Lawmakers needle regulators about lack of tailored regulations

By Katalina M. Bianco, J.D.

Representative Scott Tipton (R-Colo) has written a letter, signed by more than 130 bipartisan lawmakers, to federal bank regulators “to express our deep concern over the crushing impact that ever-expanding regulatory burdens are having on the ability of our nation’s financial institutions, particularly community banks, to serve the economic needs of our growing economy.” Tipton and his colleagues are disputing regulators’ claims that they are effectively tailoring regulation and requested detailed information on what steps the agencies are taking to tailor regulations to fit the business models of the institutions they regulate.

Specific information requested. In their letter to the heads of the Consumer Financial Protection Bureau, Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and National Credit Union Administration, the legislators wrote, “Increasingly, duplicative and ‘one-size-fits-all’ regulations, imposed by multiple federal agencies, stifle financial institutions’, including community banks, abilities to serve their local communities.” The representatives asked regulators to identify specific major areas in which they have taken action to tailor rules to the business model and risk of institutions or classes of institutions and in which areas the regulators lack the authority to tailor regulations. The lawmakers also want to know if there are any specific areas in which regulators are contemplating taking additional steps to tailor regulations and how they plan on doing so.

Legislation. On March 2, the House Financial Services Committee passed legislation authored by Tipton, the Taking Account of Institutions with Low Operation Risk (TAILOR) Act of 2015 (H.R. 2896). The measure would promote tiered regulation of the banking industry by requiring federal regulatory agencies to tailor regulations to fit the business model and risk profile of institutions. H.R. 2896 passed the committee 34-22.

For more information about tailoring regulations, subscribe to the Banking and Finance Law Daily.

Debt collection complaints still #1:CFPB snapshot

By Katalina M. Bianco, J.D.

Debt collection has been the most-complained-about financial product to the Consumer Financial Protection Bureau, with approximately 219,200 complaints submitted as of March 1, 2016. This represents 26 percent of the total complaints submitted. The bureau's latest monthly complaint snapshot focuses on consumer's debt collection complaints, and according to the report, the most common complaint is about attempts to collect on a debt that the consumer said was not owed.

 

“Today’s report shows that inaccurate information about debts continues to be a source of frustration for many consumers,” said CFPB Director Richard Cordray. “We will continue to hold debt collectors accountable for ensuring that they are collecting the right amount from the right person.”

 

 Highlights. Some of the key highlights in the snapshot include the following:

 

• First-and-third party debt collectors attempting to collect debts that consumers said were not owed made up 38 percent of all debt collection complaints.
• Debt collectors called consumers weekly, or even daily, after being told the alleged debtor was not at that number.
• Consumers were not given enough information to verify whether they owed the debt in question.
• The most complained about companies were Encore Capital Group and Portfolio Recovery Associates, Inc., two of the largest debt buyers in the country. They averaged more than 100 complaints each month between October and December 2015. The CFPB noted that in 2015, it took enforcement actions against these companies for using deceptive tactics to collect bad debts.

National overview. As of March 1, 2016, the CFPB has handled 834,400 complaints nationally. Complaints submitted relating to credit reporting rose 13 percent between January and February 2016. The top three companies about which the CFPB received the most complaints between October and December of 2015 were Equifax, Experian, and Transunion.

 

Spotlight on Florida. This month's snapshot included trends seen in complaints from consumers in Florida. As of March 1, 2016, consumers in Florida have submitted 80,200 of the 834,400 complaints the CFPB has handled. Complaints from the three largest metro areas in Florida—Miami, Orlando, and Tampa Bay—accounted for nearly 60 percent of the complaints submitted from the state.

 

Mortgages are the most-complained-about product in Florida, accounting for 30 percent of all complaints. Complaints about debt collection accounted for 24 percent of total complaints from Florida. Equifax, Bank of America, and Experian were the three most-complained-about companies from consumers in Florida.

 

 For more information about debt collection and the CFPB, subscribe to the Banking and Finance Law Daily.

NYDFS BSA/AML proposal deemed ‘unnecessarily prescriptive and potentially problematic’

By John M. Pachkowski, J.D.

The Clearing House, a banking association and payments company that is owned by the largest commercial banks, has commented on a December 2015 proposal that would require banking institutions supervised by the New York Department of Financial Services to maintain transaction monitoring and watch list filtering programs (collectively, transaction monitoring and filtering programs) as part of their Bank Secrecy Act/Anti-Money Laundering compliance programs. In addition to the transaction monitoring and watch filtering programs, a senior officer of each banking institution would be required to certify that the institution’s monitoring and filtering programs are sufficient to “detect, weed out, and prevent illicit transactions.”

Shortcomings addressed. The proposal was the end result of a series of investigations conducted by NYDFS into terrorist financing, sanctions violations, and anti-money laundering compliance at financial institutions. The proposal noted that “the Department has become aware of the shortcomings in the transaction monitoring and filtering programs of these institutions and that a lack of robust governance, oversight, and accountability at senior levels of these institutions has contributed to these shortcomings.”

Potentially problematic requirements. Although TCH noted in its comment letter, that it was “deeply committed to the shared public and private sector objective of detecting and combating financial crimes and terrorist financing,” it was concerned “that certain elements of the proposal would introduce unnecessarily prescriptive and potentially problematic requirements.”

Specifically, TCH contended that: the proposal was redundant and, in some cases, inconsistent with the existing federal BSA/AML/OFAC framework; and the proposed certification requirement would likely undermine institutional compliance programs and recommends its removal from the proposal.

The trade association suggested that as an alternative to adoption of the proposal, NYDFS establish a public/private sector task force to discuss emerging issues and supervisory expectations for transaction monitoring and filtering programs as each evolves. Additionally, TCH provided technical recommendations on certain aspects of the proposal’s monitoring provisions.

For more information about Bank Secrecy Act/Anti-Money Laundering compliance, subscribe to the Banking and Finance Law Daily.

Online advertising and the benefits

Online ad targeting technology the online application brought prominence and attracted a large community using computers and the internet, to create specialized products to serve for the purpose of advertising: Advertising cabinet digital media (online advertisement contents), online search advertising (Seach Engines Marketing), advertising online social networking (social network advertisement), Email marketing, ...

Cost savings

Compared to traditional marketing, advertising solutions online marketing costs a lot less, especially for small businesses with the funds spent on advertising is not much.


Global Market Access

With a website and an online marketing plan right, you absolutely can make a business image and products to potential customers around the world, e-commerce makes it easy to receive and process the applications global customers quickly and easily. Here are the most obvious advantage of customer reach, speed of access, procedures, costs ... In order to do this the traditional marketing will cost you a significant amount.


High efficiency

With online marketing, promotion to identify customer segments is done easily and efficiently. You can choose to put your product information to a youth focus, office blocks or other customers ... Modern life does not spend too much spare time for humans, when the machine computer and internet activities tied to the life and work of man, it is the land of online marketing you can not fail to exploit.


Easily control effectiveness and make changes in the advertising campaign.

Online marketing helps you to check the effectiveness of campaigns with detailed reports in real time (eg how many people saw your ads; daily traffic; some people see a higher product or lower than the Bvv ..). Based on the information obtained, you can change and adjust the components and solutions in its strategy immediately and very quickly to obtain the desired results.


Contact directly and immediately with potential customers

When customers interested in products / services, they will be able to easily send a request content through free utility (email, live chat, helpdesk tickets, ..) and you immediately Articles can easily respond to them. Marketing online products along with e-commerce applications has brought more interactive and easier between businesses and customers.

The benefits of online shopping

Modern life is increasingly busy, that you sometimes do not have time to go shopping in stores and supermarkets. Therefore, online shopping is the most viable option for those you give in to the flow of the times.

