News


Debtors Go to Court Over Disparate Bankruptcy Fees - ABI

Prepaid payment cards and mobile services just received a status upgrade, giving their users the same protections and services as those for bank debit-card customers, the Wall Street Journal reported. The Consumer Financial Protection Bureau this week started requiring issuers of prepaid cards to guarantee basic protection from fraud, unauthorized charges and errors. Prepaid cards allow users to load funds directly to a card without having a bank account. They usually carry a card-network logo like Visa or Mastercard and allow consumers to shop anywhere. Prepaid services are among the fastest-growing segment of the financial payments industry. The total amount loaded on general-use prepaid cards in the U.S. grew to $324 billion in 2017 from $208 billion in 2012, according to Mercator Advisory Group, a research and consulting firm. It projects the market to grow at an annual rate of around 10 percent, reaching $428 billion in 2021.


U.S. Retail Stores’ Planned Closings Already Exceed 2018 Total - ABI

As the internet continues to change shopping habits, stores across the U.S. continue to close, the New York Times reported. Less than halfway through April, American retailers have announced plans this year to shut 5,994 stores, exceeding the 5,854 announced in all of 2018, according to data from Coresight Research. Retailers in good financial shape are paring locations as their leases expire, while brands like Payless ShoeSource and Charlotte Russe are filing for bankruptcy and shutting hundreds of stores within months. Payless and Gymboree — which both filed for bankruptcy this year for a second time — account for almost half of the announced closings. “For a long time, companies have talked about the squeeze in the middle of retail, but then you see the closure of a Payless,” said John Mercer, a senior analyst at Coresight, a research and advisory firm. “There’s just so much choice now that it’s not so much always the middle.” Stores that are surviving tend to offer consumers more compelling experiences and better complement online shopping options, Mercer added. The announced closings still have a ways to go before they reach the 2017 record of more than 8,000. And openings and renovations are still taking place. Coresight has tracked announcements of 2,641 store openings by retailers in the United States this year, compared with 3,239 for all of 2018. Many of this year’s openings are dollar stores and other discount chains — areas that are less threatened by e-commerce right now. Online retailers like Warby Parker are also opening stores, though on a small scale.
Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store.


Analysis: College Grads Sell Stakes in Themselves to Wall Street - ABI

To fund part of the cost of a college degree, some students are sidestepping the common source of money, a student loan. Instead, they have agreed to hand over part of their future earnings through a new kind of financial instrument called an income-sharing agreement (ISA), according to a BloombergBusinessweek analysis. In a sense, financiers are transforming student debtors into stock investments, with much of the same risk and, ideally, return. For now, the market for income-sharing agreements can be measured in the tens of millions, a tiny sum compared with the $170 billion in outstanding asset-backed securities created from student loans. Only some schools let outside investment firms buy a stake in students. Others seek out individual donors, mostly wealthy alumni, or use money from their own endowments. Along with Purdue, which started its program in 2016, some smaller private schools such as Lackawanna College in Scranton, Pa., and Norwich University in Vermont are offering ISAs. The University of Utah recently announced a pilot plan. ISAs raise all kinds of questions. How many students will lose their jobs and be unable to pay? How much should Wall Street demand as compensation for the risk? Investors typically ask for a smaller slice from students with more lucrative majors. At Purdue, for example, English majors borrowing $10,000 pay 4.52 percent of their future income over nearly 10 years; chemical engineers, 2.57 percent in a bit over seven years.


Financial Well-Being of Veterans - CFPB

In late 2016, the Bureau administered the financial well-being scale in a nationwide survey of adults in the United States. The Bureau’s review of the veterans in the survey found that veterans reported higher levels of financial well-being than the average U.S. adult.  An analysis of the veteran survey responses found evidence that financial skills (e.g. making a budget, not overspending, etc.) is positively associated with financial behavior, which is also positively associated with financial situation and higher levels of financial well-being.  This analysis suggests that, for veterans, there is a pathway from financial skill to financial well-being.


Prepaid-Card Users Get Protection Guarantee - ABI

Prepaid payment cards and mobile services just received a status upgrade, giving their users the same protections and services as those for bank debit-card customers, the Wall Street Journal reported. The Consumer Financial Protection Bureau this week started requiring issuers of prepaid cards to guarantee basic protection from fraud, unauthorized charges and errors. Prepaid cards allow users to load funds directly to a card without having a bank account. They usually carry a card-network logo like Visa or Mastercard and allow consumers to shop anywhere. Prepaid services are among the fastest-growing segment of the financial payments industry. The total amount loaded on general-use prepaid cards in the U.S. grew to $324 billion in 2017 from $208 billion in 2012, according to Mercator Advisory Group, a research and consulting firm. It projects the market to grow at an annual rate of around 10 percent, reaching $428 billion in 2021.


Billion to Pay for Health Care Last Year, Survey Finds - ABI

A survey released yesterday by Gallup and the nonprofit West Health found that Americans borrowed an estimated $88 billion over the last year to pay for health care, the New York Times reported. The survey also found that one in four Americans have skipped treatment because of the cost, and that nearly half fear bankruptcy in the event of a health emergency. There was a partisan divide when respondents were asked whether they believed that the American health care system is among the best in the world: Among Republicans, 67 percent of respondents said they believed so; that number was 38 percent among Democrats. But Democrats and Republicans had similar responses about putting off medical treatment. Asked if they had deferred treatment because of the cost, 27 percent of Democrats said they had, compared with 21 percent of Republicans and 30 percent of independents.


2018 Consumer Response Annual Report - CFPB

The Consumer Financial Protection Bureau began consumer response operations on July 21, 2011, and became the first federal agency solely focused on consumer financial protection. The Bureau’s Consumer Response team hears directly from consumers about the challenges they face in the marketplace, brings their concerns to the attention of financial institutions, and assists in addressing their complaints.


HMDA Modified Loan Application Registers Released - ABI

WASHINGTON, D.C. — Today, the Home Mortgage Disclosure Act (HMDA) Modified Loan Application Registers (LARs) data were published for approximately 5,400 financial institutions. This is the first year in which additional data reported by certain institutions under the 2015 HMDA rule will be available. The Modified LARs contains loan level information for 2018 on individual HMDA filers, modified to protect privacy.


Payday Lenders Get Unexpected Reprieve from CFPB Rule - American Banker

A federal judge delivered another victory to payday lenders by leaving in place a stay on the compliance date for the Consumer Financial Protection Bureau’s 2017 payday lending rule, American Banker reported. That rule, drafted under former CFPB Director Richard Cordray, had two key components: new underwriting requirements for high-cost, small-dollar lenders, and limits on how often a lender can attempt debiting payments from a borrower's bank account. The CFPB under Trump-appointed Director Kathleen Kraninger already proposed eliminating the underwriting portion. But in a surprising development, U.S. District Judge Lee Yeakel's ruling that a stay of the Aug. 19 deadline will remain in effect means the payment provision will continue to be delayed as well. Yeakel, who did not indicate when he would lift the stay, is presiding over an industry lawsuit in Texas seeking to kill the rule. Once the Trump administration took control of the CFPB, the bureau sided with the plaintiffs in the case and announced its intent to reopen the rule and propose changes. The judge issued the stay in November to give the agency time to formulate a proposal.