Many of the most senior officials at the Securities and Exchange Commission remained unaware of a 2016 hack of the agency’s computer system for months after it occurred, raising questions about how the breach was initially handled, the Wall Street Journal reported today. The SEC’s new chairman, Jay Clayton, uncovered the extent of the hack only after he launched a wholesale review of the agency’s cybersecurity vulnerabilities in the spring, according to a statement he released this week. The SEC’s other commissioners learned about the hack in recent days. A former chief operating officer wasn’t told about the intrusion when it was detected last year. The pace of discovery and the way that information was disclosed is likely to increase scrutiny of an agency that in recent years has pushed financial firms to gird against attacks and urged public companies to tell shareholders about the risks of cyber[-]intrusions.
Credit card lenders are seeing delinquencies creep up again after a brief respite in the spring, the Wall Street Journal reported. Capital One Financial, Synchrony Financial and Alliance Data Systems have all seen delinquencies rise as a percentage of total loans over the past several months, after they declined slightly earlier this year. All three focus on lending to less-creditworthy borrowers, with Synchrony and Alliance Data specializing in store-branded, private-label cards. At Capital One, loans over 30 days delinquent in its domestic credit card portfolio ticked up to 4 percent of total loans in August from 3.5 percent in April, monthly data from the company shows. Over the same period, this ratio rose to 4.5 percent from 4.1 percent at Synchrony, and to 5.3 percent from 4.7 percent at Alliance Data.
Hundreds of thousands of Americans in debt from the worst batch of student loans Wall Street ever bundled could see their balances cut under a tentative agreement the feds have struck with a little-known firm that effectively owns more than $8 billion in securitized student debt, Bloomberg News reported on Friday. The tentative deal, which has not yet been finalized, would resolve a years-long investigation by the Consumer Financial Protection Bureau into consumer lawyers’ allegations that debt collectors for the 15 trusts that hold that debt have flooded courts with sloppy lawsuits against tens of thousands of borrowers accused of having defaulted. Those trusts, the National Collegiate Student Loan Trusts, are collectively one of the nation’s largest owners of private student debt. Their preliminary settlement with the CFPB was reached by their ultimate owner, VCG Securities LLC, a Florida-based investment firm led by Donald Uderitz. If finalized, it would require the payment of “large sums” in restitution to borrowers and civil penalties to the U.S. government, according to a summary of the proposal filed in a separate court case.
As the White House courts Senate Democrats as it tries to pick up additional support for the Republican tax reform effort, Sen. Ted Cruz (R-Texas) is risking alienating his colleagues across the aisle by promoting a repeal of the Dodd-Frank Act through the fast-track reconciliation process, MorningConsult.com reported today. Cruz yesterday laid out goals for what he said was meaningful GOP tax reform. The Texas Republican urged his party to take advantage of Congress’ reconciliation process to use a simple Senate majority to repeal Dodd-Frank, which he called one of the “most damaging pieces of legislation in modern times.” Cruz said that removing Dodd-Frank’s regulatory impact on small lenders is a key element for a pro-growth tax overhaul.
The Census Bureau reported yesterday that U.S. median household income jumped for the second straight year, reaching $59,039 — a 3.2 percent increase after inflation, the New York Times reported today. The bureau also reported that the percentage of Americans living in poverty continued to fall last year, while the share with health insurance continued to increase. Household incomes are outpacing wage growth because millions of Americans have returned to the work force. The economy added roughly 2.2 million jobs last year and an additional 1.4 million in the first eight months of this year. The Census Bureau report is the second in a row to find strong income growth. A year ago, the bureau reported that the median income in 2015 had risen by 5.2 percent, the largest jump since record keeping began in 1967. The 2016 gains described on Tuesday pushed the median to the highest level on record, topping the previous peak in 1999.