Buy online has many unique features Vietnam than buying direct online purchases when you share the following benefits:

- Save time and effort:

With a computer or other mobile devices with internet connection, you can enjoy purchasing power anywhere you want. Then the service delivery to the home said shipping for you.

- Freedom to choose from, refer to the following items:

You share power enjoyed their selection of products on sale on the website in any spare time before making a purchase decision.

- Wide shopping discounts:

Comfortable reference product on many different stores that you find on the net, making the choice becomes more diverse.

- Active in all situations:

You can comfortably comments, ask for advice to address these questions, if not pleasant delivery, choice of payment methods, ...

- Other costs savings:

Save Gas, oil and the costs incurred in the process of shopping.

- To participate in the promotion:

And above all, you would easily refer to attractive promotions, help you minimize procurement costs and still owns the cave is like the best.

Currently, there are some general websites such promotions promotions hot, .... If the need arises, you go directly to the page to reference the discount information sharing takes no time more.

The term CPM, CPC, CPA is what?

CPA Cost per action or CPA (sometimes known as Pay Per Action or PPA) is an online advertising model where the advertiser pays for each specified action (a purchase, sign up to receive email ... ) concerning advertising.

Advertisers want to have verbally see CPA is optimally implement online marketing campaigns, as an advertiser only pays for the ad when the desired action has occurred. An action can be a product being purchased, a registration form is complete, the desired action to be performed is determined by the advertiser. Radio and television stations also sometimes provide other forms of advertising cost per action basis, but this form of advertising is often called "per inquiry"

CPA can be determined by various factors, depending on where the ad position.


1. CPA is "Cost Per Acquisition"

CPA is sometimes called "Cost Per Acquisition") where the advertiser wants to achieve specific goals such as product sales. Use the "Cost Per Acquisition" instead of "Cost Per Action" is not inaccurate in such cases, but not all "cost per action" provided that can be called "Cost Per Acquisition ".


CPA calculation formula:
Calculate CPA = expenditure / x CTR x number of impressions CR. Let's say that in the 20,000 to show, you have 5% of clicks (CTR) to your landing page (website) and 30% of 5% this become a customer (CR):
$ 200 / [20,000 x 0.05 x .30] = $ 0.67 cost per customer has purchased the product.
CPC (Cost Per Click) - Advertising Pay per click. This form of advertising is really effective because it is directed to the right audience targeted customers interested in the products or services your company and the people who have real needs.
You'll only pay when customers click on your ad images. Depending on your daily budget for this form of advertising is much that the maximum number of clicks on your image. We will suggest to you the price per click is the most reasonable.

2. CPM "cost per 1000 impressions"
Cost per thousand impressions, often abbreviated to CPI or CPM is the phrase used in online marketing related to web traffic. Campaign where the advertiser pays for every ad displayed to a user usually in the form of a banner ad on a website, but can also refer to the ads in email advertising.
When an ad is downloaded by a user when viewing a website. A site may contain advertising and in such cases a page view will result is a show for every ad displayed to the user.
In order to calculate the number displayed correctly and prevent fraud, an ad server may exclude certain ineligible operations such as page refreshes or the actions of other users, including like display. When advertising rates are described as CPM or consumer price index, which is the amount paid for each thousand impressions eligible.
Cost per CPM is one of the marketing strategies most commonly used on the Internet along with the cost per click (CPC / PPC) and cost per action (CPA) (including CPL and CPS). Advertising CPM is generally preferred by the site because they can be sure of revenues, they will generate traffic to their website, but the CPM can be compared to different marketing strategies by cost-effective test for each (eCPM). eCPM notify the site what they would get if they sell ad placements on a CPM basis by relying on click-through rate (CTR) and / or the rate converter (CVR) of the campaign.

3. CPA "Cost Per Acquisition"

CPA Cost per action or CPA (sometimes known as Pay Per Action or PPA) is an online advertising model where the advertiser pays for each specified action (a purchase, sign up to receive email ... ) concerning advertising.

Advertisers want to have verbally see CPA is optimally implement online marketing campaigns, as an advertiser only pays for the ad when the desired action has occurred. An action can be a product being purchased, a registration form is complete, the desired action to be performed is determined by the advertiser. Radio and television stations also sometimes provide other forms of advertising cost per action basis, but this form of advertising is often called "per inquiry"

CPA can be determined by various factors, depending on where the ad position.

CPA is the "Cost Per Acquisition"

CPA is sometimes called "Cost Per Acquisition") tron ​​case the advertiser wants to achieve specific goals such as product sales. Use the "Cost Per Acquisition" instead of "Cost Per Action" is not inaccurate in such cases, but not all "cost per action" provided that can be called "Cost Per Acquisition ".
The formula calculates the CPA

Calculate CPA = expenditure / x CTR x number of impressions CR. Let's say that in the 20,000 to show, you have 5% of clicks (CTR) to your landing page (website) and 30% of 5% this become a customer (CR):

$ 200 / [20,000 x 0.05 x .30] = $ 0.67 cost per customer has purchased the product.

Federal Reserve launches survey to better understand finance company industry

By Thomas G. Wolfe, J.D.

The Federal Reserve has launched a survey of finance companies to obtain a “comprehensive view of the range of companies in this sector of the U.S. financial system” and to further develop its understanding of the finance company industry. In 2015, the Fed sought to identify all nonbank financial institutions that extend credit or supply lease financing to households and businesses in America. Now, the Fed is conducting a follow-up survey to obtain a more detailed picture of the industry.

According to the Fed’s March 23, 2016, release, the survey is designed to collect “balance sheet data on major categories of household and business credit receivables and liabilities” from the finance companies. Not only will the collected data provide a clearer benchmark for the Fed’s Finance Companies statistical release, the input also will better equip the Fed when it compiles figures and estimates for its Consumer Credit and Financial Accounts of the United States releases.

As part of the survey initiative, Fed Chair Janet Yellen is sending a letter to approximately 2,300 finance companies, explaining the Fed’s undertaking and urging the companies to participate in the survey. In her letter, Yellen emphasizes that the “availability of credit to consumers and businesses is important to our economy, and finance companies play a very important role in U. S. credit markets.”

For more information about issues of interest to the finance company industry, subscribe to the Banking and Finance Law Daily.

CFPB’s HELP Act rule expands access to credit

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau has issued an interim final rule that broadens the availability of certain special provisions for small creditors that operate in rural or underserved areas. The interim rule, which takes effect March 31, 2016, implements Congress’s recent legislation, the Helping Expand Lending Practices in Rural Communities (HELP) Act.

The HELP Act was a legislative response to concerns that the CFPB’s series of mortgage regulations issued in January and May 2013 had impacted small creditors operating in rural or underserved areas.

“Predominantly operated." Although the 2013 mortgage regulations imposed, among other things, an ability-to-repay requirement, a qualified mortgages provision, a prohibition on balloon payments for high-cost mortgages, and required escrow accounts for higher-priced mortgages, the CFPB fine-tuned the mortgage regulations to allow small creditors that “predominantly operated” in rural or underserved areas to originate qualified mortgages and high-cost mortgages with balloon payments. The small creditor provisions also did not require these creditors to establish escrow accounts for higher-priced mortgages. The bureau construed “predominantly operated” to mean that the small creditor made more than half of its covered mortgage loans on properties located in rural or underserved areas in the prior calendar year.

The HELP Act amended the “predominantly operated” requirement to provide that a small creditor now will be eligible for these provisions if it operates in a rural or underserved area, even if that is not the predominant area of its operations.

Cordray comments. CFPB Director Richard Cordray said, “The Consumer Bureau today has acted to implement the recent law that extends to more small creditors the specific provisions for operating in rural or underserved areas. This rule provides broader eligibility for lenders serving those areas to originate balloon-payment qualified and high-cost mortgages.”

