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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
July 7, 2020
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Get ready for wave of small-business defaults, PNC's Demchak warns
Banks are about to start feeling the economic pain caused by the global coronavirus pandemic, PNC Financial Services Group CEO William Demchak warned Wednesday.
So far the damage has been minimal because consumers' checking account balances have been propped up by government stimulus checks and reprieves from making mortgage, car and other monthly payments while the economy was on lockdown.
But those balances are starting to shrink again, and Demchak fears that a slowdown in consumer spending will lead to "a lot" of defaults from both small businesses and their landlords when forbearances extended to them earlier in the pandemic run out in the third quarter.
Read more at AMERICAN BANKER
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Why Federal Regulators Are Right To Take A Balanced Approach Toward Short-Term Loans. by Mary Jackson - Forbes Councils Member
Mary Jackson is CEO of the Online Lenders Alliance, the online lending industry's center for lending, technology, and innovation.
For more than a quarter of the current year, we have been living in a world that none of us anticipated when the ball dropped and the clock tolled midnight on January 1, 2020. All of our best-laid plans and intentions set to mark the beginning of a new decade have, as the saying goes, now gone awry - canceled, put on pause or held in an uncertain state of arrested development - due to the coronavirus pandemic that swiftly spread across the globe.
Over the last three months, we've seen the number of COVID-19 cases in the United States alone rise to more than 2.5 million and the death count eclipse 126,000 Americans. More than 42 million Americans have lost their jobs due to the virus and the near shutdown of much of the nation's economy. The stock market, once on an unprecedented bull run, has vacillated widely and still appears to be on shaky footing.
Like every other industry, those of us who work in financial services have seen COVID-19-related impacts on our customers, our employees and our businesses. And like every other industry, we have had to adjust and adapt in order to keep serving an at-risk customer base facing unexpected expenses and income disruptions.
Read more at FORBES
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Bank profitability at risk as pandemic slows economy, OCC says
Bank profitability is at risk as the decline in economic conditions, brought on by the coronavirus pandemic, will broadly affect bank earnings, credit quality, operations and capital, the Office of the Comptroller of the Currency (OCC) said in a report released Monday.
"We enter the economic downturn sound and well capitalized with a lot of liquidity in the system, but there are weak economic conditions that will affect financial performance going forward," Acting Comptroller Brian Brooks said during a call with reporters.
The semiannual report, which represents the regulator's view of the risks facing the banking industry, found financial institutions are beginning to see the adverse credit effects of the economic shock brought on by the pandemic through increased customer forbearance requests and higher provisions for loan losses.
Read more at BANKING DIVE
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FDIC to launch competition on system to replace quarterly reports
- About 20 data and technology companies are set to compete to develop a method to give the Federal Deposit Insurance Corp. (FDIC) more timely and targeted information on banks' deposits and credit exposure, The Wall Street Journal reports. The effort, which launches Monday, could replace quarterly reports.
- The effort would focus on modernizing the data the FDIC collects from the roughly 3,200 community banks it regulates.
- The move to update the FDIC's systems began before the coronavirus pandemic, but the outbreak has shown how stale bank reports can be. The FDIC couldn't brief the public on first-quarter data until early June, and that data set didn't stretch past March - the month the economic downturn accelerated.
BANKING DIVE
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Coronavirus could be a 'major turning point' for sustainable investing, says JPMorgan
- The coronavirus pandemic could lead to a greater adoption of ESG investing, JPMorgan said Wednesday.
- ESG investing, or when a company's environmental, social and governance factors are considered alongside traditional financial metrics, saw record inflows in the first quarter.
- "While 'tipping-point' has been used to characterize this market for almost as long as it has existed, we do believe a substantial shift is under way: stakeholders are increasingly pricing in sustainability preferences," JPMorgan said.
Read more at CNBC
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CFPB Issues Rulemaking Agenda with October 2020 Deadline for Debt Collection Rules
The bureau is also seeking comments on debt collection validation notice qualitative testing due July 29.
