October 22, 2019
and GROW!

As US banks battle interest rates, loans may be silver lining

The Fed's recent rate cuts will be in the spotlight when the big banks kick off the third-quarter earnings season this week.

Citigroup, Goldman Sachs, JPMorgan and Wells Fargo are set to report ahead of Tuesday's opening bell while Bank of America and Morgan Stanley will release their results in the days that follow.

"We expect a weak 3Q, led by a steep fall in rates and slower loan growth but tempered by swift cuts in the deposit rates and sharp growth in securities portfolios, especially Treasuries," wrote a New York-based team of bank analysts at JPMorgan in an Oct. 10 note to clients.

The Fed in September cut rates for the second time this year. The rate cuts, which were the first in over a decade, will provide a hit to net interest margin, or the spread between interest income earned from their borrowers and the amount of interest paid out to their lenders, at U.S. banks.

"We expect net interest margins (NIM) to be down at all banks QoQ and down at a faster rate QoQ by 8bp on average, with loan growth as a partial or full offset to NIM at some banks," JPMorgan analyst Vivek Juneja wrote. Read more at FOX BUSINESS


The Supreme Court Is Poised to Strike Down a Major Obama-Era Agency

The Consumer Financial Protection Bureau concentrates power in the hands of a single, unelected, unaccoutable official.

Last week, the Supreme Court agreed to hear what could end up being the most consequential case of the term - in a year where the justices are already taking up employment discrimination, the Second Amendment, abortion, DACA, school choice, and other issues of higher political salience. In Seila Law LLC v. Consumer Financial Protection Bureau, the Court will decide the constitutionality of an agency long criticized not just by the business community and free-market-oriented politicians but also by constitutional scholars who see major problems with its structure as a single-director agency seemingly unaccountable to the president or anyone else.

The lawsuit was brought by a law firm that assists in resolving personal-debt issues, among other legal work that puts it in the crosshairs of those who, like Senator Elizabeth Warren, want greater regulation of consumer-facing financial services. When the Consumer Financial Protection Bureau, which Warren helped design as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, began an investigation into the firm's practices, Seila Law argued that the agency's structure was constitutionally defective. A federal district court in Santa Ana, Calif., rejected that claim, and the U.S. Court of Appeals for the Ninth Circuit affirmed its ruling.

CFSA Conference

CFPB's Debt Collection, Payday Lending Rules Come Under Fire In Congressional Hearing

Payday lending practices again came under fire Wednesday (Oct. 16) from members of the U.S. Congress, as Kathy Kraninger, director of the Consumer Finance Protection Bureau (CFPB), faced lawmakers during their semi-annual review of the agency.

The hearing, before the U.S. House Committee on Financial Services, came a few days after U.S. Rep. Ayanna Pressley of Massachusetts introduced new legislation that would require the CFPB to regulate the debt collection industry. During the Wednesday hearing, U.S. Rep. Maxine Waters of California blasted the agency and Kraninger over debt collection, along with payday lending rules.

"You have helped payday lenders by moving to delay and weaken the Consumer Bureau's payday, small-dollar and car title rule, which would have put a stop to abusive payday loans," Waters said. "You have helped predatory debt collectors by issuing a weak debt collection rule, giving a green light for debt collectors to intimidate consumers by sending unlimited emails and text messages and calling them seven times a week, per debt, to collect debts."
Read more at PYMNTS.COM


Written Testimony of Kathleen L. Kraninger, Director, Consumer Financial Protection Bureau, Before the Senate Committee on Banking, Housing, and Urban Affairs

Chairman Crapo, Ranking Member Brown, and distinguished Members of the Committee thank you for the opportunity to present the Consumer Financial Protection Bureau's most recent Semi-Annual Report to Congress.

The Bureau presents these Semi-Annual Reports to Congress and the American people in fulfillment of its statutory responsibility and commitment to accountability and transparency. The Bureau's Spring 2019 (October 1, 2018, to March 31, 2019) Semi-Annual Report meets this mandate. My testimony is intended to highlight the contents of this Semi-Annual Report (Report).

1. Significant problems faced by consumers in shopping for or obtaining consumer financial products or services
In each Report, the Bureau identifies relevant trends affecting consumers shopping for, or obtaining consumer financial products or services. In this Report, the Bureau highlights three trends detailed in two Quarterly Consumer Credit Trends (qCCT) reports and a Research Brief.
Read more at CFPB


As Gen Z Comes of Age, Credit Market Activity Shows Significant Growth.

