ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
May 19, 2022
Paving the Payments Future
Personal Income Rose in 2021, But Growth Varied by State

Total personal income climbed in every state during the second year of the COVID-19 pandemic as the economy continued to recover, with Idaho and South Dakota experiencing the strongest gains. Americans’ earnings from work, which account for the bulk of personal income, recorded the sharpest annual increase in over two decades. Federal aid and other public assistance also added to states’ gains, surpassing 2020’s elevated levels.

Total personal income rose across states in 2021 as the economy largely followed an upward trajectory after severe losses early in the pandemic. Nationally, the sum of personal income from all sources was up 3.1% from 2020, after accounting for inflation.

Earnings, which include wages from work plus extra compensation such as employer-sponsored health benefits, and business profits, drove much of the growth after a stagnant 2020. Nationally, combined earnings jumped an inflation-adjusted 4.6%—the steepest annual growth in more than two decades—as wages increased and employment approached pre-pandemic levels by the end of the year. In Nevada and New Hampshire, annual earnings growth topped 7%, while only Alaska sustained a decline.

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Publication 5640
By a wide margin, Americans view inflation as the top problem facing the country today

The public views inflation as the top problem facing the United States – and no other concern comes close.

Seven-in-ten Americans view inflation as a very big problem for the country, followed by the affordability of health care (55%) and violent crime (54%).

About half say gun violence and the federal budget deficit are very big problems (51% each), according to a Pew Research Center survey conducted April 25-May 1 among 5,074 U.S. adults. More than two years into the coronavirus pandemic, just 19% of Americans rate the coronavirus outbreak as a very big problem for the country, the lowest share out of 12 issues included in the survey. In June 2020, in the early stages of the outbreak, 58% rated it as a very big problem, placing it among the top concerns at the time.

With few exceptions, Republicans and Democrats differ over what they see as major national problems. Inflation is by far the top concern among Republicans and Republican-leaning independents, 84% of whom say it is a very big problem in the country today.

CFPB Wants Other Agencies to Follow Its Views

Today in TechREG, Securities and Exchange Commission (SEC) Chair Gary Gensler reminded investors that crypto assets are “highly speculative” and the agency will continue policing the industry until better rules will be in place. The Consumer Financial Protection Bureau (CFPB) launched an initiative to promote consistent enforcement of consumer financial protection laws. 

SEC Chair Steps up Crypto Crusade, Sends Message to CFTC 

Gary Gensler told an audience during the 2022 FINRA annual conference that until there is better regulation on the crypto space, the agency will “continue to be a cop on the beat.” 

Gensler said those who buy cryptocurrency don’t usually get the disclosures that come with asset purchases of other kinds, including things like whether the trading platform is trading against them, or whether they own the assets they store in digital wallets. 

The chairman reiterated that certain tokens are securities. The key difference between a commodity and security when it comes to digital tokens is the raising of money by a third party, Gensler argued.

CFPB Warns Businesses Not to Misrepresent FDIC Insurance

The Consumer Financial Protection Bureau (CFPB) is looking out for consumers at risk of succumbing to false advertising stemming from misusing the Federal Deposit Insurance Corporation (FDIC) name or logo, a CFPB press release said Tuesday (May 17).

The CFPB has released an enforcement memorandum saying firms can’t misuse the FDIC’s name or logo, or make deceptive representations for deposit insurance, which is meant to promote confidence in banking.

The issue has emerged with the popularity of crypto assets and stablecoins, which investors may think are covered by the FDIC. The release didn’t name any company guilty of misrepresentation.

The CFPB says misrepresenting the protections “undermines consumer confidence and market competition.” The release said the most common form of deposit insurance comes from the FDIC.

Legislation will enable CUs to serve ‘underserved, abandoned’ communities

The Expanding Financial Access to Underserved Communities Act (H.R. 7003) will enable credit unions to help communities in need, many of which banks have abandoned or shown little interest in serving. CUNA, the American Association of Credit Union Leagues (AACUL), and all Leagues wrote in support of H.R. 7003 in advance of the bill’s scheduled markup by the House Financial Services Committee.

“Any serious discussion of policy remedies to address access to financial services to underserved or unbanked persons, businesses, or communities must include modernizing laws and regulations which prevent credit unions from serving those the banks have left behind,” the letter reads. “Credit unions’ field of membership restrictions, and the member business lending cap, shut out those that need access to mainstream financial services.

“This legislation is not a panacea to these exclusionary policies, but it does represent a solid free-market step forward toward financial inclusion and serving those who have been unable to access our nation’s financial institutions,” it adds.

CFPB’s Opinion on Fair Lending Rules Could Extend to AI

The Consumer Financial Protection Bureau (CFPB) has published an advisory opinion to affirm that banks and other lenders need to follow fair lending laws when canceling loans or changing terms and not just during the application process.

According to the advisory opinion published on Monday (May 9), some lenders have been following the Equal Credit Opportunity Act (ECOA) only when issuing loans. But the CFPB interprets Regulation B, the ECOA’s implementing rule, as applying to “approval, denial, renewal, continuation or revocation of any open-end consumer credit account.” This means rules apply before and after the bank approves the credit, the CFPB argued.

“Today’s advisory opinion and accompanying analysis makes clear that anti-discrimination protections do not vanish once a customer obtains a loan,” said CFPB Director Rohit Chopra.

This opinion applies to all creditors as defined in section 702 of ECOA and it seeks to clarify that people should be protected from discrimination in all aspects of a credit arrangement. The advisory opinion focuses on two issues:

The Data Point: 85% of Consumers Pay Credit Card Surcharges Without Issue

A source of controversy over the years, credit card surcharges are accepted as fair — and fairly set — by law, and by a surprising percentage of consumers as well. That’s a ripe opportunity for merchants to recoup card processing fees that eat into profits, and well worth a closer look.

For the study “Credit Card Surcharges: What Merchants Can Do to Maximize Income,” a PYMNTS and Payroc collaboration, PYMNTS surveyed over 2,500 United States credit card users, analyzing the sentiments triggered when consumers are faced with a surcharge, if they’re even aware of it.

With more than eight in 10 consumers surveyed having paid a surcharge on their most recent credit card purchase, a big difference is seen if cardholders were aware of the surcharge or not.

“The high rate of acceptance markedly contrasts from how cardholders who have not had to pay surcharges or are unaware if they have paid them say they would react if faced with such fees,” the study stated, with 58% of such cardholders saying they would not pay surcharges at all, compared to only 12% saying they would. The other 30% are unsure.

Banking the Unbanked: What Does It Mean?

Banks are often regarded as a necessary evil. Even though they make billions of dollars every year, they still offer services without which the modern global economy wouldn’t be possible. For most people, owning a bank account is natural and common, making their daily operations possible.

Unfortunately, some people don’t really rely on banks, thus the nickname unbanked. Approximately 2.5 billion people aren’t unbanked because they chose to. Instead, various legal and natural obstacles do not allow them to have a bank account, even though that would make their lives much easier.

Why Can’t Some Countries Have a Bank?

Believe it or not, some countries don’t have a central bank. Some, like Monaco, are actually rich micro-states that made a conscious decision not to have a central bank. Others, such as Nauru and Palau, are too remote and small to have a bank, creating territorial obstacles that prevent them from having a bank. At the moment, Panama is a country without a central bank and with the highest number of people, currently counting around 4.4 million residents.

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
757.737.4088
315 Tuscarora St., Lewiston, NY 14092