The Consumer Financial Protection Bureau announced in its spring rulemaking agenda issued this week that it expects to take final action on the proposed debt collection rules in October 2020.
The agenda was released after the U.S. Supreme Court issued its decision in Seila Law v. Consumer Financial Protection Bureau, stating that the CFPB's leadership structure is unconstitutional. Read ACA's report on the decision.
The decision could have major implications on the debt collection rule since it is an election year and the sitting president can now remove the CFPB director for any reason. However, for now the bureau is on track to release the final rule in October, according to its agenda.
Read more at ACA INTERNATIONAL
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Not everyone is eligible for the forgivable loan program, but small businesses may have other resources to tap.
Though countless Americans have been hurt financially in the course of our current recession, small businesses have perhaps been hammered the most. It's estimated that more than 100,000 have already closed their doors permanently since the COVID-19 pandemic began, and many more risk a similar fate if economic conditions don't quickly improve.
Throughout all of this, the one thing that has helped many local businesses stay afloat is the Paycheck Protection Program, or PPP. Businesses that received PPP loans were eligible for funding equal to two-and-a-half times their monthly payroll costs. Meanwhile, those loans are completely forgivable provided that 60% of their proceeds or more are used for payroll purposes.
Originally, June 30 was the last day businesses could access PPP funds, but lawmakers opted to extend it at the last minute. As such, small businesses that never applied initially now have that option. Read more at THE MOTLEY FOOL
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Supreme Court won't throw out ban on robocalls to cellphones
WASHINGTON - The U.S. Supreme Court on Monday declined to strike down a federal law banning automated calls to the nation's cellphone users.
By a vote of 6-3, the court rejected a challenge to a federal law passed in 1991, the Telephone Consumer Protect Act, intended to stop the nuisance of computer-dialed cellphone numbers. In 2015, Congress added an exception to the law, allowing robocalls made to collect debts owed to the federal government.
A group of fundraisers, political organizations, and pollsters filed a lawsuit, claiming that the revision made the law unconstitutional because it discriminated on the basis of the content of the call. A victory for them would have unleashed automated calls to cellphones just as the 2020 presidential election campaign heats up.
But the court said the provision applying to government debts could be stricken from the law, allowing the general ban on robocalls to stand.
Read more at NBC
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Supreme Court's Seila Law Has Major Implications for CFPB, All Independent Agencies
Baker & Hostetler LLP
On June 29, the Supreme Court issued its decision in Seila Law v. Consumer Protection Financial Bureau (CFPB), holding that a removal restriction limiting the president's ability to fire and thereby control the director of the CFPB violated the Constitution's separation of powers. The decision has major implications both for the CFPB and for other independent agencies, including in regulatory challenges and enforcement actions.
The CFPB won, in a sense, because the Court rejected the argument that the removal restriction's unconstitutionality had to take down with it the entire agency. Instead, the Court severed the restriction from the statute, leaving the agency to function as it was, other than now being subject to greater presidential control. While the president's new ability to dismiss the director is unlikely to have much practical consequence at present, it does mean that if there is new president come January, that president will be able to appoint a new director to the CFPB to carry out his policy agenda rather than being stuck with President Donald Trump's pick.
Read more at LEXOLOGY
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Senate passes bill to extend PPP application deadline for small businesses
Business owners would have until August to apply for relief under bill
Lawmakers in the Senate passed a bill Tuesday to extend the window for business owners to apply for a loan through the Paycheck Protection Program, which is scheduled to expire Tuesday.
In a vote with unanimous consent, lawmakers in the chamber agreed on pushing the application deadline to Aug. 8.
The bill still requires approval in the House. Read more at FOX BUSINESS
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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
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Alternative Financial Service Providers Association
757.737.4088 315 Tuscarora St., Lewiston, NY 14092
[email protected]
www.afspassociation.com |
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