December 17, 2019

Business debt exceeds households' for first time since 1991

U.S. business debt exceeded that of households for the first time since 1991, a potential warning sign for the economy as corporate investment softens.

Nonfinancial companies boosted debt at a faster 5.7% annual pace in the third quarter to a total outstanding $15.987 trillion, while household borrowing slowed to a 3.3% rise to reach $15.986 trillion, Federal Reserve data showed Thursday. Federal government debt climbed 10.4%, the most since early 2018, to $18.9 trillion.

With the record-long expansion in its 11th year, Fed policymakers have indicated in recent months that they're watching the corporate debt situation closely. Chairman Jerome Powell said in October that "leverage among corporations and other forms of business, private businesses, is historically high. We've been monitoring it carefully and taking appropriate steps."

Powell also said at the time that "in the aggregate, the household sector is in a very good place." Read more at AMERICAN BANKER


Seven Tips For Cutting Your Taxes By Thousands Before Dec. 31

The countdown to year-end is underway. And that means it's time for last-minute tax tips - steps you can take now, with just days left in the year, to cut your 2019 taxes. You'll potentially save thousands of dollars or more.

Several tax-cutting steps concern changes to the tax code due to the Trump tax cuts, known formally as the Tax Cuts and Jobs Act.

Whether based on long-standing rules or new ones, you've got to follow these seven tax tips by Dec. 31. Otherwise, the door closes on your chance to lower your 2019 taxable income or avoid a money forfeiture

Tax Tip #1: Max Out Retirement Plan Contributions
If you can afford to boost the amount of money you sock away in tax-sheltered retirement accounts, do it. For contributions to a traditional IRA or 401(k) account, you get an upfront tax deduction.
Read more at Investor's Business Daily


TransUnion: Credit card delinquencies could reach 10-year high in 2020

Dec. 12 (UPI) -- Credit card delinquencies past 90 days are expected to reach a 10-year high next year, but the projected total is still less than the last recession, according to new forecast unveiled by TransUnion on Thursday.

The 90-day-plus accounts are predicted to increase to 2.01 percent in 2020, and the number of people with revolving credit reached a record of 200.5 million in the third quarter of this year.

"This is well-managed delinquency," Matt Komos, TransUnion's vice president of research and consulting, said. "It's still healthy. This uptick is not concerning with the amount that credit has been expanding."

The TransUnion forecast said that even with the slight uptick in delinquencies, consumer balances are expected to grow next year, up 4 percent to $854 billion by the end of 2020.
Read more at UPI


NAFSA Executive Director Highlights Role of Tribal Sovereignty, Third Party Vendors to Tribal Lending Enterprises in New Forbes Article
Dec 13, 2019 News, Tribal Sovereignty

In an article published in Forbes earlier this week, NAFSA Executive Director Gary Davis, a member of the Forbes Finance Council, highlighted the role of tribal sovereignty as a core principle of how tribes live, operate, and govern themselves, particularly as it applies to economic development.

That principle, Davis writes, was recently reaffirmed by the U.S. Fourth Circuit Court of Appeals in what is being viewed as a landmark case for tribal economies.

"Key in the Fourth Circuit's ruling is the finding that tribes, as sovereign nations, can create economic arms overseen by tribal laws and regulatory bodies," Davis writes. "Per legal precedent, these tribal businesses can pursue commercial activities that generate revenue, much of which is reinvested into tribal programs and services, such as infrastructure development, education and healthcare, among others."

"While these businesses are crucial to a tribe's ability to sustain itself and provide for its members, they aren't without their opponents, who far too often attempt to shut down tribally run businesses they disagree with by resorting to common tropes and previously debunked assertions," Davis continued. "On this point, too, the Fourth Circuit was clear, stating that an entity's right to tribal immunity cannot be determined by a court's evaluation of the respectability of the business."
Read more at Native American Financial Services Association


Automated Loan Underwriting: Trust Science Scoring Explained

Want better predictions on bad loans, higher originations, and accelerated lending cycles to impact your bottom line? Automated loan underwriting can help you achieve these goals.

