October 10, 2019
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House leaders ask Supreme Court to reject Trump challenge to consumer bureau

The Democratic-led House of Representatives filed a brief late Monday night asking the Supreme Court to reject a challenge to the Consumer Financial Protection Bureau's (CFPB) constitutionality.

The House filed a brief Monday opposing a request for the Supreme Court to take up a case from the 9th Circuit Court of Appeals arguing that the structure of the CFPB, a powerful financial regulator, infringes on the president's executive authority.

The Court of Appeals ruled in favor of the agency against Seila Law, a law firm that refused to comply with a CFPB request for documents related to an enforcement action.

The appeals court upheld a district court's rejection of Seila's argument that claimed the CFPB was unconstitutional.

Seila has since asked the Supreme Court to take up the case, but the high court did not add it to the docket for its upcoming October term. Even so, the House seeks to kill the request after the Trump administration announced last month it would not defend the CFPB's structure before the Supreme Court. Read more at THE HILL


Study: Banks Will Replace 200,000 Workers With Robots by Next Decade

I recently visited the bank. To serve me, its customer, the institution that holds my meager savings (but would really prefer to sell me a mortgage) presented me with a choice. I could join a 15 person-deep line to see the lone teller on duty, or visit one of the branch's four ATMs.

This is just an anecdote and a quotidian one at that, but the banking industry has an obvious preference for machines over people. Big banks are also big employers: more than one million people work at the country's 10 biggest banks, according to Statista. The thing about banks is that they are there to deliver profits to their shareholders, and the people are expensive.

Big banks like Wells Fargo realize this, which is why that bank believes machines will eliminate the teller position and cut up to 200,000 other banking jobs over the next decade.

While workers across all job sectors may someday have to compete with machines for their daily bread-winning wage work-the dystopian near-future upon which ex-Silicon Valley executive Andrew Yang is basing his presidential campaign-no industry in America is spending more on ways to eliminate the human factor than banks. Using machines like ATMs to deal with the public rather than other human beings is an example of a "technological efficiency," one of the labor-saving shortcuts the banking industry is spending $150 billion a year to develop, as Bloomberg reported.
Read more at OBSERVER

CFSA Conference
CFSA Conference

To Congress: Semi-Annual Report Spring 2019

The Bureau of Consumer Financial Protection is pleased to present our Semi-Annual Report to Congress for the period beginning October 1, 2018 and ending March 31, 2019.

Message from the Director. I am pleased to present the Consumer Financial Protection Bureau's (Bureau) Semi-Annual Report to Congress for the period October 1, 2018 to March 31, 2019. On day one as Director last December, I launched a listening tour. Now more than eight months into this job, I have met with more than 750 consumer groups, consumers, state and local government officials, military personnel, academics, non-profits, faith leaders, financial institutions, and former and current Bureau officials. Ongoing engagement, and transparent, robust discussions help the Bureau carry out our mission We are using all of our tools-education, regulation, supervision, and enforcement-to protect consumers and prevent harm. That starts by empowering consumers to make informed decisions. That continues with smart regulation and fostering a culture of compliance through supervision. Read at CFPB

Dreher Tomkies LLP

The Evolution of the Bank on the Street Corner

I was born in Brooklyn in the early 90s. Upon learning how to walk, my first journeys were along 5th Avenue in Sunset Park. Gentrification seems to be planting its roots here now, but back then it was a sprawling ethnic community mostly comprised of immigrant families.

I remember knowing Anchor Savings Bank, the grey-columned edifice at the corner of 5th Ave and 54th Street, was a bank long before I understood the concept of a bank. It looked a lot like Gringotts, the fictional bank of choice of wizards everywhere, and still does. There's something about its architecture that screams "important money things happen here."

My mom had an account at Anchor. We'd walk there on random weekday afternoons (she didn't work at the time) to deposit cash my father brought home from his musical gigs over the weekend. She'd make note of the transaction by hand in a little booklet given to her by the bank. Sometimes she'd check on her valuables stored in the vaults downstairs. It was all very physical, and so very different from the world of digital banking we know today.


AI Lift is giving credit risk a new angle.

