AFSPA's 'Consumer Financial Education Newsletter'

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New Overdraft Rule Could Impact Earnings — Unless It Gets Spiked

A drastically low cap on big-bank overdraft charges — with two alternative options that may or may not matter — could eat into profits. But that's assuming the overdraft rule doesn't go the same way as the credit card late fee rule seems to be headed.

How much pain will the Consumer Financial Protection Bureau’s final rule on overdraft fees have on bigger banks? Keefe, Bruyette & Woods analysts have calculated that it will pull down earnings per share by 2.7% overall in calendar 2026, the first full year that the rule would be effective.

The securities firm considers this “relatively modest exposure,” per a report issued Dec. 12, when the CFPB published its rule. However, the figure is a median. Among the 13 institutions analyzed, five institutions will be hit more severely:

Read more at The Financial Brand

How Consumers Value – and Use – Branches is Shifting in Subtle Ways

Consumer preferences about which banking activities they want to do online and which they prefer to conduct in person are bifurcating. That much many banks already understand. But institutions that focus solely on the operational issue of which services to offer where may be missing an important emotional piece of the puzzle: Even consumers who prefer online also want the security and reassurance provided by a nearby branch – even if they never use it.

Bank leaders have traditionally relied on building relationships with their clients through face-to-face transactions and advice in order to build trust and ultimately more business. New research finds that this is a trend that perhaps is coming to an end with a push to digital options on service, and a preference for branches, but only in certain situations.

Read more at The Financial Brand

Have a tax law question?

Our #IRS Interactive Tax Assistant has answers.

Watch this short video to learn more:

https://youtu.be/y6HkaBkdKdU

Highlights from National Tax Security Awareness Week.

The IRS and its Security Summit partners recently held the ninth annual

National Tax Security Awareness Week, an annual event that emphasizes the importance of protecting sensitive financial information from identity theft and tax scams, especially as the holidays and the 2025 tax season approach.

Jose L. Santiago

Public Affairs Specialist

Tax Outreach, Partnership and Education

Email: jose.l.santiago@irs.gov

Which places would be most affected by the Trump administration’s immigrant deportation proposals? BROOKINGS

With President-elect Donald Trump set to take office next month for a second, nonconsecutive term, attention is turning to his policy agenda and its possible implications for individuals and communities. 

While the lack of a formal GOP platform during the campaign has rendered many aspects of that agenda ambiguous, Trump and his advisers have made clear many of the immigration policy actions they would seek to take in office. These include, among several others: conducting mass deportation of millions of unauthorized immigrants; revoking temporary legal status for hundreds of thousands of immigrants from countries suffering from violence and natural disasters; and suspending protections for students and workers whose parents brought them to the U.S. unlawfully when they were children. 

In a recent report, I argued that these actions and others would have disproportionate impacts on U.S. cities and urban areas, given that most foreign-born individuals live and work in these places. This report extends and deepens that analysis, drawing on other recent research to examine the profiles and locations of specific immigrant groups that Trump’s policy proposals may affect in the near term. 

Read more at The Brookings Institution

CFPB Files Lawsuit to Stop Illegal Kickback Scheme to Steer Borrowers to Rocket Mortgage: CFPB

Rocket Homes provided kickbacks to real estate brokers and agents to steer prospective borrowers to Rocket Mortgage

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) sued Rocket Homes to stop them from providing incentives to real estate brokers and agents in exchange for steering homebuyers to Rocket Mortgage, LLC for loans. The CFPB also sued Jason Mitchell, his real estate brokerage firm, JMG Holding Partners LLC, which does business as The Jason Mitchell Group, and the individual real estate brokerage companies in the 41 states and the District of Columbia where it does business (The Mitchell Group), for their role in the unlawful scheme. Rocket Homes pressured real estate brokers and agents not to share valuable information with their clients concerning products not offered by Rocket Mortgage, such as the availability of down payment assistance programs, which often save homebuyers thousands of dollars. The CFPB is suing Rocket Homes, The Mitchell Group, and Jason Mitchell to stop the kickback scheme, provide consumer redress, and obtain a civil penalty which will be deposited into the CFPB’s victims relief fund.

“Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal,” said CFPB Director Rohit Chopra. “At a time when homeownership feels out of reach for so many, companies should not illegally block competition in ways that drive up the cost of housing.”

Read more at the Consumer Financial Protection Bureau (CFPB)

CFPB Targets Large Digital Payment Apps, But Will It Stick?

President Trump and the Consumer Financial Protection Bureau have a complicated history. The bureau's recent move to supervise and examine the largest big tech and fintech payments services may irritate the innovation-friendly administration, but it may also see some appeal to more oversight of digital players.

Subjecting the largest nonbank companies that provide digital funds transfer and payment wallets to federal examinations similar to banks: At first blush, the idea caters to the banking industry’s longstanding goal of a level regulatory playing field with big tech and fintech competitors. So the Consumer Financial Protection Bureau’s issuing such a rule after almost a year’s deliberation might seem cause for celebration amid banks and credit unions.

As finalized, the CFPB’s rule calls for supervision and examination of digital payments providers that process more than 50 million transactions annually, with some exceptions. The final rule’s threshold was increased by a factor of 10 from the level originally proposed, focusing the coverage on a relative handful of large players (including Apple, Google and PayPal). Notably, while crypto payment services were included in the original proposal, the CFPB backed them out of the rule entirely, for future consideration. The Trump administration’s strong interest in the crypto fraternity can’t be ignored here.

Read more at The Financial Brand

Why Banks Should Anticipate a Return of the ‘Roaring ’20s’

No one can predict when or how severe the next U.S. economic recession will be, but current economic factors do not indicate drastic changes in the behavior of consumers and businesses. Favorable factors could spur the 2020s to an economic burst similar to the 1920s.

It may be that decades from now, when people mention “the roaring 20s,” they won’t necessarily be talking about the 1920s. Data suggests the U.S. economy may soon merit that title. For banking executives, it means they should begin planning now for a seemingly unlikely economic path.

Inflation, employment, demographics, and credit capacity suggest strong economic growth for the United States. Yet, the Federal Funds rate projections from the nineteen Federal Open Market Committee members (as of September 2024) showed rates declining in 2025 relative to 2024 and continuing downward during the following years. Executives should zoom out from today’s news from the FOMC and instead consider the broader economic data.

Read more at The Financial Brand

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Four Rising Regulatory Expectations Bankers Should Anticipate

If banking executives could count on anything after a year like 2023, it's more regulatory scrutiny for interest rate and liquidity risks. How will that scrutiny translate into questions during an exam? Executives should prepare for these four new expectations.

Interest rate and liquidity risks have been on the minds of most banking executives for more than a year. As elevated rates slow the U.S. economy in 2024, regulators are upping their interest, saying they will “heavily scrutinize” interest rate and liquidity risks in upcoming exams.

Todd Harper, chairman of the National Credit Union Administration (NCUA), for example, informed Congress in November 2023 that credit unions have shown “signs of financial strain” on their balance sheets. Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation (FDIC), observed the same when he said that banks “continue to face significant downside risks from the effects of inflation, rising market interest rates, and geopolitical uncertainty.”

Read more at The Financial Brand

Homeownership boom widens the wealth gap, leaving renters in financial instability

A Profile on the Wealth and Financial Well-Being of Renter Households highlights that renters today have a median net worth of just $10,400 – a mere fraction of homeowners’ nearly $400,000 median net worth. According to the Aspen Institute Financial Security Program’s report, “From Rent to Riches,” the disparity is not solely due to home equity. While home equity makes up $200,000 of homeowners’ median net worth, the remainder comes from other assets that renters typically do not own, such as stocks, bonds, retirement accounts, and business equity. The report notes that 78 percent of homeowners own a potentially appreciating asset beyond their primary residence, compared to only 48 percent of renters.

Just 39 percent of renter households have income exceeding their monthly expenses, compared to 54 percent of homeowners. The limited cash flow makes it difficult for renters to save, pay off debt, and invest in assets that can build wealth.

Renters saw a 43 percent increase in net worth between 2019 and 2022, outpacing the 34 percent increase for homeowners. Pandemic-era support measures helped to spur the growth, allowing many renters to reduce debt and invest some of their earnings, researchers said.

Read more at Louisiana Weekly

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