In this post, I'll walk you through our Trust Science credit scoring mechanism using a sample customer loan performance with anonymized test data. The example will not only demonstrate Trust Science's precise machine learning credit scores but also show the benefits of using an automated underwriting system.

Let's assume our sample customer is called Cash Now Inc. and they facilitate short-term loans to consumers. They're interested in:
  • Increasing in originations
  • Decreasing in bad loans
  • Accelerating lending cycles



What's Next For Payments In The Next Decade: The Seven 2020 Trendlines

Making predictions is simply irresistible at this time of the year - this year in particular.

Sixteen days from today will mark not only the end of a year, but the end of a decade. Not just any decade, but one that has seen unprecedented levels of innovation touch nearly every industry segment and almost every corner of the world.

Predicting the future, though, is risky business - which may explain why many predictions are wishy-washy or soon proved wrong.

There's a famous Steve Jobs quote, though, that I think frames any conversation about the future in a more thoughtful way.

Jobs said that predicting the future can't be based simply on assumptions about what might happen. Instead, he said, looking ahead starts with looking back, then connecting the dots that define the present. Only then, he said, can one get clarity about how those dots can guide innovators about the future. Read more at PYMNTS.COM

Dreher Tomkies LLP

Banks should apply customer data more smartly to instill greater trust

Financial institutions are often strong on security, but they should consider boosting user experience by proving they know their customers' preferences.

The digital environment is anonymous - not by intention, but by its very nature. The last 25 years of transformation have been characterized by an increasing appetite to leverage the digital channel to optimize growth for business, with an increasing desire for security against an equally determined fraudster community. Without security and trust, all the efforts to leverage the channel for businesses or consumer efficiency become an exercise in futility.

Trust should not be taken for granted or assumed. Trust in business is often evident by how willing consumers are to share personal information for some perceived benefit - either security, convenience or personalization.
Read more at BANKING DIVE


IRS Privatization Program for Collecting Tax Debts Triples Profits in 2019

The new revenue is helping IRS hire, but critics warn program is targeting nation's most vulnerable taxpayers and lagging behind projections.

The federal government's program outsourcing the collection of longstanding tax debt to private companies tripled the profits it brought to the Internal Revenue Service this year, though it still fell short of the revenues lawmakers had anticipated.

The private debt collection program brought in $212 million from taxpayers in fiscal 2019, up from $82 million the previous year. The four companies participating in the program took commissions of $39 million, leaving-after other administrative costs-$148 million in net revenue to the IRS. That is up from $51 million in 2018.

Under the 2015 law that authorized the privatization program, one-quarter of that revenue goes directly into a fund for hiring IRS tax collectors. The agency hired 100 new employees using those funds so far and plans to hire 100 more next year.
Read more at GOVEXEC


CFPB challenger to SCOTUS: Let Congress fix bureau's constitutional flaw

(Reuters) - Both the Justice Department and a debt relief law firm challenging the constitutionality of the Consumer Financial Protection Bureau argued in briefs this week that the U.S. Supreme Court need not kill off the bureau because of criticisms that its unique structure violates separation of powers doctrine. But the two sides offered the justices quite different proposed remedies for the alleged constitutional flaw.

When the Supreme Court agreed in October to take up a petition filed by a debt restructuring law firm targeted by the CFPB, it specifically asked the law firm, Seila Law, and the government to address whether a provision insulating the CFPB's lone director from being removed at the will of the president can be severed from the rest of the statute creating the bureau if that provision is found to be unconstitutional.
Read more at REUTERS


U.S. Consumers Expected to Maintain Strong Credit Activity in 2020

TransUnion forecasts trends for auto, credit card, mortgage and unsecured personal loans

The U.S. consumer is expected to perform well once more in 2020, marking one of the longest periods of sustained positive credit activity in recent decades. TransUnion's (NYSE: TRU) 2020 consumer credit forecast projects serious delinquency rates will either decline or remain about the same for auto loans, credit cards, mortgages and unsecured personal loans.

