August 8, 2019

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Banks could get fined for cyber breaches, top regulator says

New York (CNN Business)Cybersecurity is the biggest threat facing America's banks, FDIC Chairman Jelena McWilliams told CNN Business.

"It's something we take very seriously," McWilliams said during an interview this week.

Capital One (COF), which is not regulated by the FDIC, recently revealed a massive cyber breach that exposed sensitive information on more than 100 million customers.

McWilliams, a Trump-appointed regulator who helps oversee about 4,000 mostly smaller lenders, said the FDIC could fine a bank that suffers a major breach after failing to fix weak cyber defenses flagged by the agency.

"We could certainly have an enforcement action," she said at the KBW Community Bank Investors Conference.

Beyond a fine, McWilliams said shoddy cyber defenses could force regulators to downgrade their ratings on bank management teams.

Last month, Facebook (FB) was hit with an unprecedented $5 billion fine by the Federal Trade Commission over how the company lost control of massive amounts of personal data. It was the largest fine in FTC history. Read more at CNN BUSINESS

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CFPB Extends Comment Period for Debt Collection Proposal

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) announced today that it is extending the comment period on its Notice of Proposed Rulemaking (NPRM) implementing the Fair Debt Collection Practices Act (FDCPA). To facilitate the ability of commenters to consider the issues raised in the NPRM, gather data, and prepare their responses, the comment period will be extended by 30 days to September 18, 2019.

The proposal would provide consumers with clear protections against harassment by debt collectors and straightforward options to address or dispute debts. Among other things, the NPRM would set clear, bright-line limits on the number of calls debt collectors may place to reach consumers on a weekly basis; apply prohibitions on harassment or abuse, false or misleading representations, and unfair practices in debt collection; and clarify requirements for certain consumer-facing debt collection disclosures. Read more at CFPB

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Fed to launch real-time payments system in 2023

The Federal Reserve announced Monday it would create and implement a system that would allow consumers and businesses to send and receive money instantaneously by 2023.

The system, called the FedNow Service, would allow any U.S. bank to immediately complete debits, virtual transfers and checks. Those transactions can take up to three days to finalize with current technology, posing challenges for households with tight budgets and limited financial flexibility.

"Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community," said Fed Governor Lael Brainard in a speech announcing the decision.
"FedNow will allow faster payments to reach banks of all sizes and their customers across the country."

The FedNow system will operate nonstop and is set to launch in four years. The Fed's board of governors approved the proposal on Aug. 2 in a 4-1 vote, with only Randal Quarles, the Fed vice chair for supervision, opposing the plan.
Read more at THE HILL


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New York state regulator leads probe into payroll advance industry

Aug 6 (Reuters) - The payroll advance industry is under investigation by New York's financial regulator and other states over whether its companies are charging usurious interest rates and engaging in potential violations of payday lending laws, the regulator said on Tuesday.

New York, joined by financial regulators from ten states and Puerto Rico, sent letters to payroll advance companies requesting information, the New York Department of Financial Services (NYDFS) said.

Payroll advances are a type of loan that give consumers access to wages they have earned ahead of receiving their paychecks. Some of the companies, which operate through websites and apps, appear to charge membership fees, "tips," and other types of fees that add up to the equivalent of usurious and other illegal interest rates, the regulator said.
Read more at REUTERS

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The fall of payday loans in Israel

The payday loan has seen something of a dip in recent times. It doesn't quite have the same popularity that used to, especially in Israel.

The payday loan has seen something of a dip in recent times. It doesn't quite have the same popularity that used to, especially in Israel. Read on to find out why this is the case, and what potentially lead to the collapse of the payday loan industry.

The Dangers of Payday Loans
In spite of the fact that they seem speedy and convenient, taking out a Payday loan can be dangerous due to the extortionate interest rates, which could see you paying back double what you borrow. Sneaky terms and conditions mean that it can be easy for borrowers in a panic to be caught out. What is more, when you take out a payday loan, it will show up on your credit records and could make it more difficult to borrow in the future. It could also make it more difficult for you to purchase a home if you wish to do so in the future.

Those in financial difficulties may be tempted to take out more loans to cover previous loans that they cannot service. Do not ever do so. There is free advice available to help you get out of a debt crisis, and there may be things that you can do to save money and reduce outgoings, or increase income, in order to make ends meet. Do not panic. No matter how bad things seem, there is always a solution... that solution is very unlikely to involve a Payday lender.


Why You Should Use a Credit Report to Screen Your Employees

A credit report may seem like a controversial way to screen both current and potential employees.
However, there are significant reasons why a B2B employer should look beyond the drawbacks to the inherent advantages of this tool. A background check can't tell you the true character of the person standing in front of you during an interview, but it can tell you something about how they made important decisions in the past.

Microbilt has been helping employers narrow down their search for years by providing updated and accurate information. Learn more about why employers use a credit check as part of a comprehensive background screening, and how current and future laws may affect this process.