ICBA weighs in. The Independent Community Bankers of America voiced its support of the CFPB rule, stating that the bureau's "updated rule expands the number of community banks eligible for exemptions on mandatory escrows for higher-priced mortgages and Qualified Mortgage safe harbor status for balloon payment mortgages they hold in portfolio. Community banks that are small creditors will be able to continue to offer balloon payment mortgages and be exempt from mandatory escrow rules for higher-priced mortgages if they make at least one loan in a rural or underserved area. This will allow many more community banks in rural or underserved areas to meet the needs of their customers and communities." The ICBA added, "“The CFPB rule marks another important step in the enactment of ICBA-advocated regulatory changes broadening small-creditor and rural designations under the CFPB’s Regulation Z mortgage rules."

For more information about the CFPB's mortgage rules, subscribe to the Banking and Finance Law Daily.

KeyBank plans $16.5B community investment related to First Niagara merger

By J. Preston Carter, J.D., LL.M.

KeyBank has agreed to lend or invest $16.5 billion in low- and moderate-income communities as part of a community benefits agreement signed with the National Community Reinvestment Coalition. The commitment includes mortgage, small business, and community development lending, and philanthropy in low- and moderate-income communities, to be carried out over five years, beginning in 2017.

KeyBank’s summary of the plan explains that it addresses concerns expressed by the NCRC and NCRC member organizations in light of KeyBank’s pending acquisition of Buffalo, N.Y.-based First Niagara, scheduled for Q3 2016. KeyBank is headquartered in Cleveland, Ohio.

The Plan covers all 23 of KeyBank’s current markets, from Alaska to Maine, five of which, pre-acquisition, overlap with First Niagara: Buffalo/Niagara Falls, Rochester, Syracuse, Albany, and Hudson Valley. In addition, the Plan covers four First Niagara markets that will be new to KeyBank in: Philadelphia (and Allentown), Pa.; Pittsburgh, Pa.; Hartford, Conn. (including eight branches in Springfield, Mass.); and New Haven, Conn.

“This commitment is the result of a collaborative process with community members and bank leaders after months of give and take, resulting in a substantive and detailed commitment of resources and services to communities throughout the KeyBank and First Niagara Bank footprints,” said NCRC President and CEO John Taylor.

Key features of the $16.5 billion plan include:

• $5.0 billion in mortgage lending to low- and moderate-income communities;
• $2.5 billion in small business lending to low- and moderate-income communities;
• $8.8 billion in community development lending and investment;
• $175 million in philanthropic activities; and
• $5 million annually in marketing and communications outreach.

A KeyBank release stated that a partnership with the NCRC, including over 80 community organizations, provided valuable input to develop the National Community Benefits Plan. Beth Mooney, KeyCorp Chairman and CEO, said, "For us, balancing mission and margin is about a commitment that goes above and beyond what is required. It is simply the right thing to do, and it is good business. As evidence of that balance and our ongoing commitment to shareholders, we remain confident in and committed to meeting the growth and financial objectives of the KeyBank/First Niagara acquisition."

For more information about community development lending and investment, subscribe to the Banking and Finance Law Daily.

Prepaid cards are covered by customer information programs

By Richard A. Roth, J.D.

Banks issuing general purpose prepaid cards that have the features of bank accounts must apply their customer information programs to their customers, according to interagency guidance issued by the banking regulatory agencies and the Financial Crimes Enforcement Network. This requirement applies to cards sold or marketed by third parties, even if the third party operates the card program, the guidance makes explicit. According to the agencies, CIP rules must be applied due to the vulnerability of prepaid cards for money laundering and other financial crimes (FIL-21-2016, SR 16-7, OCC 2016-10).

The key to determining whether a bank’s CIP applies to a prepaid card is determining whether an account has been created at the bank. Under the guidance, there are two criteria. An account has been created if:

1. the card can be reloaded, either by the cardholder or by a third party; or
2. the card offers access to credit or overdraft protection.

Who’s the customer? A bank’s CIP requires the bank to acquire and verify information about the identity of the customer, the guidance says. However, the cardholder and the customer are not necessarily the same. Who is the customer—the person about whom information is required—depends on whether the cardholder can reload the card or has access to credit.

The guidance outlines the requirements for several different, common prepaid cards. According to the agencies:

General purpose prepaid cards—If the cardholder can reload the card or gain access to credit features, the cardholder is the customer. A third-party program manager is the bank’s agent, not its customer.

Payroll cards—If only the employer can add value to the card, the employer is the customer and the bank’s CIP should be applied to the employer. It is not necessary to apply the CIP to each employee unless an employee can add value to the card or gain access to credit, even if the bank maintains a subaccount for each individual employee.

Government benefit cards—If only government benefits can be added to the card and there is no access to credit, the cardholder is not the bank’s customer. Moreover, since government agencies are not considered to be customers under the CIP rule, the bank has no CIP duties.

Health benefit cards—How a bank’s CIP should be applied to health benefit cards, which are used by employers to cover medical care costs of employees or their dependents, depends on whether the card applies to a Health Savings Account, Flexible Spending Arrangement, or Health Reimbursement Arrangement. An HSA account is established by the employee and both the employee and employer can add value, so the employee is the bank’s customer. On the other hand, in the case of an FSA or HRA card, the employer establishes the account, loads value, and makes payments, so the employer is the bank’s customer for purposes of the CIP.

For more information about customer information program requirements, subscribe to the Banking and Finance Law Daily.

New York zaps payday loan lead generator

By Stephanie K. Mann, J.D. 

In order to further its initiative to crack down on unfair, deceptive, or abusive acts and practices affecting its citizens, New York Department of Financial Services has announced a settlement with Blue Global LLC, an online payday loan lead generator, for violations of New York law, under which the company must pay a $1 million penalty, cease payday loan lead generation activities in New York, and provide new consumer warnings and disclosures. The company’s Chief Executive Officer was personally found to be in violation of New York law under the Consent Order.

An investigation by the Department found that Blue Global misrepresented to New York customers and others the legal status of payday loans the company advertised primarily through websites, including 1OODayLoans.com. Additionally, the company misrepresented the safety and security of personal information that consumers entered on websites operated by Blue Global in violation of New York state law Financial Services Law Sec. 408. As a result, Blue Global’s New York customers’ personal information was available to persons who used it to attempt to commit fraud and harass consumers.

Under the agreement, Blue Global is also required to pay damages to any New York consumer who has suffered identity theft traceable to a data security breach of the company’s systems or to certain conduct by Blue Global and must adhere to data security measures to protect consumers’ personal information.
Blue Global, an Arizona limited liability corporation, is said to have sold the leads consisting of sensitive personal information of approximately 180,000 New York consumers, and collected personal information from approximately 350,000 New York consumers, according to the Department.

Blue Global released a statement calling the agreement “in our company’s and our stakeholders’ best interests” and lauding the “satisfactory resolution” to the issue.

Unsecured customer information. Blue Global offered payday loans and other financial products and services on its websites. The company allegedly offered to sell or share leads consisting of consumers’ sensitive personal and financial information captured from their websites with buyers. The information includes any or all of the following: a person’s first and last name; address; Social Security number; date of birth; driver’s license number; bank account number; routing number; email address; and other information that may be used to identify an individual.

Blue Global’s online advertisements promised consumers that protecting consumers’ personal information was “at the top of our priority list” and that securing such information was “completely 24/7 guaranteed.” Contrary to these representations, the Department’s investigation revealed that Blue Global did not take any protective measures when sharing consumers’ sensitive information with third parties.

For more information about payday lending, subscribe to the Banking and Finance Law Daily.

'Dictator’ Cordray testifies before Financial Services Committee

By Katalina M. Bianco, J.D.

