Bankers’ message
May 5, 2010 | alternatives, federal legislation, industry | Comments (0)From the head of the Virginia Bankers Association in Virginia Business Magazine:
Let me be very clear: banks of all sizes — community banks and large banks alike — are strongly in favor of financial reform that addresses the key problems that brought about the financial crisis of 2008-2009.
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Third, the bill would create a Consumer Financial Protection Bureau with broad independent rule writing authority. It sounds great in theory, and bankers strongly support improving consumer protections. But in practice, creating another new federal bureaucracy will produce more problems than it will solve by putting the government in charge of deciding what products are right for bank customers.
Hypocrisy from the NAACP
May 5, 2010 | alternatives, federal legislation, industry | Comments (1)From a Huffington Post article by NAACP President Benjamin Todd:
The NAACP agreed to end our lawsuit against Wells Fargo because we successfully negotiated an agreement that improves their practices and increases their transparency in ways that go far beyond what we could win in court.
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Next, we plan to return to systematically pursuing payday lenders like those we and our allies at the Center for Responsible Lending outlawed in Ohio and Arizona in 2008 where lenders were charging people interest rates of 400 percent.
So, Wells Fargo keeps offering payday loans while the NAACP participates in a campaign against its competitors, storefront payday lenders. In the name of transparency, the NAACP should tell the world the details of this deal they struck. Are they getting contributions from Wells Fargo? If not, what are they getting?
It’s not just about us cont.
May 5, 2010 | alternatives, federal legislation, industry | Comments (0)Community Banks are in “fear” of this bill, too. From The Atlantic:
The financial reform battle has been framed as a fight between big banks and Congress. Considering that the one of the ugliest aspects of the financial crisis was taxpayers being forced to bailout out giant financial institutions after discovering that they were so large that they couldn’t fail without taking down the rest of the economy, this interpretation would seem logical. So in order for Congress to address the problem of too big to fail, shouldn’t it be bullying the big banks, to the benefit of the smaller ones? You might think so, but there are a number of provisions in the Senate bill that worry community bankers. They fear that some aspects of financial reform will benefit the big banks and put the smaller ones out of business.
New rules for CU alternatives
May 4, 2010 | alternatives, federal legislation, industry | Comments (0)Issued by the NCUA:
Federal credit union alternatives to payday loans could range from $200 to $1,000, have a maximum APR of 1,000 basis points above the interest rate ceiling and carry an application fee of no more than $20.
Those are among the provisions of the proposed rules that the NCUA Board voted unanimously last Thursday to approve for a 60-day comment period.
Under the current interest rate ceiling, the maximum APR would be 28%. The loans could be for a minimum of one month and a maximum of six months, and any member couldn’t have more than one such loan from any one credit union at the same time.
Federal credit union alternatives to payday loans could range from $200 to $1,000, have a maximum APR of 1,000 basis points above the interest rate ceiling and carry an application fee of no more than $20.
It’s not all about us
May 3, 2010 | alternatives, federal legislation, industry | Comments (0)Other Main Street lenders are equally incensed about financial reform and working hard to fight it. From the story:
Robert Mims of Greenfield says he works two jobs to make the car payments on a 2005 Ford Taurus he bought four years ago for about $13,000. The payments – about $17,000 so far – already amount to more than what the car is worth, but he’s nowhere near paying off his car loan.
Mims, who has a bankruptcy on his credit record, says he left the dealership under the impression that the lender would lower his 24.9% interest rate if he made his payments on time for six months. He says he kept his end of the bargain, but the dealer did not. Four years later, he still hasn’t been able to negotiate a lower rate despite making his payments on time, and most of the payments he’s made continue to go toward interest, he said.”All they’re trying to do is rip off the American buyer,” he said. “At this moment, there’s probably someone getting suckered into a financing deal they can’t afford.”
Consumer advocates say Mims’ case exemplifies the need for stronger consumer protection regarding loans offered by auto dealers. The White House and many Senate Democrats agree; they’re now pushing for a new consumer financial protection agency that would regulate not just car dealers but other businesses that lend money to consumers.
“Too-big-to-fail” amendment will fail
May 2, 2010 | alternatives, federal legislation, industry | Comments (0)At least according to the sponsor. I guess for some senators it’s more important to stick it to Main Street than Wall Street.
Is it a Wall Street bailout bill?
April 30, 2010 | alternatives, federal legislation, industry | Comments (0)Big Government thinks so. Good video on this link.
Let the carve outs begin
April 29, 2010 | alternatives, federal legislation, industry | Comments (0)From The Hill:
A major source of revenue for big banks may ultimately be exempt from new regulations under financial reform legislation in Congress.
Lawmakers are looking to crack down on the multitrillion-dollar derivatives market that some blame for worsening the financial crisis.
But they appear on the verge of handing power to the Treasury Department to decide whether to exempt foreign exchange derivatives from tougher governmental oversight.
Sausage making is hard to watch.
Everything you need to know
April 26, 2010 | alternatives, federal legislation, industry | Comments (0)In today’s Washington Post:
Senators will face a crucial test vote Monday that could clear the way for debate on far-reaching legislation to overhaul the nation’s financial regulatory system — or end in a partisan standoff — as Wall Street once again takes center stage on Capitol Hill.
Elsewhere, lawmakers will be preparing to condemn the alleged sins of Wall Street’s past and also wrestling over how to prevent such excesses in the future. Top executives from Goldman Sachs, beset by charges that the bank misled its clients by selling them mortgage investments secretly designed to fail, will face questions Tuesday about how the firm profited from betting against the U.S. housing market.
Senate Republicans said Sunday they plan to block efforts to move forward with an overhaul bill unless Democrats alter central elements of the legislation. Meanwhile, Democrats and Obama administration officials spent much of the day finalizing strict new rules to rein in the huge derivatives trade, including measures that could threaten profits at some of the biggest banks.
What, military ban didn’t work?
April 23, 2010 | alternatives, federal legislation, industry | Comments (0)From the Army Times:
A couple of years after Congress passed a law to crack down on payday lenders, it turns out banks are still offering products that skirt the law.
The only difference: The banks say their loans are legal.
Wells Fargo and U.S. Bank, the two banks in the game, offer “payday advances” — renewable loans of up to 35 days that look every bit like a payday loan except they don’t violate the Defense Department’s narrow implementation of the Military Lending Act of 2007, which caps the interest rate on payday loans at 36 percent.
These “payday advances” are far more pricey: The annual percentage rate is 120 percent if the money is repaid within a month, and 261 percent if repaid within 14 days.
