July 13, 2021
The Gateway For Payroll Data
Rescinding 'true lender' banking rule hurts those most in need of credit

President Biden recently signed a Congressional Review Act resolution rescinding the "true lender" rule promulgated by the Office of the Comptroller of the Currency (OCC). He explained how this action would prevent loan sharks and online lenders from using partnerships with banks to circumvent state interest rate caps.

But it would be a huge surprise to the country's federal and state bank regulators to know that banks are partnering with loan sharks.

Putting political hyperbole aside, the ongoing battle (it has been going on since at least the 1970s) over the jurisdiction of state usury caps and the scope of federal preemption is quite complex and is critical to the availability and allocation of credit. The president and Congress no doubt believe that they were helping consumers. But as so often occurs when popular slogans are translated into pithy economic policies, they could not have been more confused about who would be hurt and who would be helped by this action.

Paving the Payments Future
Wells Fargo scraps personal lines of credit

In a statement to FOX Business, the bank confirmed the move, first reported by CNBC.

"As we simplify our product offerings, we made the decision last year to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products. We realize change can be inconvenient, especially when customer credit may be impacted. We are providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs" according to a company spokesperson.

The move impacts new customers and for existing customers with open lines, those will be closed. The bank is giving customers a 60-day notice period and is encouraging them to apply for other lending needs.

The move does not impact commercial accounts.

According to a letter viewed by CNBC the move "may have an impact on your credit score" the bank detailed.

Child Tax Credit Update Portal: The IRS upgraded the Child Tax Credit Update Portal to enable families to update their bank account information so they can receive their monthly Child Tax Credit payment.

Tax relief for employer leave-based donation programs due to COVID-19 pandemic: The IRS extended the tax relief provided in Notice 2020-46 for calendar year 2021 for employers whose employees forgo sick, vacation or personal leave because of the COVID-19 pandemic.

State-by-state data on EIP3: The IRS and the Treasury Department released information detailing how many people in each state received the third round of Economic Impact Payments through early June.

“Dirty Dozen” tax scams for 2021: The IRS has begun its "Dirty Dozen" list for 2021 with a warning for taxpayers, tax professionals and financial institutions to be on the lookout for nefarious schemes and scams.
Rethinking overdraft

While many stakeholders would agree banks need to revamp the fee-based model, it remains to be seen whether change will come through legislation or the market.

Apair of congressional hearings on Capitol Hill in May served as a perfect setting for Democrats and Republicans to take shots at Wall Street’s most powerful bank CEOs.

While some Republicans focused their questioning around voting rights and "woke-ism," several Democrats took aim at the overdraft fee — a charge financial institutions levy on their customers when they overdraw their accounts.

Sen. Elizabeth Warren, D-MA, wasted no time calling out Jamie Dimon, the CEO of the nation’s largest bank, JPMorgan Chase, as "the star of the overdraft show" for the $1.5 billion in overdraft fees the bank collected during the COVID-19 crisis.

Biden executive orders target bank mergers, financial data sharing

President Joe Biden issued a slew of executive orders Friday aimed at promoting U.S. competition and cracking down on anticompetitive practices, according to a statement released by the White House. Among those orders are two measures that would provide more scrutiny of bank mergers and give consumers greater control over their financial data.

One order requires the Department of Justice (DOJ), the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), and the Office of the Comptroller of the Currency (OCC) to update guidelines "to provide more robust scrutiny of [bank] mergers." Another "encourages the Consumer Financial Protection Bureau (CFPB) to issue rules allowing customers to download their banking data and take it with them."

Real Time Payments Help Underbanked Consumers Find Financial Relief

One of the lesser-known troubles of the modern economy is the prevalence of unbanked and underbanked individuals. Unbanked individuals lack access to bank accounts while underbanked individuals have bank accounts but rely on alternative non-bank financial services to meet at least some of their financial needs. There are currently 7 million households in the United States that are considered unbanked, and the lack of access to banking services means that these households must cash their paychecks via check-cashing services and pay bills using money orders, for example, both of which can charge exorbitant fees and drive unbanked families further into poverty.

Many of these unbanked or underbanked households could be greatly aided by real-time payments, which allow individuals to receive funds instantly, for example, or allow companies to pay temporary or gig workers at the end of every shift. These payments reduce underbanked populations’ reliance on exploitative options like check cashing services and payday loans.

U.S. Consumer Borrowing Jumped by Most on Record in May

(Bloomberg) -- U.S. consumer credit surged in May by the most on record, reflecting a jump in non-revolving loans that underscores solid household spending.

Total credit climbed $35.3 billion from the prior month after an upwardly revised $20 billion gain in April, Federal Reserve figures showed Thursday. On an annualized basis, borrowing rose 10% in May. Economists in a Bloomberg survey had called for a $18 billion gain.

Non-revolving credit, which includes auto and school loans, increased $26.1 billion, the most on record. Revolving credit, which includes credit cards, rose $9.2 billion after declining in the previous month.

Sales of motor vehicles were robust in both April and May at the same time car prices climbed. The combination has led to increased borrowing. Credit card balances, meanwhile, also rebounded by the most since 2019 as vaccinations and a pickup in social activity spurred spending.

Use our toolkit to help spread the word about pandemic financial relief options: Consumer Financial Protection Bureau

We have launched a new digital toolkit for media, intermediaries, and other stakeholders interested in providing information and resources to renters and mortgage borrowers who continue to struggle financially from the coronavirus pandemic. Our toolkit provides the most up-to-date information and resources that you can share.

According to June research, the number of seriously delinquent mortgage borrowers remains nearly three times higher than before the pandemic, and many borrowers may face a precarious financial situation once forbearance and other relief programs end.

To help spread the word to struggling consumers about their protections and relief options, you can access a comprehensive digital media toolkit with sample communications that include:

Top Federal Reserve official 'skeptical' about need for US digital dollar

A top Federal Reserve official on Monday advocated against creating a digital version of the U.S. dollar, questioning the use cases and security of a Fed-issued digital currency.

“The potential benefits of a Federal Reserve CBDC [central bank-issued digital currency] are unclear. Conversely, a Federal Reserve CBDC could pose significant and concrete risks,” Randal Quarles told the Utah Bankers Association Monday.

The remarks from Quarles, the central bank’s vice chairman of supervision, are likely to escalate discussion inside and outside the Fed over whether or not it should ultimately issue a central bank-issued digital currency.

The Fed is planning on publishing a paper this summer on the possibility of issuing a digital dollar, after which the Fed will ask for input from the public and Congress.

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