The House Financial Services Committee held a hearing on the Consumer Financial Protection Bureau’s semi-annual report to Congress on March 16, 2016. The hearing featured the testimony of CFPB Director Richard Cordray and was opened by Chair Jeb Hensarling (R-Texas) who stated, “Congress has made Mr. Cordray a dictator. And when it comes to the well-being and liberty of American consumers, he is not a particularly benevolent one.”

In his opening remarks, Hensarling charged that Corday “will presume” to decide whether Americans will be able to take out a small-dollar loan or resolve contract disputes through arbitration. He referred to auto loans, stating, “Already Mr. Cordray has decided that countless Americans should pay more for auto loans based upon junk science and a dubious legal theory of statistical unintentional discrimination.” The committee chair went on to criticize the CFPB’s Qualified Mortgage rule “which when fully implemented will disqualify almost one-fourth of all Americans who qualified for a home mortgage just a few years ago.”

Hensarling dismissed the citing of millions of dollars in fines imposed by the bureau via enforcement actions, stating that this argument is raised by “apologists” for the bureau. Rather, he continued, the bureau “operates as legislature cop on the beat, prosecutor, judge and jury all rolled into one.”

Waters remarks. In her opening remarks, Rep. Maxine Waters (D-Calif), Ranking Member of the Financial Services Committee, expressed views of the CFPB and its director that were in direct contrast to those presented by Hensarling. She praised the bureau’s accomplishments that she said have helped more Americans “participate in a financial system that is fair and strong.” She commended the bureau for the $11.2 billion dollars it returned to consumers through its supervision and enforcement efforts. The lawmaker also highlighted “particularly important efforts” such as its work so far on payday lending, discrimination in the auto lending industry, and the “unscrupulous” for-profit college that “deceived students into taking out expensive private loans and engaging in illegal debt collection practices.”

Cordray testimony on consumer initiatives. In his written testimony, Cordray discussed the efforts that the bureau has undertaken to fulfill its mission mandated by the Dodd-Frank Act as outlined in the CFPB’s latest semi-annual report. First and foremost, the CFPB listens and responds to consumers, a task that is central to its mission, Cordray said. The CFPB director discussed improvements made to the CFPB’s Office of Consumer Complaints and the fact that the bureau has begun publishing consumer complaint narratives. In July 2015, the CFPB launched the first in a new series of monthly reports to highlight key trends from consumer complaints submitted to the agency. Cordray added that the CFPB also is working to provide tools and information intended to develop practical skills and support sound financial decision-making by consumers.

Supervision and enforcement. Discussing the bureau’s supervision and enforcement functions, the CFPB director noted that in the six months since its last semi-annual report, supervisory actions have led to more than $95 million in redress to over 177,000 consumers. During the same period, the CFPB also announced orders through enforcement actions for approximately $5.8 billion in total relief for consumers, along with over $153 million in civil money penalties. Cordray outlined for the committee specific enforcement actions taken by the CFPB during the same timeframe and its partnership with other agencies, federal and local, to enforce consumer compliance laws.

Rulemaking. Cordray listed the bureau’s rulemaking efforts during the past six months, including a final rule defining larger participants of the automobile financing market and defining certain automobile leasing activity as a financial product or service, “which extends the Bureau’s supervision relating to consumer financial protection laws to any nonbank auto finance company that makes, acquires, or refinances 10,000 or more loans or leases in a year, and a request for information regarding student loan servicing.”

The CFPB director said that the bureau “seeks to serve as a resource, by writing clear rules of the road, enforcing consumer financial protection laws in ways that improve the consumer financial marketplace, and by helping individual consumers resolve their specific issues with financial products and services.”

Committee view on hearing. In a release issued after the hearing, the Financial Services Committee provided its view as to key “takeways.” First, the CFPB is not accountable to Congress or the American people because it is not subject to checks and balances. According to the committee, “real” consumer protection puts power in the hands of consumers. Finally, the bureau does have an important mission, and if properly designed and led, it is “capable of great good.” However, when the CFPB acts in ways that are not accountable or transparent, it is “also capable of great harm to the consumers it is supposed to protect.” A link to a video of Hensarling’s questioning of Cordray and the CFPB director’s testimony is included in the release.

For more information about Cordray and the Financial Services Committee, subscribe to the Banking and Finance Law Daily.

Fintech: Friend or foe?

By John M. Pachkowski, J.D.

The Federal Reserve Bank of Atlanta has published an article as part of its online publication Economy Matters examining the issues surrounding the relationship between banks and fintech companies.

The article entitled “Fintech Companies: Banks' Allies or Rivals?,” which was written by Robert Canova, a senior policy analyst in the Atlanta Fed's Supervision and Regulation Division, noted that “tension is slowly creeping into the banking world as fintech firms increase their foothold in a more important part of the financial industry sector.” He added, “banks see competition from fintech firms as the biggest threat facing the banking industry.”

What is fintech? For purposes of the article, the definition of “fintech” has evolved from just those companies that developed software that was seen as “disruptive” to any company, either start-up or established, that develops software used in providing financial services. The activities that fall into the fintech spectrum include: crowdfunding, peer-to-peer lenders, and payments, as well as providing data collection, credit scoring, and cybersecurity.

Given the universe of fintech companies, Canova observed that it was easier to discuss fintech “in terms of whether it's an ally or rival to the banking industry.”

Allies. Fintech companies act as strategic allies to the banking industry in several ways with many banks having had long relationships with a few large firms that now fall into the fintech definition. In addition, some bank are using newer fintech companies as technology vendors and avoiding competition with larger banks or other fintech companies in adopting new technology. Finally some banks are entering into strategic partnerships.

Rivals. On the flip, many fintech companies are still perceived as rivals since they offer technology-based services that dramatically reduce overall friction and difficulty in the transactional process that are “highly desired by customers, especially younger ones.”

Greater scrutiny. Regardless of being considered an ally or rival, Canova noted that it is “only a matter of time” before fintech companies face greater scrutiny from regulators. For example, The Clearing House, a trade association of the 24 largest banks, noted that there was an overall lack of consumer regulations applicable to fintech firms that often leave their customers more vulnerable than a typical bank would.

For more information about fintech, subscribe to the Banking and Finance Law Daily.

CFPB argues state’s debt-collecting special counsel are covered by FDCPA

By Katalina M. Bianco, J.D.

Private attorneys acting as special counsel to Ohio’s Attorney General for general debt-collecting purposes are not state officers under the Fair Debt Collection Practices Act, according to the Consumer Financial Protection Bureau. In an amicus curiae brief filed with the Supreme Court in Sheriff v. Gillie, the CFPB argues that the attorneys actually are debt collectors who are subject to the FDCPA’s requirements.

 

The FDCPA applies only to debt collectors, and the act’s definition of “debt collector” includes an explicit exception for “any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties . . .” (15 U.S.C. §1692a(7)(C)). A federal district court judge decided that, as special attorneys general, the private attorneys were officers of the state who enjoyed the protection of that exception.

 

The U.S. Court of Appeals for the Sixth Circuit disagreed, relying on a combination of state law and the FDCPA to determine that the attorneys were not state officials. According to the panel majority, the attorneys did not meet the Dictionary Act definition of "officer," which was the definition to be used because the word was not defined by the FDCPA. Under Ohio law, the attorneys were independent contractors, and independent contractors cannot be officers. Finally, if applied to the private attorneys, the FDCPA would not violate principles of federalism because it would not be an attempt to regulate the state or challenge the structure of the state’s government. The act would apply only to debt collectors, who were third parties.

 

CFPB arguments. The bureau argues that the special counsel are not state officers because they do not hold any state office and do not exercise any part of the state’s sovereignty. Their authority is derived strictly from contracts with the state’s attorney general, and those contracts explicitly declare them to be independent contractors.

