June 23, 2020
AFSPA Partner

AFSPA Partner


U.S. banks are 'swimming in money' as deposits increase by $2 trillion amid the coronavirus

  • A record $2 trillion surge in cash has hit the deposit accounts of U.S. banks since the coronavirus first struck the U.S. in January, according to FDIC data.
  • The wall of money flowing into banks has no precedent in history: in April alone, deposits grew by $865 billion, more than the previous record for an entire year.
  • Deposit gains were concentrated at the very top of the industry: JPMorgan Chase, Bank of America and Citigroup grew much faster than smaller firms in the first quarter, according to company data.
  • One consequence of the boom: Banks will likely lower their already paltry interest rates.

Read more at CNBC

Remarks by CFPB Director Kraninger During Consumer Data Industry Association Webinar

Good afternoon. Thank you, Francis, for the introduction. I appreciate the opportunity to be with you today and I look forward to the day when we all will be able to meet safely in-person once again. For now, I am grateful that technology has given us a forum to connect.

Today I'd like to give you a high-level snapshot of what we are hearing directly from consumers through our consumer complaint process, and how we are helping consumers during this time and ensuring they have information on their rights, protections, and options. And, finally, I want to focus on the CARES Act and credit reporting, as well as the recent guidance from the Bureau on this topic.

First, let's talk about what we are hearing from consumers.
Consumer complaints have always provided the Bureau with valuable insights into the challenges consumers are experiencing with financial products and services. And we have used those insights to inform all of the Bureau's work, including supervisory and enforcement activity. The Bureau also shares consumer complaint information with federal and state agencies to ensure that the Bureau and other regulators have useful information to support consumers.
Read more at CFPB


CFPB complaints spiked by 31% in first months of 2020 as Americans sought coronavirus relief

Consumer complaints to the Consumer Financial Protection Bureau rose 31% in the first five months of 2020, compared with the same period last year, with many complaints specifically mentioning the coronavirus pandemic.

The state of play: Through May 31, the CFPB received 142,782 complaints, according to an analysis of the bureau's records by NerdWallet.

What it means: "The CFPB relays consumer complaints about loans, credit cards, bank accounts and other financial products to financial institutions."

"Among 2020 complaints explicitly mentioning 'covid' or related terms, 'struggling to pay mortgage' was the top issue." Read more at AXIOS

Consumer Financial Protection Bureau Launches Pilot Advisory Opinion Program to Provide Regulated Entities Clear Guidance and Improve Compliance

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) today launched a pilot advisory opinion (AO) program to publicly address regulatory uncertainty in the Bureau's existing regulations. The pilot AO program will allow entities seeking to comply with regulatory requirements to submit a request where uncertainty exists. The Bureau will then select topics based on the program's priorities and make the responses available to the public. In the interest of providing clear rules to regulated entities, the Bureau has made iterative improvements to its guidance processes, including issuing more robust compliance aids and frequently asked questions as well as providing clarifications to individual entities. This pilot advisory program builds on those efforts, recognizing that the public widely would benefit from a process that provides clarifications broadly and not just to requesting individuals or entities.
Read more at CFPB


Bye $600 jobless benefit, eviction reprieve, cash for small firms. COVID-19 relief ending.

The extraordinary safety net that has buoyed financially stressed Americans during the coronavirus pandemic is starting to fray.

In the coming weeks, the jobless will likely no longer receive an extra $600 in their weekly unemployment checks. Many tenants who don't pay their rent can be evicted. And many small businesses won't have a forgivable federal loan to cushion the blow of meager sales.

Government and private-sector programs intended to keep millions of people afloat since mid-March during the most abrupt and severe recession in U.S. history are scheduled to expire soon even as near-record unemployment and deep financial hardship persist. Goldman Sachs says in a recent research note that it expects some of the programs to be extended in some form, though they likely won't be as generous.
Read more at USA TODAY

Fintechs try old bank charters as 'everything old is new again'

A federal plan designed to help booming financial technology innovators enter the traditional banking system won't be sidelined for long by the COVID-19 pandemic, legal experts predict.

Citing the pandemic, the Federal Deposit Insurance Corporation last month gave the public more time to comment on a proposal unveiled in March that would require parent companies of so-called industrial banks to serve as a source of financial strength as a condition for receiving deposit insurance coverage. Fintech companies are hoping to secure industrial bank charters to get their foot in the door of banking.

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A limited freeze in the rule-making caused by the virus is unlikely to slow the rapidly growing trend of fintech firms looking to use this century-old method to become a bank, according to several fintech watchers contacted by CQ Roll Call. Read more at ROLL CALL

Dreher Tomkies LLP

How COVID-19 is Driving Big Job Losses in State and Local Government

Cuts to payrolls are mostly temporary for now, but decisions ahead will depend on the virus and budget stresses

Although the federal jobs report released June 5 provided some unexpectedly good news about the start of a recovery from steep private sector losses in recent months, cuts continued to mount for state and local governments, including public education.

In the public sector, officials responded to the COVID-19 pandemic by furloughing workers at shuttered facilities and trimming payrolls in the face of substantial projected budget shortfalls. Colleges, school districts, and other areas of state and local government have shed approximately 1.5 million jobs since March, but most have been furloughs or temporary layoffs, according to the U.S. Department of Labor. In all, employment for the sector has fallen to its lowest levels since 2001, eclipsing the declines that followed the Great Recession.

Private industries have generally incurred greater percentage losses than the public sector. The lifting of lockdowns across the country brings hope for the return of private sector jobs, but many governments face bleak financial outlooks that continue to leave workers vulnerable.
Read more at The Pew Charitable Trusts

FDIC-Insured Institutions Reported Reduced Profitability but Strong Loan Growth and Stable Asset Quality in First Quarter 2020

  • Loan and Lease Balances and Deposits Registered Strong Growth
  • Asset Quality Metrics Remained Relatively Stable
  • The Number of Banks on the "Problem Bank List" Remained Low
  • Deteriorating Economic Activity Negatively Affected Banking Industry's Profitability
  • Quarterly Net Income Fell by 69.6 Percent from First Quarter 2019
  • Community Banks Reported a 20.9 Percent Decline in Net Income from a Year Ago

Read more at FDIC


The data on racial disparity in financial services

The murder of George Floyd shocked the national psyche to its core, spotlighting the persistent, systemic racism that exists in many American institutions, which continues to disenfranchise those who live within the Black community.

The national and international outcry for reform has been strong. However, there is one institution that can take immediate action to make mainstream products accessible, life more affordable and the pursuit of a middle class dream attainable.

At the center of this institution resides the payments industry, supported by traditional banks, credit unions and credit card issuers, along with nontraditional firms such as pawn shops, payday lenders and check cashers.
Read more at PaymentsSource

New bill would allow small businesses to get second PPP loan

Certain small-business owners may be able to apply for a second Paycheck Protection Program loan if a new bill introduced on June 18 becomes law.

The legislation, called the Prioritized Paycheck Protection Program (P4) Act, would allow businesses with fewer than 100 employees to apply for a second loan if they have used up (or are on pace to exhaust) their first PPP loan and can show a 50% loss in revenue due to the COVID-19 pandemic. Business owners also must show they need the money for payroll and eligible non-payroll costs.

"Many small businesses will continue to struggle in the weeks and months to come," Sen. Ben Cardin (D-MD) said. "Congress must once again act urgently to support our most vulnerable small businesses through this crisis, so our economy can recover as quickly as possible after the pandemic. Every business we prevent from failing now, is a business that will be in a position to create jobs during the recovery."
Read more at YAHOO FINANCE



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