Liability and Risks
Hiring the wrong person for a position is an expensive mistake that can backfire in more ways than one. Apart from the financial resources and time invested in a new hire, employers also have to be on the lookout for any wrongdoing that may occur under their noses. In 2016, the average loss for a company impacted by theft was $1.13 million.

From financial mismanagement to outright theft, it can be difficult to predict how your employees will act over time. If they feel slighted by the company or see an opportunity, it may not take much to push them over the edge. It's all too easy for an employee to take advantage of their position - especially if they have full access to the company's financial accounts.

Check cashing companies provide a needed service

The Maryland Association of Financial Service Centers, the state trade association for businesses offering check cashing services, supports financial education efforts that are factual and unbiased. While we commend the CASH Campaign for the many good services they provide to underserved citizens of Maryland, their goal to shift people from check cashing and payday lenders is biased in its very conception

I am only addressing check cashing services as there are no brick and mortar payday lenders in Maryland and Maryland check cashers do not offer loans. The article cites a $40,000 lifetime cost to the unbanked or underbanked. I have no idea where this figure comes from, but like so much information about check cashing, it is inaccurate. Using real numbers based on a full-time worker making $15 per hour who buys three money orders and pays three bills electronically each month, the fees would be about $435 per year. This type of factual information is what should be provided to someone seeking financial education.


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FDIC releases annual banking risk publication

The Federal Deposit Insurance Corporation (FDIC) has published its 2019 Risk Review, which officials said highlights emerging risks and exposures in the banking system.

"The FDIC is committed to transparency and accountability, and the publication of our 2019 Risk Review provides an opportunity for us to communicate data and our analysis on key risks facing the banking system," FDIC Chairman Jelena McWilliams said.

Financial institutions, policymakers, analysts and regulators will find the publication of particular interest, the FDIC said, adding the most recent edition of Risk Review provides a summary of conditions in the U.S. economy, financial markets, and banking industry while also presenting critical risks to banks in two broad categories: credit risk and market risk.

The credit risk areas discussed in the document are agriculture, commercial real estate, energy, housing, leveraged lending and corporate debt and nonbank lending while the market risk areas discussed are interest rate risk and deposit competition and liquidity.
Read more at Financial Regulation News

Alt Data is the key to compete effectively

Walmart may tap unbanked market with cryptocurrency plan

Walmart is looking to increase its profit by cutting out the transaction fees it pays to the likes of Visa and Mastercard when consumers use credit or debit cards.

But the retail giant also is trying to keep pace with competitors such as Amazon and Target, which offer delivery services. Walmart began testing its Delivery Unlimited service last year in select markets such as Houston and Miami.

Among the touted benefits of cryptocurrency, Walmart looks to use artificial intelligence to "[help] the customer to buy an amount according to his budget, values, affinities and preferences," according to the patent.

However, the retailer appears to be nowhere close to launching the currency. "We don't have any plans for this patent at this time," Walmart spokesman Kory Lundberg told Bloomberg in an email.

This wouldn't be Walmart's first entry into the banking marketplace. The chain applied to operate an industrial bank in Utah in 2005, but regulators rejected it in 2007. The retailer offers banking services in Canada and Mexico. Read more at MARKETING DIVE

Dreher Tomkies LLP
Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.
Opportunity for organizations that serve economically vulnerable populations to receive support

For the past five years, the Bureau's Office of Community Affairs has supported organizations committed to helping people manage their money and work toward their goals using a suite of financial empowerment tools called Your Money, Your Goals. If your organization serves economically vulnerable populations and you are interested in gaining more intensive support, such as training and technical assistance for your consumer financial empowerment efforts, you can apply for the Your Money, Your Goals 2020 cohort.

The Office of Community Affairs-which focuses on economically vulnerable consumers-is looking for approximately 40 organizations from across the country that are interested in using the Your Money, Your Goals toolkit, issue-focused booklets, and companion guides to help build the financial well-being of the people they serve.

The Office of Community Affairs is interested in working with organizations that serve economically vulnerable populations to equip frontline staff and volunteers to introduce financial capability topics in their meetings with the people they serve. These organizations may include:
Read more at CFPB

Portfolio Acquisitions & Sales

National Debt Holdings works with our creditor partners to acquire, manage, and sell receivables portfolios. We offer comprehensive and data-driven solutions that enable creditors to create immediate cash for their accounts receivable at all stages of the account lifecycle from performing through charge-off.

Portfolio Review and Valuation
National Debt Holdings offers creditors a no-obligation portfolio review and valuation to help them understand their options for debt sales and portfolio servicing. Our team will review accounts, stratify portfolio data, review documents, and conduct due diligence on the portfolio to compile a report that outlines the suggested sale or recovery strategy and provides expectations for liquidating the accounts. Our portfolio review provides creditors with context to their discussions about selling portfolios or placing accounts with agencies and law firms for servicing.