 

The purpose of the FDCPA is to control the practices of third-party debt collectors, the bureau notes. Exempting private attorneys who are acting to collect debts on behalf of a state government would undermine that purpose.

 

The CFPB adds that the appellate court was correct in saying that the application of the FDCPA to the private attorneys would not intrude on the state’s sovereignty. Ohio can use its own employees or officers to collect debts without being affected by the act. Only third parties acting for the state would be affected, and there was no Supreme Court precedent for the proposition that federal regulation of a state’s independent contractors intruded on the state’s sovereignty.

Letter head issues. The brief also supports the appellate court decision that the collection letters sent by the attorneys could have contained misrepresentations. The letters used the attorney general’s letterhead but were signed by the private attorneys as “Outside Counsel for the Attorney General’s Office” or as “Special Counsel to the Attorney General.” The consumers claimed that this created a false impression about who sent the letters.

 

The CFPB argues in its brief that whether the letters were false, deceptive, or misleading was to be judged according to the perspective of an unsophisticated consumer. According to the CFPB, a reasonable jury could decide that an unsophisticated consumer could be misled into believing that the attorneys were employees of the attorney general, so the suit should not be dismissed.

 

The case is No. 15-388.

 

For more information about CFPB amicus briefs, subscribe to the Banking and Finance Law Daily.

Reform National Flood Insurance Program before renewing it, AAF paper urges

By Thomas G. Wolfe, J.D.

In her research paper for the American Action Forum, author Meghan Milloy urges policymakers to make several major changes to the National Flood Insurance Program (NFIP). Noting that the NFIP is slated for renewal by Congress in 2017, Milloy exhorts policymakers to “avoid a blanket stamp of approval” and to make necessary improvements to the NFIP, which she characterizes as an “indebted and inefficient program.” In her March 9, 2016, paper, titled “The NFIP is Due for Some Major Reforms,” Milloy sketches the history of the NFIP, outlines the program’s current problems and challenges, and offers recommendations for its reform.

Milloy is the Director of Financial Services Policy at the American Action Forum.

In Milloy’s estimation, the NFIP’s biggest problems and challenges are threefold. First, there is a low rate of compliance with the NFIP. Only 53 percent of the nearly 1.5 million structures in designated Special Flood Hazard areas that are required to be covered under the NFIP are actually covered. Moreover, since there are fewer flood insurance policies in place than are required, there is less revenue for the program. According to Milloy, the NFIP “has been in debt to taxpayers for over 10 years.”

Second, in connection with insurance premiums for the program, Milloy discerns several flaws: (1) the premiums don’t reflect the risk; (2) there are artificially low caps on premium increases; (3) “full risk” premiums are too low; and (4) the premium rates “rely on inaccurate data.”

Third, given the structure of the NFIP and the exceptional strain on the program that resulted from Hurricane Katrina in 2005 and Superstorm Sandy in 2012, the potential losses generated from the NFIP “have created substantial exposure for the federal government and U.S. taxpayers.” Milloy cites a 2013 report issued by the Government Accountability Office in support of the gravity of the NFIP’s indebtedness.


Based on these findings, Milloy offers several options for reforming the NFIP:

• Employ stronger enforcement measures to increase the number of NFIP policyholders, not only to ensure compliance but also to increase the amount of revenue coming into the NFIP via additional premium payments.
• Charge policyholders premiums that better reflect the actual amount of risk of loss to their properties and implement the “grandfathering” of existing policies to minimize any “rate shock” to the program.
• Return the NFIP to a status of self-sufficiency by sharing the risk of loss with the private flood insurance market—thus allowing the federal government to focus on “flood risk mitigation” while letting the private market focus on underwriting flood insurance policies.
• Update the NFIP’s technology in general and create a central repository for flood elevation data in particular.

For more information about the implications of flood insurance for the financial services industry, subscribe to the Banking and Finance Law Daily.

Business loans, choosing the right time

In the context of the economy have many opportunities, but also huge challenges, making money small business investment, which should depend on the loan or not is something that a lot of people are wondering.

Small Business is now a movement attracted many investors, but not everyone has a sufficient amount of capital to rotate for their business ideas. So, the bank is an ideal destination for many customers needs. However, a lot of people question it raises is: 'Making money small business investment, which should depend on the loan? ".

In fact, in hard times, finding a good job is not easy, or official salary was not enough to spend today, small business is a way to make money, improve countless lives the same effect.

According to some financial experts, when you have enough determination and confidence with their business plan but can not manage money, the banks would be your ideal location. A few dozen loans or hundred million to open a grocery store ... personal, small business households are strong banks disbursed with two common methods: each loan, overdraft and card loans credit for all customers with a quick time, easy procedures.

For example, the method for each loan, ie each time a loan, customers and credit institutions perform lending procedures and credit contracted. This is how the loan quite popular today because quite a long time to borrow, interest rates soft, flexible capital again.

For methods for overdraft loans and credit card loans: bank majority applies only to those customers whose accounts paid through the bank. Meanwhile, the bank will be spending in excess of the amount paid on account of the client (usually a bank for exceeding the maximum spending 8-12 months' salary).

Overdraft loans and credit card loans are now employees of the company, or office workers use the most because it is consistent with the need to pay in advance to spend, shopping, doing business capital small.

Besides, the bank also offered many promotional loan program in order to attract customers, especially during the end of the old year, New Year today. Interest rate this incentive programs than the current lending ground in the field of manufacturing trading at 6.8 to 9% regular / year for short-term; 9.3 to 11% / year for the medium and long term, while the preferential interest rates for bank loans (for the first year) is usually 5.5 to 8% around.

Bank loan - What is a mortgage?

This type of loan product has guaranteed the bank's tradition, it is necessary first of collateral and guarantee papers collateral.

Bank loans only solve the large and have a good business plan. In the case of small loans majority of customers will choose the mortgage loan not to resolve the situation and retain the collateral in order to borrow larger loan. If once you have borrowed 1st 2nd then borrowing extremely difficult and very likely due to external services to guide the procedure. Therefore, when a loan is optimal loan is to consider carefully avoid doing halfway out of capital.

Lower interest rate mortgage loan and time to longer transaction processing.

Should choose mortgage loan or mortgage?
The answer is that, depending on the need of capital and power in your debt like banks?
Mortgage loan: shopping needs, consumers need quick capital - customer participation usually unsecured loans to settle shopping needs, consumer, entertainment and family own (buying a car, home repairs, traveling, weddings ...). Therefore, these loans are usually unsecured form from a few dozen to a maximum of 100 million. Loan period depending on the regulations of banks and credit institutions, mostly aged 12 months - 48 months.

Mortgage customers needs large loans and mortgage collateral value equivalent to the amount of capital to lend. Which can amount to several billions or tens of thousands of billions for doing business needs and trade.

However, consider carefully chosen form for the needs themselves, their ability to repay, and should refer to the information that the loan decision.

Mortgage loans are unsecured loans may be not?
According to a financial expert, in case customers are mortgage loans are temporary loans will not be supported in any further capital forms: unsecured or mortgage. This is prescribed by most banks. For assistance loans, the customer needs to finalize the current loan. Please advise more, if customers are unsecured loans, they may be supported in the form of additional loans unsecured depending on conditions and repayment capacity of the customer.

Why interest rates for unsecured consumer loans higher than the mortgage loan?
Unsecured consumer lending is a lending operation based on personal charisma can evaluate a commercial credit institutions for a customer without having to mortgage the property. On the original, unsecured consumer loans are managed in accordance with the regulations has been given row. However in terms of interest rates, the state banks not subject to the ceiling lending interest rate as for other operations that are based on the agreement between the bank and the borrower.

On the level of risk, mortgages and unsecured loans have different risk levels, so does the interest rate can not be the same.

Bank loans: unsecured loans should be chosen or mortgage?