Q2 2019 TransUnion Industry Insights Report explores latest consumer credit trends
Gen Z, those individuals born in 1995 or after, increasingly took part in the consumer credit market during the first half of 2019. The newly released Q2 2019 Industry Insights Report from TransUnion (NYSE: TRU) found that growth is coming from the entire Gen Z demographic who are 18 years or older - not just those who became credit eligible for the first time.

Approximately 14 million Gen Z consumers (44% of this group) were carrying a balance as of Q2 2019, up from 11 million in Q2 2018, according to the report. The number of Gen Z consumers who were credit eligible (18 years or older) increased by 4.5 million in the last year, rising to 31.5 million in Q2 2019. Over the next three years, it is anticipated that another 13 million Gen Z consumers will become credit eligible.

"Both the newest and oldest members of the credit-eligible Gen Z generation are beginning to enter the credit market for the very first time," said Matt Komos, vice president of research and consulting at TransUnion. Read more at TRANSUNION


Retail Sales Slump Raises Questions About Consumer Spending

One of the laws of physics, loosely phrased, is that an object in motion stays in motion, on its path, until outside forces act to change that path.

The outside forces may be coming to bear on the engine that's led the economy on an upward path - the U.S. consumer.

As reported Wednesday (Oct. 16), data from the U.S. Commerce Department showed retail sales in the country were down 30 basis points last month. The news was less than stellar on two fronts, namely that 1) economists had expected gains - to the tune of positive 30 basis points - and 2) the data represented the first drop in seven months.

Digging a bit deeper, two other data points give pause. Sales at furniture and home furnishing stores slipped by 60 basis points. More ominously, online retail sales were down by 30 basis points - and online, of course, is where the sales have gone as brick-and-mortar stores continue to shutter. Though some observers took note of the fact that September's slide was tempered by an upward revision to the August data. Read more at PYMNTS.COM

Dreher Tomkies LLP

Economists and policy makers are 'sleepwalking' toward next financial crisis, Mervyn King says

Former head of Bank of England says economists must 'escape' old ideas that have put globe at risk

A sense of gloom about the global economy permeated the International Monetary Fund and World Bank annual meetings over the past week in Washington.

The international organizations officially slashed their global growth forecasts and warned of dire consequences if the standoff between the U.S. and China over the future of the global trading system is not ended. There was no sign that either side was listening.

If there was a prize for the gloomiest speaker at the gathering, it might have gone to former Bank of England governor Mervyn King, who used his experience as a policy maker to try to shake current officials into action. Read more at MARKETWATCH


Three New California Laws Will Impact Consumer Maurice Wutscher LLP.

Three new laws signed by California Gov. Gavin Newsom in recent days will impact consumer credit in the state by capping interest rates on payday and other consumer installment loans, giving automatic exemptions for bank account levies and removing exemptions for attorneys and mortgage loans from the Rosenthal Act.

AB 539 amends the California Financing Law, which licenses and regulates finance lenders and brokers, by imposing new restrictions on loans of $2,500 or more but less than $10,000. It also adds a rate cap on those loans so that the annual simple interest rate may not exceed 36 percent plus the federal funds rate. The CFL currently imposes restrictions on loans of less than $2,500.

The amended CFL also requires that when lenders make loans of more than $2,500 but less than $10,000, they furnish to a national credit reporting agency the borrower's payment performance. And, before disbursing the loan, the lender must provide the borrower a "credit education program or seminar."


Equifax and Alchemy release white label lending product for fintechs and banks.

Alchemy Technology Inc. and Equifax Inc. (NYSE: EFX) today announced a new partnership to drive FinTech innovation.

The relationship is designed to help banks, specialty financing firms and FinTech startups accelerate their time to market with easily deployable white labeled lending solutions. The two companies will make the "tech" in FinTech available to organizations of all sizes with a powerful combination of the Alchemy Lending Operating System and Equifax data analytics, credit, identity and income verification solutions.