Both balance and originations activity are also expected to grow for most key credit products. This strong activity is buoyed by low unemployment rates, continued growth in GDP and high consumer confidence. The U.S. consumer credit market has now grown every year since the Great Recession concluded in 2009, marking one of the longest economic expansions in U.S. history.
Read more at TRANSUNION


Six tips to consider when you're offered a retail store credit card

For shoppers looking to take advantage of holiday sales, many department stores and large retailers now offer their own credit cards. These cards typically provide additional discounts and frequent shopper rewards when used exclusively at their stores or with affiliate retailers. Many cards may also include special no-interest or deferred-interest offers on purchases made during a promotional period.

Retail store credit cards can seem like a harmless way to gain additional savings, especially as you're checking out at the register. If the card is not used wisely, however, signing up could have a financial impact that lasts well beyond the holidays

Before you start your holiday shopping this year, be prepared with the pros and cons so you can make an informed decision when the offers come.
Read more at CFPB


'Millennials are spending more on almost every vice,' survey finds

Workers on the lower end of the income spectrum, earning less than $30,000 a year, spend a greater portion of their earnings on financial vices like alcohol, tobacco, gambling, and lottery tickets, according to a new survey by

And millennials (ages 23-38) spend more money annually ($1,741 on average) on alcoholic beverages than Gen Xers and baby boomers. Only the so-called silent generation spends more on alcohol: $7,982 a year, on average. Millennials also spend more of their annual income on smoking and playing the lottery than Gen Xers and baby boomers, according to Bankrate.

"Millennials are spending more on almost every vice. In general it makes sense. Millennials are younger and have more time to go out. They're all about experiences, trying to enjoy their lives. And they have the ability to spend extra time in their lives with friends," says Dixon. "As people get older, they have more responsibilities, more children to take care of," she says.
Read more at YAHOO Finance


This Is What Racism Sounds Like in the Banking Industry

Jimmy Kennedy earned $13 million during his nine-year career as a player in the National Football League. He was the kind of person most banks would be happy to have as a client.

But when Kennedy tried to become a "private client" at JPMorgan Chase, an elite designation that would earn him travel discounts, exclusive event invitations and better deals on loans, he kept getting the runaround.

At first, he did not understand why. Then, last fall, he showed up at his local JPMorgan branch in Arizona, and an employee offered an explanation.

"You're bigger than the average person, period. And you're also an African American," the employee, Charles Belton, who is black, told Kennedy. "We're in Arizona. I don't have to tell you about what the demographics are in Arizona. They don't see people like you a lot." Kennedy recorded the conversation and shared it with The New York Times.
Read more at The New York Times


Alleging Digital Wallets Are Not Prepaid Products, PayPal Sues the CFPB Over Its Prepaid Rule

PayPal Holdings Inc. on Wednesday sued the Consumer Financial Protection Bureau alleging the regulatory agency's 8-month-old prepaid rule represents a "category error" and a violation of the First Amendment, and should be vacated by the court.

The lawsuit, filed in the U.S. District Court for the District of Columbia, charges that the 1,600-page regulation forces PayPal to make awkward and confusing disclosures to consumers by improperly including digital wallets under its definition of a general purpose reloadable (GPR) card. "[T]he Bureau's onerous compulsory disclosures require PayPal to prominently feature items that are irrelevant to the core use of its digital wallet offering, such as 'periodic,' 'per purchase,' 'customer service,' and 'inactivity' fees," PayPal's suit alleges.

By forcing speech in this way, PayPal further charges, the rule violates the U.S. Constitution's free-speech protections. "[T]he Prepaid Rule is invalid, and may not be enforced against PayPal, because it violates the First Amendment of the U.S. Constitution," the suit alleges.

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