Time | Wednesday, March 26, 2014

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. Others argue that the sale is the most egregious example yet of crowdfunding's one-sidedness. Two venture capital firms which made early equity investments in the project received a 2,000% return. At that multiple, Mr. Schulte's contribution would have been worth $6000 today.

B Corp Best For the World 2014 | Wednesday, March 26, 2014

One PacificCoast Bank and Sunrise Banks were recognized by B Lab's B Corp Best for the World 2014 award in the midsize business category. One PacificCoast Bank's profile highlighted their innovative governance structure, well-compensated workers, commitment to mission-driven lending and commitment to offsetting green house gas emissions with certified carbon credits and energy efficiency programs. Sunrise Banks' profile featured their environmentally-conscious office practices and locations, employee benefits, community-focused ownership, volunteerism and support of local suppliers.

Washington Post | Wednesday, March 26, 2014

Increasing numbers of people are finding themselves so close to the financial brink that they must borrow against future wages just to cover the costs of everyday life. Over the past half century, the purchasing power of wages have fallen while access to credit has risen, causing credit to replace wages for an increasing number of purchases. Meanwhile, personal savings have fallen steadily from their 1970's peak. The effect of this dependence on credit is that the average American has very little financial leeway when something unpredictable happens or just needs to scrape together enough money to pay monthly expenses. Those expenses lead to 75% of payday borrowing.

The Washington Post | Tuesday, March 25, 2014

The Consumer Financial Protection Bureau released a new report on payday lending at a public hearing in Nashville. The agency is nearing the release of new rules to govern the industry. Their report argues that "short term" loans are usually not short term at all, but more often renewed again and again as consumers dig themselves into deeper sinkholes of debt. Half of all loans, for example, come as part of sequences of 10 or more renewed loans — and in one out of five loans, borrowers end up paying more in fees than the initial amount they borrowed. It is not clear what form the upcoming CFPB regulations will take; the Dodd-Frank Act prohibits imposing usury caps, but the CFPB may eliminate lump-sum payday loans or require the loans be modified to incorporate more affordable installment plans.

American Banker | Monday, March 24, 2014

Bronx-based Spring Bank seems like a perfect candidate for New York State's Banking Development District program, an initiative that encourages banks to put branches in low-income neighborhoods that have none. Spring Bank, recently certified as a CDFI, offers customers financial literacy courses and products like checking accounts with no fees or minimum balance requirements. But two years ago, when the bank expanded into Harlem, its application to participate went nowhere. The reason: the program was being revised and New York's Department of Financial Services was not considering new applications. This revision has been going on for the last four years, leaving the popular program in limbo.

Crain's Chicago Business | Friday, March 21, 2014

Urban Partnership Bank is selling a branch in the Chicago suburb of Stone Park to Wintrust Financial Corp., the latest move in the bank's bid to scale back its sprawling enterprise. “Our strategy and the business have changed, and we're getting back to the fundamentals of serving Chicago's South and West sides,” an Urban Partnership spokesman said. Under the terms of the deal, Wintrust will take on the branch's deposits, but not its loans. The employees of the tiny branch, which holds less than $5 million in deposits, are also expected to transfer to Wintrust. The sale will leave UPB with nine branches.

American Banker | Thursday, March 20, 2014

Sixteen of the 20 largest U.S. cities are experiencing growth rates faster than their surrounding suburbs, reversing a trend towards suburban sprawl that has held since the '20s. Retiring baby boomers and millenials alike are relocating to the city in search of culture, walkability and faster-paced lifestyles. For banks, this transition is contemporaneous with hard economic times. The proclivity of younger city dwellers toward online banking has dovetailed nicely with many banks' impulse toward downsizing branches to cut costs. But regulators worry the next lending bubble could appear in the urban real estate market. Bankers are also wary, looking for signs of overcapacity after getting burned in the housing bubble.

Idaho Statesman | Wednesday, March 19, 2014

An Idaho bill setting restrictions on payday lending has passed the state's House of Representatives by only one vote and now awaits the Governor's approval. The bill limits the amount of payday loans a borrower can take out to 25 percent of monthly income and caps the number of times a lender can try to redeem a bounced check at two, ending the possibility of racking up additional fees. The bill also allows a borrower who can't pay within the usual two-week term to request an extended payment plan without additional fees. But Dawn Juker  of Catholic Charities of Idaho said the bill doesn't go far enough and she'd rather have no bill at all instead of the one speeding through the Legislature. "There's too many things the consumer would have to be responsible for -- such as requesting an [extended payment plan] -- that payday lenders would not typically market," Juker said.

Medill Reports | Wednesday, March 19, 2014

A number of Chicago-based banks, including ABC Bank and Urban Partnership Bank, are seeking ways to direct the unbanked away from predatory small dollar loans. "I think we have questions about the responsibility about some of the [small-dollar loan] products,” said Levoi Brown, chief banking officer with Urban Partnership Bank. “A lot of these people are already in debt. So what you are doing is continuing to feed that cycle.” ABC Bank offers Ready Cash, a small-dollar loan product for the unbanked. Reginald Little, loan officer at ABC, said the product offers a much better interest rate and repayment than other nonbank firms. Mr. Little picked up an application form from a local payday loan lender and pointed at the 403 percentage rate. “Don’t you think that’s a bit abusive?”

Virginia Community Capital | Wednesday, March 19, 2014

A new video documents the impact of Virginia Community Capital's Pathfinder Program on the Appalachian town of Glade Spring. The program started in 2010 when Virginia Community Capital convened a variety of national and regional stakeholders to discuss solutions for rural Virginia's economic hardships. With funding from the DHCD, the Pathfinder Program injected much-needed capital into the towns of Glade Spring and Onancock. Dirk Moore of the Glade Spring Planning Commission remarked on the progress:"When I think about the past, I remember boarded-up windows, people talking about a 'ghost town.' Today, the town features bustling shops, including a new outfitters, an artisan store featuring handmade products by local artisans and two restaurants.