February 8, 2022
Paving the Payments Future
Consumer Financial Protection Bureau Launches Initiative to Save Americans Billions in Junk Fees

Agency Seeks Public Input on Fees on Bank Accounts, Credit Cards, and Other Financial Products

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) launched an initiative to save households billions of dollars a year by reducing exploitative junk fees charged by banks and financial companies. Today’s request is a chance for the public to share input that will help shape the agency’s rulemaking and guidance agenda, as well as its enforcement priorities in the coming months and years.

“Many financial institutions obscure the true price of their services by luring customers with enticing offers and then charging excessive junk fees,” said CFPB Director Rohit Chopra. “By promoting competition and ridding the market of illegal practices, we hope to save Americans billions.”

Companies across the U.S. economy are increasingly charging inflated and back-end fees to households and families. This new “fee economy” distorts our free market system by concealing the true price of products from the competitive process. For example, hotels and concert venues advertise rates, only to add “resort fees” and “service fees” after the fact. And fees purportedly charged to cover individual expenses, like paperwork processing, can often greatly exceed the actual cost of that service.

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U.S. Has More Credit Cards Than Ever as Issuance Surged in 2021

(Bloomberg) -- U.S. lenders issued more credit cards than ever last year, with a growing share of them going to consumers with lower credit scores

A record 196 million Americans held cards at the end of 2021, according to a report by credit-data agency TransUnion. In the third quarter, the latest for which detailed numbers are available, the number of new cards issued hit an all-time high of 20.1 million, it said. Some 9 million of them went to so-called non-prime borrowers -- those with poor or fair credit.

The surge shows how lenders seeking growth are eager to tap into consumers who’ve largely been able to meet their obligations even after pandemic stimulus programs ended last year. Credit-card issuers have been ramping up marketing campaigns and competing to lure customers. Interest rates charged on cards were at longtime highs last year relative to risk-free rates on Treasury debt.

CFPB Report Shows Criminal Justice Financial Ecosystem Exploits Families at Every Stage

Report Finds Products and Services Rife with Burdensome Fees and Lack of Choice

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today published a review of the financial issues facing people and families who come in contact with the criminal justice system. The report, “Justice-Involved Individuals and the Consumer Financial Marketplace,” describes an ecosystem rife with burdensome fees and lack of choice, and where families are increasingly being forced to shoulder the costs. It walks through the financial challenges families encounter at every stage of the criminal justice process, and the ways in which providers – often for-profit private companies – are leveraging a lack of consumer choice and their own market dominance to impose hefty fees at families’ expense.

“Many incarcerated individuals and their families pay exorbitant fees for basic financial services,” said CFPB Director Rohit Chopra. “Today’s report describes how private companies undermine the ability for individuals to successfully transition from incarceration.”

Small businesses are the engines of growth in our communities, driving wealth creation and upward financial mobility. When small businesses succeed, our economy is stronger, more equitable and more resilient.

There are 31.7 million small businesses in the U.S.*
Small businesses accounted for more than 99.9% of all U.S. business. They created 1.6 million new jobs and employed 60.6 million people, or 47.1% of the American workforce.*

18.3 percent, or about 1 million businesses are minority-owned

1.1 million or about 19.9 percent of businesses are woman-owned

337,934 or 5.9 percent of businesses are veteran-owned

U.S. banks see business lending driving 2022 growth

NEW YORK, Feb 3 (Reuters) - Demand for business loans is picking up in the United States as an economic recovery drives consumer spending and encourages companies to bulk up inventories, fueling optimism it will boost banks' 2022 growth.

However, the outlook for consumer spending is more mixed with demand for home loans, mortgage refinancing and auto loans declining while credit card spending rises.

As investment banking and trading bonanzas fizzle out, banks are relying on a revival of moribund loan demand to drive profits during 2022.

An increase in commercial and industrial (C&I) loans through the back end of 2021 and start of 2022 has generated optimism.

"People are rebuilding their inventories," Terrance Dolan, chief financial officer for U.S. Bancorp , said last month. "They're starting to make business investment ahead of the consumer spend and the economic growth that they see in 2022."

3 Challenges Facing Credit Unions

Talk to experts in the credit union (CU) space, and they’ll tell you most CUs are trailing their peers in the banking industry when it comes to innovations.

Catching up will mean CUs making substantial digital strides — from technological investments to complete overhauls of infrastructure — as well as an honest assessment of the digital experiences CUs offer.

And that’s not the only challenge facing credit unions. While CUs continue to attract more members, many of them are struggling to keep these members from seeking some banking products or services from other financial institutions.

Solving this issue will require CUs to pair personalization and customer service expertise with the latest digital offerings to win back members testing the waters with brands like Stripe, Square and other FinTech giants, Brian Scott, senior vice president and chief growth officer at PSCU, told PYMNTS in an interview.

Unbanked in Kansas City: Why many don't have a bank account, how groups are trying to change that

KANSAS CITY, Mo. — Going to the bank, checking one's account on a phone, cashing a check, transferring money to a different account — these all sound like everyday errands. But for 15% of households in Kansas City, this isn't the norm.

KSHB 41 News looked at what it's like to be unbanked and the disadvantages that come with it.

Tamika Davis prides herself on two things:

"A mother. Hard worker," Davis said. "That's pretty much it. I work and I be a mother.

How communities are investing American Rescue Plan funds. The Brookings Institution

In the 10 months since the passage of the $1.9 trillion American Rescue Plan Act (ARPA), cities and counties have been working to prioritize and execute investing of their portion of the act’s $350 billion in flexible State and Local Fiscal Recovery Fund (SLFRF) dollars. And as recent Treasury Department guidance made clear, local leaders have myriad options to use these resources to address the direct health and economic impacts of the COVID-19 pandemic, as well as to confront the underlying challenges that exacerbated the pandemic’s negative effects on vulnerable individuals, businesses, and communities. 

To illuminate the many options at communities’ disposal, we are introducing the Local Government ARPA Investment Tracker, a joint project of Brookings Metro, the National Association of Counties (NACo), and the National League of Cities (NLC). This tool adds to other important efforts to understand local ARPA implementation, including Results for America’s ARP Data and Evidence Dashboard, and the Treasury Department’s analysis of highlights from initial SLFRF reports.  

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