November 21, 2019
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2020 Election: Where the Candidates stand on Banking

More than two dozen candidates are vying for the presidency in 2020, and all of them have something to say about banking.

President Donald Trump: Republican

The president is not a fan of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the big banking bill enacted in 2010 after the 2007-08 global economic meltdown. He's called the law - which created the Consumer Financial Protection Bureau, imposed a big-bank stress test and banned proprietary trading - a "very negative force" and, in 2018, signed a bill to pare back parts of it, mainly for smaller banks. That law, the Economic Growth, Regulatory Relief, and Consumer Protection Act, waives the stress test for banks with assets of $250 billion or less and also waives the restriction on proprietary trading - known as the Volcker Rule - for banks with assets of $10 billion or less.

Trump has also made deregulation the focus of some of his earliest executive orders. In the most well-known of these, he required federal agencies to eliminate two existing rules for any new rule they issue, and in another order, he directed Treasury to evaluate laws, regulations and other official orders against the goal of making banking as competitive as possible while protecting consumers. Read more at BANKING DIVE

CFSA Conference

2020 Election: Where the Candidates stand on Banking

More than two dozen candidates are vying for the presidency in 2020, and all of them have something to say about banking.

Former Vice President Joe Biden: Democrat

As President Barack Obama's vice president when Dodd-Frank was enacted, Biden is closely linked to the 2010 law that put sweeping restrictions on banks and increased consumer protections.

For much of his long career as a U.S. senator from Delaware, Biden took positions supportive of banks and other financial services companies, many of which are headquartered in his state. Arguably the most significant of these was his vote in favor of the Gramm-Leach-Bliley Act, which passed Congress in 1999. The law repealed the Glass-Steagall prohibition on the mixing of investment and retail banking that had been in place since 1933. Critics say it was the removal of the firewall between these two banking sectors that helped fuel the 2007-08 economic crisis, eventually leading to Dodd-Frank.

Prior to that, Biden voted for the Riegle-Neal Interstate Banking and Branching Efficiency Act, which allowed banks to cross state lines to acquire other banks. Supporters say the law has increased efficiency in the industry, while critics say it has led to unhealthy consolidation, reducing consumer choice and concentrating assets among a few giant banks.
Read more at BANKING DIVE


Big banks would get climate stress tests under Senate bill

  • A Senate bill introduced Wednesday would force the Federal Reserve to conduct stress tests every two years to measure large banks' ability to weather financial risks brought on by climate change.
  • The Climate Change Financial Risk Act of 2019 would put the U.S. on par with such countries as the U.K. and the Netherlands, whose central banks have started quantifying the potentially systemic risks associated with climate change, said Sen. Brian Schatz, D-HI, the bill's sponsor.
  • Nine Democratic senators, including five presidential candidates, have expressed their support for the measure, but the bill still needs support from Republicans, who hold a majority in the Senate.

The Fed tests whether banks hold enough of a capital buffer to offset adverse hypothetical economic situations such as a spike in unemployment. But it doesn't do the same for climate.

World economies could lose at least $44 trillion in economic activity by 2060 with 2.5 degrees of warming, or as much as $72 trillion by 2060 in the event of climate inaction, Citigroup predicted.
Read more at BANKING DIVE


Amazon abandons plan for checking accounts

  • Tech giant Amazon abandoned its effort to create checking accounts, telling one of its potential banking partners, JPMorgan Chase, it was concerned it would be subject to banking regulations, according to a report from The Information.
  • The news came to light days after fellow tech company Google announced it would roll out checking accounts next year, backed by Citi and Stanford Federal Credit Union.
  • Tech companies are increasingly finding themselves under scrutiny from lawmakers and regulators when they expand into new business models and revenue streams.

Amazon held preliminary discussions with big banks early last year about partnering to provide checking services, The Wall Street Journal reported. But the tech company apparently scrapped the idea in its early stages, two sources told The Information. An Amazon spokeswoman, however, told the publication the company "doesn't comment on rumor or speculation."

Checking accounts can be an advantageous entry point into banking for tech companies. The accounts offer substantial customer data, including salary, where people shop, and what bills they pay. They also have a long shelf life - the average U.S. adult has used the same primary checking account for about 16 years, according to a Bankrate survey.
Read more at BANKING DIVE


Move Payments Faster: Understanding ACH Payment Processing for Businesses

ACH payments are electronic transactions from one bank to another that are processed through the Automated Clearing House network. ACH payments are commonly used for direct deposit of payroll, and online recurring payments of bills, mortgages, and loans.According to the National Automated Clearing House Association (NACHA), 23 billion payments were processed over the ACH network, moving over $51.2 trillion. This represents the sixth consecutive year that ACH payments value has risen by $1 trillion or more, year-over-year. The popularity of ACH transfers has to do with customer comfort level; as electronic payments become more common, more people choose ACH over other payment options. ACH payments also offer several benefits over different types of payment including paper checks, wire transfer, or EFT.