Alchemy Technology is a lending-as-a-service organization founded with the belief that technology, analytics and operations should be executed in concert. The company's Alchemy Lending Operating System was purpose-built to specifically address the credit needs of today's digital consumers in an increasingly mobile economy, enabling automation and real-time underwriting for banks and FinTechs alike. Designed for ease of use, the Alchemy Lending Operating System does not require costly additional IT infrastructure or staff. New financial products can be up and running in weeks, and are true white labeled solutions without third-party branding.
Read more at FINEXTRA


Mastercard and Branch To Fast-Track Pay For Hourly Workers

That instant payments have been a significant boon to workers in the gig economy is almost inarguable. A glance at the data demonstrates why. According to a study released jointly by PYMNTS and Mastercard, a large segment of gig workers live paycheck to paycheck, and more than a third of them wait at least a week for their wages. Getting paid faster can often mean the difference between staying ahead of their finances and getting buried under a high pile of overdraft and late fees.

But what Mastercard has come to appreciate, Senior Vice President of Digital Partnerships Adam Granoff noted, is that gig workers aren't the only segment of the workforce trying to manage shortfalls between regularly scheduled pay periods

"There has been a lot of focus on workers entering the gig economy. But what we know is that the cash flow issue and financial stresses gig workers face are often also faced by hourly workers - especially those who don't have consistent hours," Granoff told Karen Webster shortly after the announcement of Mastercard's partnership with Branch to provide a digital bank account for consumers who work for hourly wages.
Read more at PYMNTS.COM


New CFPB database of expensive prepaid cards is missing key information, advocates say

Some so-called 'payday lender cards' aren't on the quietly-launched database, the National Consumer Law Center says

The Consumer Financial Protection Bureau has launched a new database revealing the terms and conditions on prepaid cards and payroll cards that can sometimes hit users with high fees.

But people wouldn't know that from the federal watchdog agency, consumer advocates say.

The National Consumer Law Center says it's puzzled as to why the CFPB hasn't publicized the database, which contains information about overdraft fees, withdrawal limits and spending limits on the cards. The National Consumer Law Center is a nonprofit that advocates for consumers' rights on issues ranging from bankruptcy to debt collection.
Read more at MARKETWATCH


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Exclusive to the short-term consumer and alternative lending industries for: Installment Loans, Title Loans, Personal Loans, Personal Lines of Credit, Student Loans, Military Loans, Subprime Loans, Lease-to-Purchase and Rent-to-Own (RTO). We also have revolutionized the way payments are processed for Online Lenders, including MPL (Marketplace Lenders) and Lending Platforms.

LoanPaymentPro provides a proprietary advanced form of its own Payment Validation and Verification function (think enhanced version of Zero-Dollar Authorization (ZDA). Putting the "control" back into the hands of lenders by allowing them to perform a bankcard validation and/or account verification prior to storing a bankcard or processing a payment. When lenders utilize our new validation technology, it significantly decreases fraud and increases their chance of a successful payment. Read more at LoanPaymentPro


There are 618,000 millennial millionaires in the US-and 44% of them live in 1 state

There are approximately 618,000 "millennial millionaires" - those with a net worth of over $1 million - in the United States, according to a 2019 report from Coldwell Banker Global Luxury and WealthEngine, which defines millennials as those born between 1982 and 1996, or ages 23 to 37 in 2019.

The population of wealthy young people is growing, the report finds. And they're getting richer: "By 2030, millennials will hold five times as much wealth as they have today, and are expected to inherit over $68 trillion from their predecessors in the Great Transfer of Wealth."

The "Great Wealth Transfer" refers to the trillions of dollars that will be passed down to millennials from their baby boomer parents, who are considered the wealthiest generation in history.
Read more at CNBC


Why Medical Data is 50 Times More Valuable Than a Credit Card

As the healthcare company lurches into embracing cloud-based technology, protecting medical data has become even more essential. While banks and other financial organizations have long been data security experts, the healthcare field has been a bit slower to protect its data, which can often be more valuable than credit cards and bank account numbers.

Experts say the value of a social security number is worth 10 cents on the black market, with credit cards going for 25 cents. Medical identify theft of secure medical records, which often include both of those numbers plus much more information, is even more lucrative.

"Medical information is a lot richer," says ClearDATA Chief Privacy and Security Officer and Founder Chris Bowen, who says the medical record is 50 times more valuable than a credit card number. "It is not just the credit card. You can build entire human persona around a health record. You can create or seek medical treatment, abuse drugs, or get prescriptions. The life span is so much longer than a credit card." Read more at D CEO HEALTHCARE



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