AI-powered analytics "bend the curve" to reveal the creditworthy customers you've been missing.

Lenders still rely on broad screening techniques to filter risky prospects. But what if you knew that indicators like First Payment Default (FPD) turn out to be no more reliable than a coin toss in predicting profitable accounts? What if you knew that changing demographics have left millions of worthy customers virtually invisible to traditional screening methods?

In today's credit marketplace, getting from Point A to Point B isn't always a straight line. Lenders have various business goals and risk tolerance. Markets vary by industry and risk pattern. And consumers are demonstrating spending and savings habits that are no longer consistent with previous generations. If you follow the traditional scores and credit risk rules, you're probably writing off perfectly good customers.

Stay ahead of the curve. And the competition.

Now imagine a system that shares your standard of credit risk, but has the power to expand your opportunities. Read more at ACCELITAS


NCUA finalizes rule authorizing new payday loan alternative option. by Ballard Spahr LLP

The National Credit Union Administration has published a final rule in the Federal Register that amend the NCUA's general lending rule to provide federal credit unions (FCU) with a second option for offering "payday alternative loans" (PALs). The final rule is effective December 2, 2019.

In 2010, the NCUA amended its general lending rule to allow FCUs to offer PALs as an alternative to other payday loans. For PALs currently allowed under the NCUA rule (PALs I), an FCU can charge an interest rate that is 1000 basis points above the general interest rate set by the NCUA for non-PALs loans, provided the FCU is making a closed-end loan that meets certain conditions. Such conditions include that the loan principal is not less than $200 or more than $1,000, the loan has a minimum term of one month and a maximum term of six months, the FCU does not make more than three PALs in any rolling six-month period to one borrower and not more than one PAL at a time to a borrower, and the FCU requires a minimum length of membership of at least one month.

In 2018, the NCUA issued a proposal to give FCUs the ability to offer PALs with more flexible terms and that would potentially be more profitable (PALs II). [link to blog] The PALs II authorized by the final rule do not replace PALs I but are an additional option for FCUs. PALs II incorporate many of the features of PALs I while making three changes:
Read more at JD SUPRA


How to Speed Up the Payment Process on Your Website

More and more people prefer online payment.

It's well-known that tech-savvy millennials and Gen-Xers prefer online shopping and cash-free (and now credit-card-free as well) payments.

However, according to the report by CNBC, the number of online payment admirers keeps growing, since more and more Baby Boomers get introduced to modern technology and its perks, including high security and versatility.

The general landscape of mobile payments shows rapid growth and development. Current stats on online payments show that:
  • The use of mobile payments and e-Wallet is expected to increase from 15% last year to 28% by 2022.
  • On the other hand, the use of cash payments is expected to decrease from 32% last year to 17% by 2022.
  • It is reported that global mobile transactions will be worth more than $4 trillion by 2023.


Verifying Account Identity in the Age of Real-Time Payments

Account validation has always been an important aspect of the payment lifecycle. The verification of an account leads to reduced rates of fraud, chargebacks, and other costly mistakes. Despite the benefits of verifying an account prior to approving a transaction, not all merchants have a protocol in place to do so. But soon merchants using the ACH network will be required to implement some form of account verification.

NACHA, the Electronic Payments Association overseeing the ACH network, changed its Operating Rules governing account ACH payments. According to the rules, originators of WEB debit entries are required to use a "commercially reasonable fraudulent transaction detection system" to screen for fraud. Beginning on March 19, 2021, the rule will change to explicitly require "account validation" to be part of fraud detection system.

Merchants who do not already have account validation capabilities built into their fraud detection systems should educate themselves about the rule change and explore ways to ensure compliance. The white paper "Securing Faster Payments: Modernizing Account Validation" published by GIACT is a great resource to start with. Read more at PAYMENTS JOURNAL


LeadSherpa is a Lead Acquisition Platform that provides software technology and workflow tools used to acquire, manage and optimize lead performance.

The platform provides a unique combination of lead management functionality and optimization technology used to drive lead performance. Lenders can utilize individual components or the full Lead Acquisition Platform to power their lead decisioning, waterfalls, analytics and optimization.

