The evolution of banking in the 21st century: BROOKINGS

Evidence and regulatory implications

Uninsured deposits should be subjected to tougher regulatory requirements to guard against the type of rapid runs that toppled three large regional banks last spring, suggests a paper discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 29.

In the wake of the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank (three of the four largest bank failures in U.S. history), the authors look at two trends over the past quarter century—the substantial growth of uninsured deposits and the migration of business lending to non-banks. The trends challenged the failed banks and banks like them, and in some cases left them vulnerable to runs. And, using a simple model they constructed, the authors assess regulatory options for reducing the risk of destabilizing runs.

Read more at The Brookings Institution

Consumer Response Annual Report: CFPB

Executive Summary

 Pursuant to the Consumer Financial Protection Act of 2010, this annual report analyzes complaints submitted by consumers in 2023. During this period, the Consumer Financial Protection Bureau (CFPB) sent more than 1.3 million complaints to more than 3,400companies for review and response.

 Complaints about credit or consumer reporting continued to increase in 2023, accounting for more than 81% of all consumer complaints sent to companies. The CFPB sent nearly 1.1 million credit or consumer reporting complaints to companies for review and response. Three nationwide consumer reporting agencies—Equifax, Experian, and TransUnion—accounted for more than one million of these complaints.

 In their complaints, consumer raised issues related to fraudulent activity in nearly every product category. For example:

 In credit or consumer reporting complaints, consumers raised issues related to 

identity theft. Consumers reported not recognizing accounts or credit inquiries on 

their report. Consumers also ran into many difficulties in addressing these 

inaccuracies with consumer reporting agencies.

 In debt collection complaints, consumers claimed collectors were collecting on loans 

that the consumer never obtained and resulted from identity theft or fraud.

Read more at Consumer Financial Protection Bureau (CFPB) 

Consumer reporting companies have an obligation to correct errors: CFPB

The consumer reporting system maintains detailed profiles on millions of Americans. Companies harvest information on people’s financial status or record of paying bills and provide that information to consumer reporting companies. Consumer reporting companies then sell this data to companies making employment, credit, and other decisions. We have seen companies in this system repeatedly try to find legal loopholes to avoid meeting basic requirements designed to ensure the accuracy of the information. Over the last few years, the Consumer Financial Protection Bureau (CFPB) has taken several steps to beat back dubious claims from industry participants that they don’t have to follow the law’s requirements. These include companies arguing that they don’t have to investigate when consumers dispute mistakes in their credit reports if the company characterizes the dispute as “legal” in nature and companies that provide data to consumer reporting companies arguing that they can tell the consumer reporting companies to keep providing disputed information that can’t be verified.

Congress passed the Fair Credit Reporting Act (FCRA) more than fifty years ago in response to concerns about consumer reporting companies. The CFPB is the primary enforcer of this law. We are committed to protecting people from companies in the consumer reporting system that break the law. For that reason, the CFPB and the Federal Trade Commission (FTC), which also enforces the FCRA, filed an amicus brief today in the U.S. Court of Appeals for the Eleventh Circuit addressing yet another erroneous argument from a company in the consumer reporting system.

Read more at Consumer Financial Protection Bureau (CFPB) 

FACT OF THE MATTER

$1.3 trillion: The increase in public assistance costs needed to support Americans over the next 20 years due to a lack of retirement savings.

QUOTE OF NOTE

"We see immediate benefits for people who have low incomes and who have moderate incomes [when states and cities change zoning rules to allow more housing]."

Pew's Alex Horowitz

Mobile bank branch brings financial services to underserved communities

CLEVELAND — PNC Bank is rolling out more options for people who have little or no access to banking services.

PNC's mobile bank branch is making stops at several organizations across Northeast Ohio, including the Greater Cleveland Food Bank.

The 30-foot truck features services similar to brick-and-mortar bank branches.

"We have an ATM, we can take an application and open a savings or checking account immediately," said Pat Pastore, Regional President of PNC Cleveland. "We can issue a debit card and we can also take loan applications and so forth."

Those services are becoming harder to find in Cleveland.

Read more at NEW5CLEVELAND.COM

INFiN is proud to be a source of reliable information about the consumer financial services industry, its products, and customers.

The following fact sheets provide background on INFiN, its mission, the customers INFiN members serve, the products and services offered, and the issues and dynamics surrounding this vital industry.

INFiN, a Financial Services Alliance, is the leading national trade association representing the diverse and innovative consumer financial services industry. The alliance includes more than 350 companies, operating approximately 8,000 locations throughout the United States and online. INFiN members deliver critical products 

and services – including small-dollar consumer loans, check cashing, pre-paid cards, money transfers, and electronic bill payments, among others – to meet U.S. consumers’ ever-changing needs and expectations.

OUR MISSION

As the voice of the vital and rapidly evolving consumer financial services industry, we advocate on behalf of customers to ensure all have access to cost-effective, transparent financial services in a thriving, competitive marketplace, enabling and empowering financial inclusion and stability.

Read more at INFIN

New UK Rules Aim to Enhance Competition in Payday Loan Market

The UK’s Competition and Markets Authority (CMA) has unveiled new regulations targeting the payday loan industry. The announcement comes following a comprehensive 20-month investigation into the sector, which has often courted controversy over its practices.

Under the new rules outlined in the CMA’s final report, online payday loan companies will be mandated to disclose details of their products on at least one Financial Conduct Authority (FCA) authorized price comparison website (PCW). This move aims to provide consumers with clearer information, enabling them to make informed decisions when seeking short-term loans.

However, the CMA acknowledged a current shortfall, as no commercial PCW holds FCA approval specifically for payday loans. To address this gap, the regulator stipulated that lenders must establish such a platform if none emerges. Nevertheless, the implementation of this ruling will undergo further consultation before being enforced.

Read more at PYMNTS.COM

Proposed Massachusetts Retirement Savings Program Shows Financial Promise: PEW

Study reveals that the self-sustaining initiative could help the state and hundreds of thousands of private-sector workers

A proposed Massachusetts retirement program designed for employees of small businesses without workplace savings plans holds promise, according to new research from Boston College’s Center for Retirement Research (CRR). The study, financed by The Pew Charitable Trusts, finds that such a state program would be self-sustaining and garner significant participation while helping to shrink worker savings gaps and state budget deficits.

Today, nearly half of private-sector workers in the United States lack access to employer-provided retirement plans. The inability to easily and regularly save for the future leaves about one-third of U.S. households reliant solely on Social Security during their retirement years. In Massachusetts alone, this reality affects around 1.2 million workers, with a disproportionate impact on lower-income, non-White, and female workers. If current trends persist, projections show that vulnerable older households could face an average income shortfall of $10,820 per year by 2040, relative to recommended income replacement targets. And that would lead to significant declines in their quality of life.

Read more at The Pew Charitable Trusts