The 50+ generation of consumers is the most financial challenged in history. Numbering more than 110 million in America alone, they are confronting a future of complex options and less financial confidence than any previous generation. With most either entering retirement, or already in a post-employment phase, decisions this generation makes today will impact not only their life, but the financial lives of their children who may be forced to support them. Although the 50+ segment represents only 35% of the entire U.S. population, they control more than half of the nation’s investable assets. The people in this generation are heavy users of almost all financial services, holding balances in their accounts that are coveted by banks, credit unions, insurers, financial planners and wealth managers. They are also the fastest growing segment of digital product users, becoming comfortable with the online and mobile solutions that other generations already depend on. Most importantly, the 50+ generation is a huge segment with significant needs that are currently unfilled. And with future generations (including Millennials), not having faced these challenges to date, but directly impacted by the outcome of their parent’s financial decisions, meeting the needs of the 50+ consumer has the potential of impacting the banking loyalty of their children.
The updates to the leading Republican effort to replace the Dodd-Frank Wall Street Reform and Consumer Protection Act are out, which include possible changes to the leadership structure of the top housing agencies.
A memo first came out on potential plans reportedly from House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, back in February, revealing an even more aggressive version of the Financial CHOICE Act.
That memo showed that the Consumer Financial Protection Bureau was facing some of the most dramatic changes under the updated Act. Previously, the CHOCIE Act 1.0 proposed leadership changes for not only the CFPB, but the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and the National Credit Union Administration as well. But looking over the new summary of the CHOICE Act 2.0, the language walks back a lot of the initial CHOICE Act 1.0 proposals.
After years of packing on debt, more American consumers are struggling to pay their credit-card bills. Credit card charge-offs have been rising steadily, posting their biggest surge since 2015 in February. Lenders from Capital One Financial Corp. to Discover Financial Services have ratcheted up loan-loss provisions and reported increasing delinquencies. This has raised concern among analysts and investors alike, especially when paired with the fact that card loans outstanding just surpassed $1 trillion for the first time since the financial crisis. The consequences could be significant for some lenders, especially private-label card companies including Synchrony Financial and Alliance Data Systems Corp., which both report earnings next week. These firms are likely to be canaries for broader weakness among consumers because they cater to subprime borrowers unlike, say, American Express Co. or JPMorgan Chase & Co.
Warning that federal bankruptcy courts face a “debilitating workload crisis” in Delaware and eight other districts, the U.S. Judicial Conference urged Congress to authorize four new bankruptcy judgeships and convert 14 temporary judgeships into permanent positions, according to a press release on Friday. In a letter on April 3 to Congressional leaders, the Conference said that all 14 temporary judgeships are scheduled to lapse May 25, posing a particularly heavy impact on Delaware’s federal bankruptcy court. “These bankruptcy courts would face a serious and, in many cases, debilitating workload crisis if these temporary judgeships were to expire,” wrote James C. Duff, as secretary of the Judicial Conference. “The U.S. Bankruptcy Court for the District of Delaware, for example, would be crippled as five of their six authorized judgeships are temporary, all with the risk of expiring in 2017.” Other affected court districts are the Middle and Southern Districts of Florida, the Eastern District of North Carolina, the Eastern District of Virginia, and the Districts of Maryland, Michigan, Nevada and Puerto Rico.
The House of Representatives voted yesterday to add a new section to the bankruptcy code just for banks, a measure meant to allow banks to fail without needing taxpayer bailouts or setting off a crisis, the Washington Examiner reported yesterday. The lower chamber passed the Financial Institution Bankruptcy Act of 2017 on a voice vote, a week after the bill cleared the Judiciary Committee also on a voice vote. Speaking on the House floor Wednesday, committee chairman Bob Goodlatte of Virginia said that the legislation "will better equip our bankruptcy laws to resolve failing firms, while also encouraging greater private counter-party diligence in order to reduce the likelihood of another financial crisis." The bill would set out a specific set of rules to help authorities sort out which creditors are owed in the event of a bank bankruptcy, in an effort to reduce the panic and uncertainty that can accompany these events. The House has passed the legislation in previous Congresses, but the Senate has not acted on it.
In a private meeting with lawmakers, White House economic adviser Gary Cohn said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, Bloomberg News reported yesterday. Cohn, the ex-Goldman Sachs Group Inc. executive who is now advising President Donald Trump, said that he generally favors banking going back to how it was when firms like Goldman focused on trading and underwriting securities, and companies such as Citigroup Inc. primarily issued loans. The remarks surprised some senators and congressional aides who attended yesterday’s meeting, as they didn’t expect a former top Wall Street executive to speak favorably of proposals that would force banks to dramatically rethink how they do business. Yet Cohn’s comments echo what Trump and Republican lawmakers have previously said about wanting to bring back the Glass-Steagall Act, the Depression-era law that kept bricks-and-mortar lending separate from investment banking for more than six decades.
A major provision of the new banking rules created after the 2008 financial crisis is too complicated and should be revised, the Federal Reserve's outgoing point man on financial regulation said yesterday, the Washington Examiner reported today. "Several years of experience have convinced me that there is merit in the contention of many firms that, as it has been drafted and implemented, the Volcker rule is too complicated," Fed governor Daniel Tarullo said in an exit interview at Princeton University. The rule, which is meant to prevent banks from speculating with deposits insured by the government, may be having a "deleterious" effect on market liquidity, Tarullo suggested, floating the idea that small banks might be exempted from it altogether.
The House won’t vote until this summer at the earliest on changes to the 2010 Dodd-Frank financial-overhaul law, a senior Republican said yesterday, demonstrating how the path for regulatory relief remains in flux as lawmakers grapple with health care policy, a tax overhaul and other issues, the Wall Street Journal reported today. Rep. Patrick McHenry (R-N.C.) said financial regulatory policy could make it to the House floor “when it is warm out…perhaps June, July would be my hope.” When Republicans do move toward voting on a financial regulatory bill, there is “no question” the House can “pass a major change to financial services law,” McHenry said. “What the Senate can do from there is an open question,” he added, nodding to the fact major Dodd-Frank changes might face opposition from Senate Democrats.
The Consumer Financial Protection Bureau on Friday pushed back against the Justice Department’s contention that its independent structure is unconstitutional, but said that it could still do its job even if a court orders structural changes, the Wall Street Journal reported. The consumer watchdog created under the Obama administration is stepping up its defense ahead of a federal appeals court hearing in May that could significantly transform its operations. Responding to the court’s request for a possible remedy if the agency’s structure is ruled unconstitutional, the CFPB said that if its structure is altered and the president gains the power to fire its director at will, it will still be able to function in the manner consistent with its original mission.
The number of home foreclosures is down sharply from the depths of the financial crisis, even as many of the mortgage firms involved remain the same, including Fannie Mae, Wells Fargo, Bank of America and JPMorgan Chase. But the latest foreclosure rankings also include a number of firms that barely registered or did not exist when the crisis began a decade ago, the New York Times reported today. These new entrants include firms affiliated with the private equity giant Lone Star Funds, the mortgage lender PennyMac Loan Services, the investment bank Goldman Sachs and the mortgage firm Carrington Mortgage Services. This changing of the guard in the foreclosure rankings, based on data compiled by RealtyTrac, reflects the new reality that most foreclosures today are not coming from mortgages written during the post-crisis period, but from soured loans written before the crisis that are in the final stages of liquidation.