ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
July 15, 2021
The Gateway For Payroll Data
Are You Rich? How the Wealthy Are Defined

The vast majority of Americans do not meet commonly held definitions of what it means to be rich in the U.S.

Respondents to Schwab's 2021 Modern Wealth Survey said a net worth of $1.9 million qualifies a person as wealthy. The average net worth of U.S. households, however, is less than half of that.

But wealth is in the eye of the beholder -- a person's location, career, community, background and so many other factors can influence his or her perception of wealth. Those perceptions may be evolving as new generations enter adulthood and redefine success.

"The generations of today, Gen Y and Gen Z, they don't think about wealth and success the way boomers did, especially as it relates to finances," says Penny Phillips, president and co-founder of Journey Strategic Wealth in New Jersey and California. "It was, save my money, make some investments and when I'm 65, I'll try to take my first big vacation. Today, success is defined so much more by life experiences and impact and living for today."

Paving the Payments Future
Fed strikes balance between openness, caution toward nonbanks

The central bank issues guidance for fintechs seeking a charter, while its chair advocates for expanding the CRA to encompass all lenders.

UPDATE: July 13, 2021: Five banking trade groups sent two separate letters to the Federal Reserve on Monday seeking more details on how fintech charter recipients would be given access to the Fed system. Monday was the deadline by which the central bank sought comments on its May guidance.

“We urge the board to outline specific capital, liquidity, risk management and public reporting requirements necessary for master account access, and any additional parameters for eligible entities whose business models may present enhanced risks to the payment system or to the U.S. financial system, but are not subject to the same level of federal regulatory oversight,” the American Bankers Association (ABA), the Consumer Bankers Association (CBA) and the National Association of Federally-Insured Credit Unions (NAFCU) wrote in one letter.

Organizations that are not subject to such standards and oversight should not have access to the payments system because of the risks they pose, the groups said. Beyond that, “the banking framework is a starting point” in that “novel business models will need enhanced scrutiny and conditions of access” because the technologies on which they rely may pose different risks,” the groups said.

Child Tax Credit Update Portal: The IRS upgraded the Child Tax Credit Update Portal to enable families to update their bank account information so they can receive their monthly Child Tax Credit payment.

Tax relief for employer leave-based donation programs due to COVID-19 pandemic: The IRS extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.

State-by-state data on EIP3: The IRS and the Treasury Department released information detailing how many people in each state received the third round of Economic Impact Payments through early June.

“Dirty Dozen” tax scams for 2021: The IRS has begun its "Dirty Dozen" list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for nefarious schemes and scams.
Is the economy's big comeback starting to fade?

Are the economy’s post-pandemic fireworks already petering out?

Some top economists have lowered their blockbuster forecasts for this year amid lingering supply-chain bottlenecks, rising inflation and the rapid spreading of the latest COVID-19 variant. Toss in a couple of wild cards, too: uncertain prospects for more government stimulus, and a Federal Reserve that suddenly seems inclined to raise interest rates sooner than expected.

“Risks to the outlook have intensified,” Barclays economist Jonathan Millar says.

No need to panic. Economists still expect the U.S. to record its fastest growth since the early 1980s as Americans flush with an extra $2.5 trillion in savings -- from government stimulus checks and spending cutbacks during pandemic-induced lockdowns – splurge.

Payday Lending 2021 Legislation

Payday lending, or deferred presentment, involves single-payment, short-term loans based on personal checks held for future deposit or on electronic access to personal checking accounts. This document also tracks loan products designed to be alternatives to payday lending.

In the 2021 legislative session, 21 states have pending legislation regarding payday lending and payday lending alternatives.

Mississippi reenacted the licensing requirements for check cashers under the Mississippi check cashers act and removed the repealer. New Hampshire clarified and extended deadlines in consumer credit examinations applicable to certain entities licensed by the banking department. North Dakota amended and reenacted §§13-04.1-02.1, 13-05-02.3, and 13-08-12 of the North Dakota Century Code, relating to money broker exemptions, collection agency exemptions, and deferred presentment service transaction procedures

Rethinking overdraft

While many stakeholders would agree banks need to revamp the fee-based model, it remains to be seen whether change will come through legislation or the market.

Apair of congressional hearings on Capitol Hill in May served as a perfect setting for Democrats and Republicans to take shots at Wall Street’s most powerful bank CEOs.

While some Republicans focused their questioning around voting rights and "woke-ism," several Democrats took aim at the overdraft fee — a charge financial institutions levy on their customers when they overdraw their accounts. 

Sen. Elizabeth Warren, D-MA, wasted no time calling out Jamie Dimon, the CEO of the nation’s largest bank, JPMorgan Chase, as "the star of the overdraft show" for the $1.5 billion in overdraft fees the bank collected during the COVID-19 crisis. 

What does driving have to do with debt collection?

For some people, a traffic ticket is just a nuisance: pay the ticket and move on. But for many Americans, the inability to pay a ticket or fine, often for a minor infraction, can kick off a harmful chain of events. Starting with having their driver’s license suspended, drivers are then faced with a tough choice to stop driving — and lose access to work and necessities — or keep driving with a suspended license and risk more costly fees, arrest, and even jail time. 

That’s precisely the choice facing millions of people in the U.S. who’ve had their driving privileges suspended.  

Without driving, many people can’t get to work, take their children to school, or get an elderly parent to the doctor. So in most places, 75 percent of people continue driving after their license is suspended. If they get pulled over, they can be arrested and jailed. And even a few days in jail can lead to job loss and housing instability. Rather than solving the problem of unpaid tickets and fines, these enforcement practices make it even more difficult for people to earn the money they need to pay the penalties and fees to get their licenses back. 

CFPB Prioritizing Resources Against Racial Bias in Home Appraisals

As the Bureau’s Fair Lending Director, I am pleased to highlight that the CFPB has prioritized resources to focus on the role of racial bias in home appraisals, a growing topic of conversation within our communities.

Home ownership is a key building block of wealth. It is illegal to discriminate against someone because of race at any stage of the mortgage process, including property appraisals. When a home is improperly undervalued by an appraiser, that hurts the homeowner and the surrounding community. Undervaluation of homes based on race helps drive the racial wealth divide.

At the same time, overvaluation of homes can also put family wealth at risk and lead to higher rates of foreclosure. Ensuring that the appraisals used to make lending decisions are accurate and free from bias is essential if families of all races and income levels are to prosper and pursue successfully the American dream of homeownership.

Local Tax Limitations Can Hamper Fiscal Stability of Cities and Counties

3 ways states can help localities improve budget flexibility and resiliency

As the COVID-19 pandemic continues, local governments across the country face the formidable task of committing resources to rising health care needs while maintaining services their communities expect, including schools, parks, and libraries. At the same time, the pandemic has created significant economic uncertainty for local leaders, with many experiencing large revenue shortfalls that make balancing budgets all the more difficult.

When local governments struggle, states pay a price, too—because of lost jobs, reduced tax collections, diminished services, and, in extreme cases, costly state bailouts. To minimize harm during economic downturns and support localities’ financial stability over the long term, states could review any policies that restrict local budget flexibility— including the policy that is the focus of this issue brief: limitations that states impose on local taxation.

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
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