You are required to bank loans, but it makes you wonder if the choice is between service mortgage loan and mortgage loan, you should opt for a satisfactory service, easy to manage personal finances? Here are the necessary knowledge to help you make the best decisions for their loans.

Unsecured loans and mortgages is what?
Mortgage loan: Also called loan without collateral simplest sense is the amount the borrower can get the desired loan without mortgage of assets or any other conditions when loan guarantee money.

Mortgage Loans: A loan products secured assets, eg loans to buy cars with housing mortgages, consumer loans mortgages personal savings book ... The ownership of assets remain with the borrower, but if they can not pay their debts to the bank customers to transfer property ownership to the bank to liquidate.

Currency borrowers need to understand advantages and disadvantages to know which to choose mortgage loan or mortgage that can come to a right decision - first they need to understand the nature of this form 2.

The nature of the mortgage loan and mortgage?

Mortgage loan:
In unsecured loans, borrowers do not need to mortgage any property, can use just the amount you borrow to carry out the tasks that have been pre-planned and just pay a financial term is not worth including monthly during the loan. Parallel besides currency depreciation over time as well as loans for initial loan value "value" in the future.

Mortgage loan programs are now mostly very convenient and fast. Just over 2-3 days (depending on region) customers received immediate disbursement of the loan amount from 10 to 300 million without mortgage collateral.

Now funds are disbursed based on documents such as payroll, labor contracts, life insurance contracts ... in a short time.

Easy to own and installment loans are small monthly. Bank based on your salary limit for lending. Unsecured loans are usually from 6 times to 20 times, depending where you are wage work. If the employee is normally 6 times salary loans and if medical staff from industry, the police, the law, the loan can be up to 20 times the monthly salary in cash.

Without collateral, without guarantee company, the service at no cost.

But there are certainly advantages will have the disadvantage of that is likely to emerge as the borrower of bad debts do not have to mortgage their properties and do not need a guarantor, a lot of potential risks so that high interest rates will than other loan packages.
But this is the bank's services, but it still segregated into separate blocks. Interest rate will not like mortgage borrowers. Most fall into the range of interest rates 1.66% / month. Some cases, the interest rate is lower than 1.2% / month and usually it is an individual customer VIP customer types.

Customers simply owe overdue (Special Mention as customers delayed loan payments not in compliance with banking regulations) will not support borrowing records. This is the point where the customer base is currently lending support will be scarce. As this loan program is not so reputable mortgage is placed on top and banks are very strict approval.

The secret to quick mortgage

If you intend to buy houses with loans from the bank, you refer 6 helpful tips below to the transaction goes smoothly and quickly.

Financial planning and determining the amount you want to borrow

If it is determined by loan mortgage banking, your existing balance amount and sources of "supporting" the other, and should only borrow 60 -70% determined value of the apartment purchased. Because the maximum loan limit at banks usually 70% if you use the apartment as collateral to buy or mortgage by 90% if other real estate.

According to experts, if your income stability (from wages, rental property and / or business) loans make confident decisions, and soon owned the house.

Selecting banks and lending incentives program

To stimulate the market, today there are many banks in conjunction with investor commitments to provide preferential loans with various incentive programs focused on interest rates, combined with gifts, discounts .... For long-term loans such as buying a home, when selecting preferential package, you do not just look at the numbers, no bank interest-free loan you should determine the actual interest rate for the duration of loans (including including preferential rates and preferential later). Specific information about the incentives package, you can consult the Internet, employees of real estate trading floor, investors or friends, relatives ...

Besides, you also need to understand the conditions associated incentives and other parameters make it easy to balance the needs and master plans such as borrowing limits (mentioned above) and tenor besides the bank's interest rates.

Balance of income and monthly repayment amount

For sure your income, you need to determine the amount of monthly payment (principal + interest) should not exceed 60-70% of the income threshold. Remember, your income must also cover the cost of other daily activities.

Actively preparing the necessary dossier

You should take the initiative to prepare the necessary documents before you meet the bank, full profile and quality will determine 90% of the time and process loans.

So, what should prepare to get answers from the bank? Simple, ready at 3 items:

- Legal documents Personal

- Profile of documents proving the loan purpose

- Documents to prove income

Additionally you take the initiative requires the help of bank employees when there are obstacles in the process of preparing documents.

Fees and binding commitments of banks

The incentive program is often associated with certain binding conditions. No one wants to owe forever, while loans often determine the long term to split the amount to be paid monthly; so, should consider the possibility that you will repay before maturity, break the contract. Hence the need to learn about early repayment charges and the ability to repay preferential ...

Keep in touch with the bank

Take the initiative to communicate with the bank instead of passively waiting for the loans approved and disbursed. This also helps you avoid the risk of fines payment schedule or damage deposit of the purchase contract.

If done properly 6 point on, you totally can put problem loans at any bank and negotiating contract terms most beneficial and suitable for you.

The note when selecting preferential loan package

Currently when bank loans are usually two ways interest is declining balance and initial debt balance.

First, you need to care about their affordability anywhere. Then you need to choose reputable bank, good service, by the transparency of the bank is an important factor to ensure their loans. During the loan period, you will have to pay a monthly principal and interest should be to ensure adequate financing for bad debt is not incurred.

When borrowing, you also need to consider interest rates before and after the time preference, if it saves 12-month rate plus a fixed margin or it is saving 13-month interest rate plus margin.

You should also consider purchasing insurance for loans (especially mortgage loans), about 1% of the loan.

You need a good business plan, selecting reputable banks to access capital efficiently. You should also consider secured loan assets, rather than unsecured loans because of high interest rates.

Bank can fully meet your needs. The purchase of the vehicle and the vehicle purchased by mortgage are key products of the bank. Procedure is quite simple: you provide personal information, bank income can provide credit to buy the car for you.

Maloney: ‘Unmask’ anonymous shell corporations sheltering money laundering activities

By Katalina M. Bianco, J.D.

Representative Carolyn B. Maloney (D-NY) is promoting action on legislation that is intended to stop anonymous money laundering operations by requiring disclosure of shell corporation beneficial owners. Reps. Maloney and Peter King (R-NY) originally introduced the Incorporation Transparency and Law Enforcement Assistance Act (H.R. 4450) in the 113th Congress. Maloney was joined by various law enforcement officials, including Manhattan District Attorney Cyrus Vance and former Federal Bureau of Investigation Special Agent Konrad Motyka from the Society of Former Special Agents of the FBI.

“ISIS and other terrorists are remarkably sophisticated, and they are looking for any opportunity to exploit our legal and financial systems,” said Maloney. “We are aiding and abetting terrorists and criminals when we allow them to set up anonymous shell companies and funnel money into the United States.” The lawmaker added, “The level of ineptitude in dealing with this problem in Washington is shocking.”

Maloney said that her bill simply would require that to form a U.S. corporation, the true owners must be revealed. “I think the American people would be shocked to learn that isn’t the law already.”

Legislation. According to Maloney, the introduction of H.R. 4450 followed an investigation by Global Witness that exposed the common practice of using U.S.-based shell corporations to launder money linked to criminal enterprises. An investigation last year by The New York Times documented how streams of foreign wealth shielded by shell corporations are used to purchase more than half of all properties in New York City that cost more than $5 million.

The bill directs the Treasury Department to issue regulations requiring corporations and limited liability companies formed in a state that does not already require basic disclosure to file information about their beneficial ownership with Treasury as a backup. The measure also provides minimum disclosure requirements for states and civil penalties for those who submit fraudulent, incomplete, or outdated information when setting up a corporation.






For more information about recent efforts to reveal the beneficial owners of shell corporations, subscribe to the Banking and Finance Law Daily.

Florida bank penalized for compliance deficiencies leaving Ponzi scheme undiscovered

By Andrew A. Turner, J.D.

