June 30, 2020
AFSPA Partner

AFSPA Partner


Americans Hold Huge Pile of Cash That's Key to Economic Recovery

(Bloomberg) -- Just like back in 2008, the Federal Reserve has pumped record amounts of cash into the financial system this year to stave off an economic collapse. But unlike in 2008, when that money mostly piled up in banks' accounts at the Fed, funds are pouring into Americans' checking accounts.

And that's a big distinction.

When kept at the Fed by banks as excess reserves, the money fails to give the jolt to the economy. But put it directly in people's pockets -- which occurred this time because Fed support was matched by government stimulus -- and the potential boost suddenly becomes meaningful.

The numbers are eye-popping. In the three months through May, the most liquid portion of the money supply, as measured by a gauge known as M1, surged 26%.
Read more at BLOOMBERG

Supreme Court rules consumer bureau director can be fired at will

The Supreme Court on Monday ruled that the structure of the Consumer Financial Protection Bureau (CFPB) is unconstitutional, striking down the protections that prevented the agency's director from being fired at will.

The court said in a 5-4 decision, which hands a victory to Republicans, that the firing protections are an unconstitutional restraint on the president's ability to oversee executive branch agencies.

"Such an agency lacks a foundation in historical practice and clashes with constitutional structure by concentrating power in a unilateral actor insulated from Presidential control," Chief Justice John Roberts wrote in the majority decision, joined by his conservative colleagues.
Read more at THE HILL

Dreher Tomkies LLP

NEBRASKA: Campaign to cap payday loan interest rates at 36% moves ahead in Nebraska even as federal measures remain stalled

Nebraska voters have moved closer toward getting the chance to decide whether or not to put limits on the amount of interest payday loans can charge, thanks to a local campaign that collected 120,000 signatures.

The Nebraskans for Responsible Lending coalition, which includes state chapters of the AARP and ACLU among its members, announced Thursday they had collected enough signed petitions to get an initiative that would cap the annual interest rate on payday loans at 36% onto the November ballot during the 2020 general election.
Read more at CNBC

More than a third of Americans have a credit score that's considered subprime-here's what that means

If you have less-than-stellar credit, you may be classified as someone who is "subprime," which means your credit score is lower than what's required to get the best, or "prime," interest rates.

More than one-third (34.8%) of Americans fall into the subprime credit category, according to a 2019 Experian study.

Lenders consider subprime borrowers to present some level of risk compared to prime borrowers, including a higher likelihood of carrying high balances and missing payments. As a result, subprime borrowers often receive unfavorable terms on credit cards, loans and other financial products that can add up to high costs over time. These costs make it harder to get out of debt and improve credit scores.

In fact, subprime borrowers have an average of 7.5 delinquent accounts (more than double the national average of 3.6) and many subprime accounts have overdue balances.
Read more at CNBC


Americans increase deposits as banks cut back on lending

U.S. banks are seeing deposits skyrocket and are pulling back on loans in the face of the coronavirus pandemic, newly released data from the Federal Reserve show.

Why it matters: It's the latest sign of trouble for the banking sector and the economy - a signal that consumers and businesses aren't starting new projects or focusing on growth, and are instead socking away cash.

By the numbers: The Fed's latest report on assets and liabilities of commercial banks shows that while banks have radically stepped up commercial and industrial loans, consumer loans have fallen precipitously. Read more at AXIOS

CFPB Issues Interpretive Rule on Method for Determining Underserved Areas

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) today issued an interpretive rule to provide guidance to creditors and other persons involved in the mortgage origination process about the way in which the Bureau determines which counties qualify as "underserved" for a given calendar year.

The Bureau's annual list of rural and underserved counties and areas is used in applying various provisions under Regulation Z, which implements the Truth in Lending Act. These provisions include the exemption from the requirement to establish an escrow account for a higher-priced mortgage loan and the ability to originate balloon-payment qualified mortgages and balloon-payment high cost mortgages. Read more at CFPB


5 cybersecurity considerations for getting back to work securely

As governments begin lifting emergency orders, company leaders are considering policies, technology and processes that will protect their workforces. Many of these factors rightly center around health and safety, but we must also acknowledge that all of us are still targets for cyberattacks. The new work-from-home world has poked countless holes in security perimeters, so organizations must prioritize cybersecurity preparation as well.

Going back to work securely
According to a recent (ISC)² study, 23% of cybersecurity leaders said their organization has experienced an increase in cyberattacks since employees started working from home due to COVID-19. While 50% said they believe they have been following best practices, the same security leaders also said they could be doing more to secure their remote workforces. This situation has proven that the bad guys don't go on vacation during a crisis.

Why America won't be going cashless anytime soon

There's a reason they say cash is king.

Commodity money-physical objects like coins and paper bills that hold value-has been used since ancient societies made the switch from bartering goods like salt and cattle. America started issuing its own currency, which evolved into the dollar we know today, in 1776, just before the country declared its independence.

Cash is still the second-most-used form of payment in America today after debit cards. But many advocates for "going cashless" believe that the paper dollar's time is nearly up.
Read more at FORTUNE


This major issue needs to be resolved before we can become a cashless society

COVID-19 has accelerated the use of digital payments.
But this move to contactless transactions has highlighted inequalities.
Black Americans are less likely to have bank accounts than other groups in the US, and the same is true for poor people in Europe, according to a report.

The coronavirus pandemic has underscored society's disparities in everything from health to employment and wealth. The crisis has also highlighted a lack of fairness in digital payments, which are quickly overtaking cash transactions. Central bank officials are looking at ways to make these transactions fairer and more inclusive.

Payment cards and digital wallets were catching on before the spread of Covid-19, but the shift has accelerated. Contactless cards and wallets got a marketing boost from the (overhyped) concern that cash could help spread the virus, and those worries prompted more stores to go cashless. Widespread lockdowns have given e-commerce a tailwind, another boon for digital transactions. Read more at World Economic Forum

Watchdog calls for fraud crackdown at small business lending program

The Government Accountability Office targeted the Small Business Administration in a sweeping new report Thursday.

Congress' watchdog arm called on the Trump administration on Thursday to step up efforts to police the government's massive small business rescue program after finding a significant risk of fraud and resistance to oversight at the agency running the bailout.

The Government Accountability Office targeted the Small Business Administration in a sweeping new report looking at how agencies have used $2.6 trillion in economic relief funds appropriated in response to the Covid-19 pandemic.

In the report, the GAO said the $670 billion Paycheck Protection Program, which offers small business loans that can be forgiven in exchange for maintaining payroll, had limited safeguards and insufficient guidance and oversight planning - all of which have increased the likelihood that borrowers may misuse or improperly receive loans.
Read more at POLITICO



Alternative Financial Service Providers Association

315 Tuscarora St., Lewiston, NY 14092