January 7, 2020

More borrowers are getting rejected for auto loans

Overall consumer debt continues to rise, but analysts see moderation ahead

U.S. consumers might have their pick of employment in today's robust job market, but that doesn't mean everyone is getting financed for a car.

A Federal Reserve Bank of New York survey of consumer credit released Monday showed a spike in the rate of auto-loan rejections, to 8.1% in October from 4.5% in the same month last year.

And for the full year, the average rate of car-loan rejections was 7.1%, up from 6.1% for 2018, even through applicants reported fewer denials in other parts of the record $14 trillion consumer debt market for the same 12-month period.

"The reported rejection rates for credit cards, mortgages and mortgage refinancing applications all declined compared to 2018," according to the Fed's snapshot of its annual survey, which covers consumer experiences when applying for auto loans, credit cards, credit-card balance increases, mortgages and mortgage refinancing.
Read more at MARKETWATCH


U.S. banking regulators unveil proposal to update low-income lending standards

WASHINGTON (Reuters) - Two U.S. banking regulators unveiled a proposed overhaul to community lending standards on Thursday, kicking off a contentious policy fight over the proper way to ensure banks are supporting lower-income borrowers where they do business.

The proposal would offer banks more specific examples of what sort of activity qualifies for credit under the Community Reinvestment Act and give them more flexibility in terms of where they engage in that type of lending.

Rules around the CRA, a 1977 law which requires regulators to assess how well banks are serving the needs of lower-income communities, were last updated in 1995.

The new proposal from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation is aimed in large part at accommodating how banks do business now.
Read more at REUTERS


A new anti-robocall law pummels spam callers with fines and pressures phone companies to stop robocalls in their tracks - but it won't end them just yet

President Trump on Monday signed the TRACED Act, which will increase fines for robocalls and add other measures that experts hope will decrease phone scams over time.

Americans receive billions of robocalls each year, and the technology to make robocalls has become cheaper and easier to access over recent years.

The new law also requires that phone companies create systems to block spam calls from phones without charging consumers extra.

Visit Business Insider's homepage for more stories.

A new anti-robocall law signed by President Trump on Monday could make spam calls a little less frequent in the near future, The Associated Press reported - but don't expect robocalls to disappear fully anytime soon.


Fed Says Banks Cite Regulations Among Reasons for Repo Spike

(Bloomberg) -- Many of the largest U.S. banks pointed to regulatory restrictions on their balance sheets and reduced risk appetite to explain why they stood on the sidelines during the mid-September spike in overnight funding rates instead of profiting from the excess demand for short-term lending, according to a Federal Reserve survey.

Three-fourths of primary dealers responding to the Fed's December Senior Credit Officer Opinion Survey reported "basically no change" in secured lending from Sept. 16-18, compared with the first week in September, despite a higher lending rate. Fed officials had expected banks with excess liquidity to jump in with extra lending.

After the disruption caused the Fed's benchmark overnight interest rate to stray outside its target range, the central bank intervened by injecting funds into the repo market, eventually returning overnight rates to more normal levels.

About three-fifths of those surveyed said they were "at least somewhat certain that the spike in overnight Treasury repo rates was driven by technical factors and thus would only be temporary." Read more at BLOOMBERG


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Read more at REPAY


Michigan lawmakers eye no term limit payday loans

(Nadia Ramlagan/Michigan News Service) Critics of a bill being considered by lawmakers that would allow payday lenders to offer longer term, higher dollar loans say the legislation puts the most vulnerable Michiganders at risk.

House Bill 5097 would allow payday lenders in Michigan to make loans of up to $2,500 with no limit on the length of the loan.

Sandra Pearson, president and CEO of Habitat for Humanity of Michigan, says families don't always know what they're getting into when they take out a payday loan.

"Our financial coaches and counselors and educators are more and more interacting with families who are coming to us wanting help," she relates. "And probably about 30% of those coming to us are involved in payday lending loans that they're trapped in right now, and we're working toward helping them get out of this cycle."
Read more at 95.3 MNC



CFPB Issues Financial Literacy Annual Report

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) issued its Financial Literacy Annual Report for fiscal year 2019.

The Bureau delivered its digital and print resources to more than 12 million consumers in fiscal year 2019. Promoting savings has also been a key part of the agency's work. The Bureau launched Start Small, Save Up, an initiative to encourage the public to save and be better prepared for emergencies or unplanned expenditures. As part of the initiative, the Bureau launched a Savings Boot Camp, a multi-week email course to guide people through the fundamentals of savings.

The Dodd-Frank Act requires the Bureau to report on its work to provide consumers with information to make informed decisions about financial products.

Read the REPORT


Timothy Li

The Top Ten Fintech Predictions for 2020 by Timothy Li

To my Fintech friends, this is my 4th annual "Top Ten" Fintech prediction. I started this tradition at Crowdfund Insider back in January 2017.

As we are saying goodbye to an incredible Fintech year of 2019, I see another seismic change in 2020 for our industry. One which could spell the end to Fintech as we know it.