Here are four benefits to ACH payment processing solutions:

1. Lower Processing Costs
ACH transfers usually cost less than alternate forms of payment and are often the cheapest alternative to a cash transaction. Costs may vary depending on the ACH processor; some charge a flat fee per transaction, ranging from $0.25 to $0.; others charge .75 - 5 percent of the transaction value; some use a combination of per transaction and percent of transaction value.
Read more at PAYLIANCE

Fall 2019 rulemaking agenda

The Bureau published its Fall 2019 Agenda as part of the Fall 2019 Unified Agenda of Federal Regulatory and Deregulatory Actions , which is coordinated by the Office of Management and Budget under Executive Order 12866. The agenda lists the regulatory matters that the Bureau reasonably anticipates having under consideration during the period from October 1, 2019 to September 30, 2020, as described further below. As an independent regulatory agency, the Bureau's participation in the Unified Agenda is voluntary.

Director Kraninger took office in December 2018 and shortly after embarked on a listening tour to engage with Bureau stakeholders, employees, and outside experts, building on feedback submitted through more than 88,000 public comments in response to the Bureau's 2018 "Call for Evidence" initiative. This Unified Agenda represents the first one the Bureau has prepared following Director Kraninger's listening tour.

Consumer Financial Protection Bureau


Alchemy Partners with Plaid to Enhance Loan Decisioning and Fraud Detection Capabilities

Alchemy Technologies ("Alchemy") a leading fintech infrastructure development company based in Utah enters into a partnership agreement with Plaid, a data network powering the fintech tools that millions of consumers have come to rely on to improve their financial lives.

Alchemy, one of the leading SaaS fintech lending infrastructure companies, has partnered with Plaid to support businesses in account and asset verification for improved lending decisioning. Alchemy has developed algorithms and detection tools to help its clients to examine the applicant's financial picture. These algorithms also protect consumers from taking out redundant and costly loan products. Alchemy clients will have access to Plaid's suite of APIs providing clean transaction, identity, and income data to build more responsible lending products and support the next wave of core lending solutions.

"Plaid has been one of the foundation blocks of today's fintech evolution and with our new partnership, we'll advance our work to support the greater financial services community," said Timothy Li, Founder, Alchemy Technologies. "Alchemy constantly deploys new, innovative products to the marketplace. By leveraging banking transactional data to accurately detect personal income and stacking behaviors, we equip our clients to avoid credit risk and offer more affordable products to their clients." Read more at BUSINESS INSIDER


Americans and Privacy: Concerned, Confused and Feeling Lack of Control Over Their Personal Information

Majorities think their personal data is less secure now, that data collection poses more risks than benefits, and believe it is not possible to go through daily life without being tracked

A majority of Americans believe their online and offline activities are being tracked and monitored by companies and the government with some regularity. It is such a common condition of modern life that roughly six-in-ten U.S. adults say they do not think it is possible to go through daily life without having data collected about them by companies or the government.

Data-driven products and services are often marketed with the potential to save users time and money or even lead to better health and well-being. Still, large shares of U.S. adults are not convinced they benefit from this system of widespread data gathering. Some 81% of the public say that the potential risks they face because of data collection by companies outweigh the benefits, and 66% say the same about government data collection.
Read more at Pew Research Center


A Consumer-first Approach in Digital Marketing Starts with Accurate Data

The proliferation of devices, content formats, digital touchpoints, and connected experiences has resulted in a shift in consumer expectations. Armed with information and technology, consumers now count on brands and organizations to deliver on-demand, frictionless, and relevant interactions at every step along their journey. More than ever, the balance of power has shifted into the hands (or more appropriately, fingertips) of consumers.

For their part, marketers understand the power of personalization. A 2018 survey from Verndale revealed that 90% of senior-level US marketers said personalizing the customer experience is critical for business success.