The 30-day delinquency rate for all loans and leases fell to 2.20 percent in the second quarter from 2.22 percent a year earlier. The 60-day delinquency rate crept up to 0.67 percent from 0.62 percent a year earlier. The 30-day delinquency rate for auto loans and leases has improved for the second consecutive quarter. And as prime-risk originations continue to rise and subprime originations continue to fall, 60-day delinquencies likely will follow suit, according to Experian's second-quarter State of the Automotive Finance Market report. Super-prime loan and lease originations made up 19.1 percent of the market in the second quarter, up from 17.9 percent a year earlier. Prime-risk loan and lease originations dominated with a 39.4 percent share, up from 39 percent a year earlier. There was also a shift in market share by lender type in the second quarter, with more share going to credit unions and less to banks. Banks' share, on the other hand, fell to 32.3 percent from 34.8 percent a year earlier. Some banks have decided to pull back from auto lending and subprime financing, Zabritski said. "They've kind of rebalanced what percentage of their overall portfolio will be focused on auto, which can cause reduction in their share and reduction in bank share overall," she said. Overall, the second quarter was consistent with recent quarters, she said. "That's actually a good thing. It has been consistent performance and consistent originations."
The Senate last week unanimously approved legislation by Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Senator Al Franken (D-Minn.) clarifying Congress’ intent to allow family farmers to more easily reorganize their finances when they fall on hard times, according to a press release on Friday. As a part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Congress passed a provision to address the unique financial situations of family farmers who are reorganizing their assets following bankruptcy. However, a 2012 Supreme Court ruling found that the 2005 law, as written, failed to achieve Congress’ express goal of helping family farmers. Grassley and Franken’s Family Farmer Bankruptcy Clarification Act of 2017 rectifies the Supreme Court ruling by clarifying congressional intent. The Family Farmer Bankruptcy Clarification Act reiterates Congress’ earlier action to enable bankrupt family farmers reorganizing their debts to treat capital gains taxes owed to a governmental unit, arising from the sale of farm assets during a bankruptcy, as general unsecured claims. It also removes the Internal Revenue Service’s veto power over a bankruptcy reorganization plan’s confirmation, giving the family farmer a chance to reorganize successfully.
The White House is considering more than a half-dozen candidates to be the next head of the Federal Reserve, including economists and business people, with a goal of filling out a depleted board with expertise ranging from financial regulation to community banking, Bloomberg News reported yesterday. The breadth of the search goes against the narrative that has taken hold in Washington, D.C., and on Wall Street that the Fed chair nomination is a two-horse race between National Economic Council Director Gary Cohn and current Fed Chair Janet Yellen, whose term expires in February. Some of the other possible contenders include former Fed Governor Kevin Warsh, Columbia University economist Glenn Hubbard and Stanford University professor John Taylor, one of the people familiar said. Lawrence Lindsey, a former economic adviser to President George W. Bush, has been discussed. Former US Bancorp CEO Richard Davis and John Allison, the former CEO of BB&T Corp., have also been considered.
Equifax, one of the three major consumer credit reporting agencies, said yesterday that hackers had gained access to company data that potentially compromised sensitive information for 143 million American consumers, including Social Security numbers and driver’s license numbers, the New York Times reported today. The attack on the company represents one of the largest risks to personally sensitive information in recent years, and is the third major cybersecurity threat for the agency since 2015. Criminals gained access to certain files in the company’s system from mid-May to July by exploiting a weak point in website software, according to an investigation by Equifax and security consultants. The company said that it discovered the intrusion on July 29 and has since found no evidence of unauthorized activity on its main consumer or commercial credit reporting databases.
Sen. Chris Coons (D-Del.), a member of the Senate Judiciary Committee, announced yesterday that a bill he sponsored to extend temporary bankruptcy judgeships has passed the Senate, according to a press release. The bill calls for a five-year extension for 14 temporary bankruptcy judgeships and will create four new bankruptcy judgeships. With this bill, Delaware will retain its one permanent bankruptcy judge, will receive extensions of its five temporary bankruptcy judges and will receive an additional two temporary bankruptcy judgeships for five years to handle the heavy caseload for the district. Article References Bill: S. 1107, the “Bankruptcy Judgeship Act of 2017.”