Gibraltar Private Bank and Trust Company of Coral Gables, Fla., has been assessed with civil money penalties by the Financial Crimes Enforcement Network and the Office of the Comptroller of the Currency for willful anti-money laundering compliance violations that led to its failure to monitor and detect suspicious activity despite red flags. The penalties will be satisfied by payments of $1.5 million to the Treasury Department and $2.5 million for the penalty imposed by the OCC.

The OCC, Gibraltar’s primary regulator, had previously placed it under a consent order to address deficiencies in the bank’s compliance program and customer due diligence and reporting obligations. These deficiencies ultimately caused Gibraltar to fail to timely file at least 120 suspicious activity reports (SARs) involving nearly $558 million in transactions occurring during the period of 2009 to 2013, much of which related to a $1.2 billion Ponzi scheme perpetrated by Scott Rothstein.

“We may never know how that scheme might have been disrupted had Gibraltar more rigorously complied with its obligations under the law. This bank’s failure to implement and maintain an effective AML program exposed its customers, its banking peers, and our financial system to significant abuse,” said FinCEN Director Jennifer Shasky Calvery.

Transaction monitoring. FinCEN found that Gibraltar’s transaction monitoring system contained incomplete and inaccurate account opening information and customer risk profiles, which hindered its compliance staff from adequately spotting unusual account activity. Gibraltar also failed to sufficiently address an automated monitoring system that generated an unmanageable number of alerts, including large numbers of false positives, which caused significant delays in Gibraltar’s review.

The deficiencies of Gibraltar’s SAR reporting were also due in part to Gibraltar’s investigation process. In particular, Gibraltar allowed the Rothstein investigation to languish and did not file a suspicious activity report on Rothstein-related activities until after information regarding his activities appeared in the media.

Risk assessment. Gibraltar did not adequately risk rate its high net-worth private banking customers, like Scott Rothstein, FinCEN said. As a result, the bank applied insufficient scrutiny to his and related accounts, and missed significant red flags. In addition, Gibraltar did not have up-to-date, accurate, and verified information to enable it to conduct its annual risk assessment.

For more information about anti-money laundering compliance issues, subscribe to the Banking and Finance Law Daily.

Will Bitcoin entrepreneurs wait for regulators to catch up?

By J. Preston Carter, J.D., LL.M.

Whether Bitcoin will “significantly alter the way money changes hands around the world” will depend on interactions between factions in the virtual currency world and financial regulators, according to a paper by David Wessel, Director, and Peter Olson, Research Analyst, at the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution. Their paper, part of the Hutchins Center Explains series, is titled “How Blockchain could change the financial system (part 1 and part 2).”

Blockchain. The authors contend that Bitcoin and its underlying technology, blockchain, have the potential to challenge the dominance of the big players in payment systems and significantly reduce the cost of financial transactions and the speed with which they are completed. They quote a recent essay by Bank of England economists as saying, “The key innovation of digital currencies is the ‘distributed ledger’ which allows a payment system to operate in an entirely decentralized way, without intermediaries such as banks.” This distributed ledger, blockchain, avoids the centralized ledger of central banking systems.

Virtual currency factions. The authors highlight two factions in the virtual currency world. R3CEV, a blockchain consortium made up of more than 40 of the world’s largest banks, thinks the new technology could make transactions between banks much less costly than under the current system. Its Managing Director, Charley Cooper, says that his firm is willing and eager to work with regulators, but there’s no one person to talk to: “In the U.S. it’s incredibly difficult because it’s unlike many other countries where the regulators fall under a single umbrella.”

Barry Silbert, founder and CEO of the Digital Currency Group, a company that invests in and builds Bitcoin-related companies, warns regulators that innovators “are not going to sit back and wait” for the regulators to act before moving.

Regulators. The authors quote Jeffrey Stehm, now of Promontory Financial, as saying when he was a senior staffer at the Federal Reserve Board that most regulators “don’t wake up in the morning and want to be resisters to new things and don’t want to be resisters to technology, but on the other hand they have a mandate from the governments, whether it’s state or federal, to do certain things.”

The paper also cites Sayee Srinivasan, of the Commodity Futures Trading Commission, as suggesting that entrepreneurs “take the path of least resistance [meaning, use cases where legality isn’t a question] because if you are going to be waiting for regulators to change things, it just takes a lot of time because writing rules is a very, very difficult, challenging, risky, painful process and that’s not in our DNA to go and quickly change rules....”


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Fed proposes single-party credit exposure limits for large holding companies

By Richard A. Roth

The Federal Reserve Board is again proposing rules that would restrict large domestic and foreign bank holding companies’ credit exposures to single counterparties. The proposal offers different restrictions on U.S. and foreign BHCs and would establish stricter limits as the systemic importance of the BHC and the counterparty increases. According to the Fed, only BHCs with total consolidated assets of $50 billion or more would be affected. Comments on the proposal to add a new Subpart H to Reg. YY—Enhanced Prudential Standards (12 CFR Part 252) are due by June 3, 2016.

The proposal would implement Dodd-Frank Act Section 165(e), the Fed says. Rules for U.S. BHCs originally were proposed in December 2011, with proposed rules for foreign BHCs coming in December 2012. The new proposals offer more differentiation among BHCs and counterparties.

Covered companies and exposures. The proposal divides U.S. BHCs into two categories:
major covered companies—BHCs that are global systemically important banking organizations; and
covered companies—BHCs with less than $250 billion in total consolidated assets and less than $10 billion in on-balance-sheet foreign exposures, and BHCs that exceed either threshold but are not G-SIBs.

Counterparties also are divided into two categories:

• major counterparties—G-SIBs or nonbank financial companies that have been designated as systemically important financial institutions; and
• other counterparties—counterparties that do not reach the threshold for being “major.”

The exposure of a BHC to a counterparty would be determined on a consolidated basis. All of the credit exposure of all parts of the banking organization to all entities controlled by the counterparty would be totaled. BHCs would be expected to monitor and control their exposure to counterparties on a consolidated basis.

Proposed U.S. BHC limits. The proposal would establish three separate limits for U.S. BHCs:

• A covered company with less than $250 billion in total consolidated assets and less than $10 billion in on-balance-sheet foreign exposures would have a credit exposure limit of 25 percent of its total regulatory capital plus its allowance for loan and lease losses to any counterparty.
• A covered company with more than $250 billion in total consolidated assets or more than $10 billion in on-balance-sheet foreign exposures would have a credit exposure limit of 25 percent of its tier 1 capital to any counterparty.
• A major covered company would have a credit exposure limit of 15 percent of its tier 1 capital to any major counterparty, and of 25 percent of its tier 1 capital to any other counterparty.

Foreign BHCs. The proposed rule for foreign BHCs also would apply only to organizations with total consolidated assets of at least $50 billion. It would apply to any intermediate holding company that such an organization was required to create.

The limits for foreign BHCs would be comparable to those for U.S. BHCs. They are, however, a bit more complex due to the need to account for intermediate holding companies. Under the proposal:

• A U.S. intermediate holding company with less than $250 billion in total consolidated assets and less than $10 billion in on-balance-sheet foreign exposures would have a credit exposure limit of 25 percent of the intermediate company’s total regulatory capital plus its ALLL not included in tier 2 capital to any counterparty.
• The combined U.S. operations of a foreign BHC with less than $250 billion in total consolidated assets and less than $10 billion in on-balance-sheet foreign exposures would have a credit exposure limit of 25 percent of its total regulatory capital to any counterparty.
• A U.S. intermediate holding company with $250 billion or more in total consolidated assets or more than $10 billion in on-balance-sheet foreign exposures would have a credit exposure limit of 25 percent of the intermediate company’s tier 1 capital to any counterparty.
• The combined U.S. operations of a foreign BHC with $250 billion or more in total consolidated assets or $10 billion or more in on-balance-sheet foreign exposures would have a credit exposure limit of 25 percent of the BHC’s worldwide tier 1 capital to any counterparty.
• A major U.S. intermediate holding company, or the combined U.S. operations of a foreign BHC, would have a credit exposure limit of 15 percent of tier 1 capital to any major counterparty. The limit on exposure to any other counterparty would be 25 percent of tier 1 capital.