In the financial services sector, for example, companies that prioritize and excel in customer experience are better equipped to win the battle for consumer loyalty. Younger consumers want more customized and personalized offers, as well as easy access to information and research to make decisions. According to a recent TransUnion study on consumer loyalty in the Consumer First Era, nearly half of Gen Z consumers said relevant offers were important, signaling a growing need for customization as this audience becomes credit eligible.
Read more at TRANSUNION


States Hold Onto Federal Dollars Meant for Needy Families

Vanessa Mccrickard, a single mother of two from Woodbury, Tennessee, is the sort of person welfare is designed to help.

Mccrickard says she can't find reliable child care in her town of roughly 3,000, which is about 50 miles from downtown Nashville, so she can't work full-time. She receives child support from the father of her oldest child, but nothing from the father of her 2-year-old. She struggles to pay her bills.

Mccrickard applied for Tennessee's version of Temporary Assistance for Needy Families (TANF), the federal block grant program that replaced traditional welfare in the 1990s. But state officials told her that if she got cash assistance, the state would deduct the same amount from her child support payments. And she'd have to work at least 30 hours a week.

She says her inability to get assistance is especially frustrating because Tennessee has the money to help her - $732 million, to be exact. That's the amount of federal welfare money the state is holding in reserve. Read more at Pew Charitable Trusts

Dreher Tomkies LLP

Big changes could be in store for student loan borrowers

Presidential campaign proposals and recently introduced legislation aim to rewrite the rules around student loan interest, repayment and refinancing.
Some of the plans would reduce - or altogether erase - people's balances.
It's no surprise politicians have turned their attention to the topic: More than half of Americans say student debt is "a major problem" for the country, according to a Politico/Morning Consult poll.

Big changes could be coming down the pipeline for the 44 million Americans with student debt.

Presidential campaign proposals and recently introduced legislation aim to rewrite the rules around student loan interest, repayment and refinancing.

Some of the plans would reduce - or altogether erase - people's balances.
Read more at CNBC


Fed, FDIC approve BB&T-SunTrust merger

  • The Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) approved BB&T's $28 billion acquisition of SunTrust on Tuesday, allowing the two banks to move forward with their plans to form the sixth-largest U.S. bank, a combined entity called Truist.
  • The regulatory agencies approved the merger on the condition that the banks divest 30 branches and more than $2.4 billion in deposits to mitigate the competitive effects of the deal. The Fed also issued a consent order against SunTrust for unfair and deceptive practices, regarding "misleading or inaccurate statements" the bank made to business customers from 2013 to 2017 regarding the operation and billing of add-on products.
  • BB&T and SunTrust expect the deal to be completed by Dec. 6, the banks said in a joint statement. 

With green lights from the Fed and the FDIC, BB&T and SunTrust have cleared the final hurdles on their path to pursue what their CEOs have referred to as "a merger of equals."

Once merged, Truist is expected to have assets totaling approximately $451 billion.
Read more at BANKING DIVE


Midland, Texas Beat NYC Area When it Comes to Fat Paychecks

(Bloomberg) -- The New York city area may boast the largest share of personal income in the U.S., but pay is growing the fastest in the much smaller oil-boom towns of Odessa and Midland, Texas, according to new Commerce Department data.

Indeed, Midland's per capita personal income of more than $122,000 a year was higher than that of San Jose, San Francisco, Boston or New York last year, the data show. Midland and Odessa -- bases for Permian basin shale production -- have benefited from a boom that last year drove the U.S. to surpass Russia to become the world's largest oil producer.

Still, personal income in the New York-Newark-Jersey City area last year rose to almost $1.5 trillion, or 8.3% of the U.S. total -- the largest share in the U.S. The NYC metro area was followed by Los Angeles with a 4.8% share and Chicago at 3.3%. Among the top 20 largest, Denver surpassed Riverside, California for the 18th spot last year.

For the fifth year in a row, metropolitan areas in the U.S. outpaced rural and small towns in per capita personal income -- total pay divided by population.
Read more at BLOOMBERG


Banks see Fed payments proposal opening door to fintech rivals

Banking industry pushes for tight rules on companies moving into banking-like services

A plan by the Federal Reserve to build its own network to transfer funds quickly has pitted technology firms seeking a foothold in the financial sector against banks that have traditionally dominated the payments business.

Tech firms see the new payment system as an opportunity to get into the payments business, and banks, facing a new rival, are pushing for tight rules on companies moving into banking-like services, according to advocates on both sides of the issue.

The Fed in August announced a plan to develop an instant payment system, FedNow, drawing praise and opposition. Big banks, which have their own payments system, are trying to persuade Congress to block the Fed plan. Read more at ROLLCALL


Alternative Financial Service Providers Association

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