred in the three weeks leading up to Christmas last year.
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 developed with help from a company it helped create, Smiley Technologies. Among the app's features are real-time transaction processing and on-demand account information.
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 NACA Program applications is Monday, November 24. An application workshop for the programs will be held Thursday, October 2, 2014.
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 in troubled loans in an effort to boost its asset quality.
Albina Community Bancorp in Portland, Ore., has filed for bankruptcy. Albina had been deferring interest payments to Hildene Capital Management for five years. The hedge fund invested in a collateralized debt obligation backed by Albina's debt. But the bank has been operating under a written agreement with the Federal Reserve Board that forbids it from paying its trust-preferred debt without regulatory approval. Hildene had threatened to force the company into involuntary liquidation if it defaulted. The company's board resigned as of the bankruptcy filing, which showed $7.5 million in liabilities and $1.3 million in assets. Hildene has raised the possibility of legal action against Albina's directors, as well as Beneficial State Bank, which recapitalized Albina last year.
The annual Temenos banking survey has found growing anxiety among bankers about competition from tech giants. Respondents say their institutions are taking steps toward innovation, but nevertheless doubt that banks will make major updates to mission-critical systems until regulators force them to. Twenty-three percent of banks identify competition from tech vendors as a concern and 67 percent intend to boost IT spending. Customer loyalty was an even greater concern – and 30 percent of bankers said it was their biggest worry. One solution: building a better branch. Although the importance of branches dropped five points this year, retooling them toward customer support and advice plays a key role in many banks' retention strategies.
A federal judge shut down two online payday lenders operating under the umbrella of the Hydra Group after the CFPB and FTC said they extracted more than $36 million from customers who never agreed to loans. The operations bought personal data about people who were researching loans at other websites, deposited unsolicited money in their accounts and debited finance charges that exceeded the amount of the deposits. When some consumers tried to stop their banks from debiting the money, the companies produced fake loan documents testifying to the debt. The lenders made mostly unsolicited loans totaling $125.3 million while extracting $161.9 million from bank accounts.
A new analysis of Home Mortgage Disclosure Act data by the Urban Institute shows that the current tight credit environment has disproportionately affected African American and Hispanic households. African American and Hispanic borrowers took out a greater share of mortgages as housing prices neared their peak, the worst time to take out a loan. Then, as prices began to drop, tightened credit standards left many unable to obtain or refinance a loan. From 2005 to 2012, the share of loans made to African American and Hispanic households dropped from 23 percent to 12 percent, locking many borrowers out of homeownership and creating an obstacle to building wealth.
The Consumer Financial Protection Bureau has proposed bringing the financing units of the big automakers under federal supervision for the first time, a move that would let the agency examine the lending arms of Toyota, Ford and Honda. The bureau has grown concerned that some car buyers are being steered into expensive loans when they qualify for cheaper ones and being misled about the terms and benefits of add-on products. The proposed rule would extend the bureau’s current oversight of bank auto lenders to cover 38 auto finance companies that make, acquire or refinance 10,000 or more loans or leases a year. The firms provided financing to about 6.8 million consumers last year.
A new startup, TrueAccord, hopes to bring debt collection into the internet age. The company, which recently attracted $5 million in venture capital funding, uses behavioral analysis make debt collections less intimidating. TrueAccord tailors its campaigns to debtors, building a profile of the consumer and figure out the right course of action to collect on a debt. "I've been sitting here listening to breakup songs and eating ice cream because I feel like you're avoiding me," says one message targeted at millennials, who enjoy ironic humor according to TrueAccord’s data. TrueAccord uses email alongside phone calls and letters, and also allows users to negotiate terms through a web portal – unusual in an industry where regulations have caused collectors to shy away from online communication.