Before we get there, let's take a look at how I did last year. Here's the link to my 2019 predictions and let's review them one by one:

10. Consumer Lending Market Correction (Welp). I was wrong about this one. President Trump's aggressive stands against the Federal Reserve paid off. The interest rates are still at an all-time low and employment numbers are strong. Despite trade wards with the rest of the world, the U.S. consumer market remains strong. People are still borrowing at an incredible speed. According to the Feds, total consumer revolving credit is over a trillion dollars, growing at a 5%+ annual rate.

9. The Rise of Debt Relief Companies (Welp). It's just a matter of time when that trillion dollars will come home and roost. During a downturn, bankruptcy and foreclosures are typically the solutions for people that couldn't get out of debt. There aren't too many Fintechs thinking about this because most of them (and their founders) haven't seen an economic cycle played out yet. Helping people get out of debt might be a thing in the near future, but we haven't seen a lot of development this year on the Fintech front to get people ready for the next economic cycle.


Rising credit card debt boosts bank profits

Consumers are carrying near-record levels of credit card debt and the banking industry is a big beneficiary, according to the Washington Post.

Card companies have increased interest rates and fees as credit balances rise.

Industry experts say that will cost consumers who carry balances and don't pay off their bills every month.

Credit card sales were up 10 percent at JPMorgan Chase and 5 percent at Citigroup in the third quarter.

Profit at card issuers are rising. Visa's earnings rose 17 percent this fiscal year and 11 percent at MasterCard in the third quarter, according to the Post.

Consumer are holding their own in this strong economic environment. While balances have gone up, delinquency rates remain relatively low. About 6 percent of consumers were late on a payment this year compared with 15 percent in 2009, according to WalletHub.
Read more at FOX BUSINESS



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Dreher Tomkies LLP is a law firm located in Columbus, Ohio providing services to financial institutions nationwide.

We concentrate in the areas of banking and financial services law. The Firm's practice encompasses all aspects of financial services provided by creditors to consumers and business entities. The Firm's clients range from Fortune 500 companies and foreign-owned enterprises to small businesses, including diversified companies, banks and bank holding companies, investment bankers, investment funds, finance companies, credit and charge card issuers, mortgage bankers, retailers, debt purchasers, manufacturers, industry and trade associations, and coalition and issue groups.

Our attorneys routinely advise clients on consumer lending, home equity lending, first and second mortgage lending, private label and general purpose credit card lending, student lending, retail sales financing, payday lending, title lending, RAL lending, agricultural lending, wholesale financing, inventory financing, business revolving credit and charge programs, factoring, health care and medical financing, deposit taking, home banking, annuity and insurance sales, GAP programs, reinsurance, debt cancellation and suspension, debt collection compliance, money transmitting, state and federal regulatory compliance, and the licensing and chartering of institutions.

Read more at Dreher Tomkies LLP


Tech giants still need to convince wary Americans to share health data

Google (GOOG, GOOGL) may have suffered a public backlash, and invited federal scrutiny, after reports it had access to identifiable patient data, but how the incident affects the company's future trustworthiness remains to be seen.

The outcry came last month after reports Google was working with one of the country's largest health systems, Ascension, to use data to help predict better diagnoses and care strategies.

It signaled the first known time a big tech company had access to patient information that was not de-identified - a common practice in the health tech world. But big tech companies like Apple (AAPL), Microsoft (MSFT) and others have been working with providers around the country through cloud services, which provides a similar level of patient data access.

This signals a growth of big tech into the health tech space. But a recent survey shows that the vast majority of consumers are wary of sharing their health data with tech giants as they face increasing fallout over data breaches and other privacy concerns.
Read more at YAHOO Business


Expert explains why Americans need to 'get away' from retiring at age 65

The traditional benchmark age to draw retirement money is getting revamped, even as many Americans in their late 60s and 70s are continuing to work full-time or part-time.

On Friday, President Trump signed The Secure Act, a bill which aims to remove hurdles for Americans looking to save for retirement. It raises the age that savers must begin drawing on retirement funds to 72.

Its other features include helping small businesses band together to offer pooled retirement plans, and opening the door for long-term, part-time workers to become eligible for retirement benefits.

"It recognizes that people are working longer and living longer, and so it extends the required minimum distribution age" from 70.5 to 72, Skip Schweiss, managing director of retirement plan services & advisor advocacy at TD Ameritrade Institutional, told Yahoo Finance.
Read more at YAHOO Finance

Dreher Tomkies LLP

What Is the Size of the Average Retirement Nest Egg?

See how you compare-and whether you have enough saved for retirement.

A 2019 analysis of more than 30 million retirement accounts by Fidelity Investments found that the average balance in corporate-sponsored 401(k) plans at the end of 2018 was $95,600. For traditional, Roth, and rollover IRAs, the figure was $98,400. And for 403(b)s and other defined-contribution retirement plans in the non-profit sector, it was $78,700. Those numbers were down about 7.5% to 8% on average from the same quarter of the previous year, due largely to a downturn in the stock markets in late 2018.

American workers had an average of $95,600 in their 401(k) plans at the end of 2018, according to one major study.
But 401(k) and other retirement account balances vary widely by the age of the worker.
Other major factors that influence retirement savings include household income and education.

Read more at Investopedia


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