Acquiring Receivables Portfolios
When creditors need to strengthen their financial position or create immediate cash flow, National Debt Holdings offers customized solutions that create a faster cash cycle. Our team quickly reviews portfolios, conducts due diligence on sellers, and creates cash for our creditor partners, all within just a few days. Through our proprietary tools and processes, we make the review and transaction execution process easy and straightforward.

An update on credit access and the Bureau's first No-Action Letter

For some consumers, the use of unconventional sources of information, or "alternative data," to evaluate creditworthiness may be a way to increase access to credit or decrease the cost of credit. Alternative data includes information not typically found in core credit files of nationwide consumer reporting agencies and may indicate a likelihood of meeting obligations on time that a traditional credit history may not reflect.

In addition to the use of alternative data, increased computing power and the expanded use of machine learning can potentially identify relationships not otherwise discoverable through methods that have been traditionally used in credit scoring. As a result of these innovations, some consumers who now cannot obtain favorably priced credit may see increased credit access or lower borrowing costs. Read more at CFPB

Accelerate Payments & Lower Processing Costs

Why Apple's new credit card is groundbreaking.

The Apple Card isn't your typical credit card - Here are its best features

Apple (AAPL) is reinventing itself so it no longer depends solely on the iPhone, and the latest example of this change comes via the tech giant's new Apple Card credit card. Available to select customers starting Tuesday, Aug. 6, and rolling out to consumers nationwide later this month, the Goldman Sachs-backed Apple Card is the company's first foray into the credit card industry.

It's an interesting move on Apple's part, and it's bringing its consumer tech knowledge to bear in crafting the card from sign-up to payment. These are the best features of the Apple Card.

1. Sign up is incredibly easy
Apple has made signing up for the Apple Card as painless as possible. To get a card, you open the Apple Wallet app on your iPhone, tap on the Apple Card sign-up tab, enter your information and you're set. The process takes about a minute, and Apple doesn't collect the information you provide. Instead, Goldman Sachs uses the information to perform a real-time credit check to ensure you qualify for the card. Read more at YAHOO FINANCE

Redefining how financial service businesses measure risk and process payments.

States Kick Off 2019 With Widespread Economic Growth

States' economies have improved at different paces since the Great Recession, as reflected by the combined personal income of all residents. First-place North Dakota has grown more than four times faster than last-place Connecticut. In a sign of underlying economic strength, total personal income rose in all 50 states in early 2019 for the second straight quarter.

The national recovery has been long-running, but economic growth, reflected in the combined personal income of all residents, is still off its historic pace. Through the first quarter of 2019, total U.S. personal income rose by the equivalent of 1.9 percent a year since the recession began, compared with the equivalent of 2.6 percent over the past 30 years, after accounting for inflation. The rates represent the constant pace at which inflation-adjusted state personal income would need to grow each year to reach the most recent level and are one way of tracking a state's economic trends.

After tumbling nationwide except in West Virginia during the depths of the recession, personal income totals have recovered in all states but have grown at far different rates.
Read more at Pew Charitable Trusts

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The richer the area, the better the small business service from banks, report says

The Woodstock Institute finds that entrepreneurs struggle for capital in lower-income parts of the Chicago area.

Small businesses and startups in lower-income parts of the Chicago area have a harder time getting bank loans than counterparts in wealthier regions and often resort to online financing with interest rates so high that it threatens their solvency, said a report issued Tuesday by the nonprofit Woodstock Institute.

The report found that despite an overall increase in bank lending in the Chicago area, small businesses in low-income census tracts or those with a large population of minorities still don't get a proportionate share of loans less than $100,000.

For example, the report found that 24.5 percent of all businesses in the region are in low- to moderate-income census tracts, yet they received only 19.7 percent of the sub-$100,000 loans from 2015 to 2017, a disparity of 4.8 percentage points.

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Bill addresses internet sales tax collection

Sens. Ron Wyden (D-OR) and Jeff Merkley (D-OR) introduced legislation last week banning retroactive taxation, preventing states from imposing sales tax collection responsibilities on sellers for any sale occurring before the Wayfair decision.

The Online Sales Simplicity and Small Business Relief Act stems from last year's Supreme Court ruling in South Dakota v. Wayfair, Inc., which overturned precedent, allowing states to collect sales tax from out-of-state businesses.

"Small businesses in Oregon have been tied up in a sea of red tape since the Supreme Court's decision in Wayfair allowed other states to require them to collect sales tax on online purchases," Wyden, ranking Democrat on the Senate Finance Committee, said. "Our bill would prevent small businesses from having to comply with onerous requirements, allowing them to focus on growing and hiring."

Another feature of the bill is the creation of an exemption for small businesses that see less than $10 million a year in total sales and establish an orderly phase-in of compliance obligations, preventing states from imposing remote sales tax collection duties before Jan. 1, 2021.
Read more at Financial Regulation News

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