* Increase Conversion by buying more good leads and fewer bad ones based on real-time data.

* Reduce CFD/CPL through weeding out under-performing leads prior to underwriting / decisioning

* Optimize lead performance by automatically adjusting waterfall based on real-time data

It's time to automate the heavy lifting of lead buying and stop buying bad leads.
Let's discuss why it makes sense for your organization.
Read more at LEADSHERPA


US cracks down on Chinese artificial intelligence companies

The U.S. is blacklisting Chinese tech companies that it says have helped to subjugate ethnic minorities in China.

The Commerce Department announced Monday it will add 28 Chinese governmental and commercial organizations to its "entity list" "for engaging in or enabling activities contrary to the foreign policy interests of the United States."

That means U.S. companies must get government approval to sell technology to those Chinese companies.

The U.S. says the companies are using their state-of-the-art capabilities -- such as facial recognition and artificial intelligence technology -- to assist with a continuing pattern of improper surveillance, repression and arbitrary detention of Muslims in China.
Read more at FOX BUSINESS


Social Security phone scams are now a greater threat than IRS scams

Since October 2013, IRS phone scams have cost around 14,700 people more than $72 million in wire transfers, gift cards, and prepaid debit cards. The standard operating procedure: threatening immediate arrest by law enforcement unless the person pays - and quickly.

Historically, IRS scams have been the most common phone tactic used by scammers. But in the first six months of 2019, scammers are favoring a new method which involves getting victims' Social Security information.

According to FTC complaint data, as well as data from background check provider BeenVerified, Social Security scam reports have increased by 23 times in the first six months of the year.

This problem is new and growing. BeenVerified's data show that in 2018, Social Security scam calls made up only 1.5% of total spam call comments and IRS and tax scams made up 6.8%. But this year, Social Security shot up to 9.5% of complaints as IRS scams fell to 1.7%.
Read more at YAHOO FINANCE


Lower Interest Rates Are 'Large Challenge' for Regional Banks

U.S. interest rates are heading a lot lower, and investors don't seem to have come to terms with how bad that could be for regional banks, according to Citigroup .

The bank expects the Federal Reserve to cut rates four times between now and the end of next year. That would leave the Fed's target for short-term rates at between 0.75% and 1%, compared with 1.75% to 2% currently.

"Macro headwinds from lower rates present a large challenge for the regional banks," analyst Keith Horowitz said in a note to clients on Tuesday. The "recent move down in rates is not being fully priced in," to stocks of regional banks, he argued.

Falling rates are a problem because they mean assets that banks purchase will yield less, new borrowers will pay less interest, and current borrowers will have an incentive to refinance at a lower rate. Read more at BARRON'S


Credit Unions & Fintech Firms: A Great Partnership Opportunity. by Kristen Hoyman

Is Your Credit Union Keeping Up with Modern Technology?
Seventy-nine percent of credit union members would leave their credit union for a financial technology (fintech) firm for convenience and easy access to services.

If you are a credit union, this figure should scare you. But don't jump to any hasty conclusions just yet - you don't have to invest a billion dollars in new technology. You can compete with larger financial institutions even if you don't have the same access to funds.

You do have options. At REPAY, we empower credit unions to enhance the member experience. Our real-time payment technology solutions enable credit unions to provide faster, more streamlined digital service offerings.

Buy, Build, or Partner. Why build something brand new when you can partner or buy?
Read more at REPAY


What is the Average American Net Worth?

Net worth is often used as a measurement of individual, or household, wealth. This value can give you a holistic perspective of your financial situation. In fact, the average American net worth is $68,828, according to the U.S. Census Bureau's 2011 study on wealth and asset ownership. But how is this figure calculated? And how do you calculate your own net worth? Below, we take a closer look at the factors that distinguish your net worth from your fellow Americans.

Net worth is often used to contemplate the earnings of celebrities and high-profile individuals. But this measurement can be useful for anyone looking to manage their finances. If you know how much you're spending in comparison to how much you're earning, you'll be able to be more strategic with your money. But before we determine the average American net worth, we should first explore its definition and how it works.
Read more at SmartAsset


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