For more information about bank holding company regulation, subscribe to the Banking and Finance Law Daily.

Massachusetts warns banks, consumers against increased ATM fraud

By Stephanie K. Mann, J.D.

Automated teller machine card skimming fraud is increasing, and banks need to ramp up their detection and prevention efforts in response, according to the Massachusetts Division of Banks. A letter from Commissioner David J. Cotney is warning ATM operators to increase their security at their ATMs and to enhance their security programs.

Skimming is the use of a physical device that is somehow attached to an ATM, enabling a criminal to record the information on a card’s magnetic strip or to intercept information being transmitted over the ATM’s telephone or Internet connection. Alternatively, criminals may be able to capture the information wirelessly. The intercepted information can be combined with a PIN that was captured using a hidden camera to allow criminals to carry out fraudulent transactions.

The state regulator is encouraging ATM operators to increase their monitoring, both by enhancing physical security and watching more closely for unusual transaction activity. Physical and technological controls and incident response plans all should be tested regularly. ATM security considerations should be part of financial institution risk assessments, the division also says.

Warning to consumers. Additionally, the Division advised consumers to examine nearby objects that might conceal a camera and to check the card slot for a plastic sheath before using an ATM. Consumers should leave an ATM if they notice someone is watching and to immediately report any suspicions to the machine operator or a nearby law enforcement officer.

The Division further cautioned consumers not to respond to unsolicited requests for bank account numbers or PINs for debit or ATM cards. Consumers should additionally monitor accounts for unauthorized transactions and immediately contact their financial institution if fraud is suspected.

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The financial know-how businesses should know

While many businesses have closed because of the economic downturn, some investors to consider it self-employment is the time to better prepare for the future. Business owners not only to shape the balance of their current account but also estimate the financial resources to support future growth.

However, this requires business owners have the courage to be able to deal with challenges. So recently, surveys of launching a group of small business owners, American Express (Amex) has found that many of them are having trouble separating fact from fiction finance.

Take, for example, found that 34% Amex business owners surveyed believe that mistakes of term loans (funded immediately by maturity and amount) and a credit line (which is opened and closed when necessary) of a business is basically the same. And nearly 40% of them believe that the application of many lenders to raise capital is very good while the opposite is true because with a loan that has too many lenders, it can distract the your credit line.

With the framework of this article, we would like to briefly present five things you should know about the financial position to be able to help your business thrive in the future:

1. reinvested PROFITS ARE THE BEST

Hedge funds best for a business active is the amount that the company is actually created. Many entrepreneurs often miss opportunities to grow profit by using unproductive directions. Some are acting in the opposite direction, pouring money into any business project while not keep a dime. Both of these approaches can lead to bankruptcy. If you need a loan, banks will like you to pay that loan with a reasonable salary to be your acceptance. Similarly, banks also want to know the business can still achieve profitability whether to pay bank debts.

The profits reinvested in the business is the secret to get the long-term development success. This is the capital of "patience" to build enterprise value without debt or profit sharing with other partners. So, about 46% of business owners are American Express survey said they had planned to finance its growth by reinvesting profits.

2. USE OF CREDIT COMMERCIAL

Commercial credit process described deferred payments for goods and services that you purchase now from multiple vendors and various sellers. You can find plenty of sellers willing to sell on credit to a growing business - or even opened - rather than the provider if you can make a long-term agreement for the purchase from them.

And from my perspective, you will see commercial credit has also become one of the safest forms of business lending. Bank loans become endangered due to the periodic payments to pay despite low turnover. But sales drop may affect orders you have placed or not? This also depends on the level of your business credit has been down the same or not.

Just so has seen enough business credit can be valuable and easier than banks or other types of borrowing. In addition, it also allows you can split the payments and pay scattered over many months or even years without the pressure of fluctuations in loan interest rates.

3. EARLY data LIMIT

Time to set up a credit line is when you are likely to meet the requirements necessary to limit it, not wait until you need it later. Having a line of credit can help you grow your business by adequate financial resources to meet the opportunities ahead. In general, the credit limit is also very suitable for the use of credit card companies to follow the much higher interest rates and the increasingly onerous terms. But you should avoid using a credit line to bail himself out of trouble by those limits are closed when necessary and effective when newly reopened them for use next time.

4. EXPAND RELATIONSHIP WITH BANKS

If you have multiple accounts that just opened in a major bank, consider opening an account at another bank by region or community. This will give you more options in time to look for loans, line of credit or other credit support for their development plans.

5. CONSIDER ALTERNATIVE SOURCES LOAN

For more options, you can join the credit union legal, accounts receivable financing (factoring news) or lend "the same level". However, the form of loans at the same level (or by person) given in the economic downturn as the traditional lending sources no longer available, but instead is a new Internet site is currently making this form becomes easier and business owners can join and get the necessary loans.

The major challenge for the world economy in 2016

According to the International Monetary Fund (IMF), the world economy is simultaneously facing three major adjustments, including emerging markets slowdown, China shifted growth model less dependent on exports and production, and the US Federal reserve System (FED) phasing out super-low interest rate policy.

The growth recovery lasted 6 years of the global economy is under stress, and the IMF dated 19/1 cut growth forecasts for the world economy this year - Bloomberg said.

IMF gloomy outlook for the world economic outlook given in the context of basic commodity prices plunged and political turmoil engulfed push Brazil into recession, oil prices plummeted as the manufacturer " black gold "afflicted, and the dollar rose," made difficult "for the US economy.

In the quarterly report World Economic Outlook (World Economic Outlook) latest IMF forecasts the world economy will grow 3.4% this year, from 3.6% forecast made in May 10/2015.

Verdict that the IMF can make global investors more pessimistic.

International financial markets have had a bad opening for 2016, with the continuous stock index dropped sharply, oil prices continued to set the bottom, and gradual monetary policy tightening that US capital inflows massively flee from risky assets higher across the world.

"This year will be a year of great challenges. Policy makers should think in the short-term stability and the way they can be used to reinforce that, in addition to looking for long-term growth prospects, "chief economist Maurice Obstfeld of IMF said.

The IMF estimated the world economy grew by 3.1% last year, the weakest growth since the recession in 2015 was also the year 2009. Growth of emerging economies and developing countries deceleration Year 5 in a row.

According to the IMF, the world economy is simultaneously facing three major adjustments, including the slowdown in emerging markets, China shifted growth model less dependent on exports and production, and US Federal reserve System (FED) phasing out of super-low interest rate policy.

The IMF warned that global growth may be derailed if the challenges are not well managed.

According to the analysts, the theme of global growth prospects deteriorate opened in Davos, Switzerland on June 20/1. It is expected that more than 2,500 policy-makers, business leaders, investors and scholars attended the event.

The IMF said emerging economies and developing countries will grow 4.3% this year, down from 4.5% forecast made in October, and compared with an increase of 4%, but this group achieved in 2015.

"The journey of this year we can be bumpy, especially with emerging economies and developing countries," Mr. Obstfeld said.

IMF forecasts China's economy to grow 6.3% this year, down 3.5% Brazilian economy, and the Russian economy fell by 1%.

For developed economies, the IMF predicts a recovery "modest and uneven" will continue. This institution lowered its growth forecast for the US economy in 2016 to 2.6%, from 2.8% in October launched.

According to the IMF, the eurozone economy will grow 1.7% in 2016, 0.1 percentage points higher than forecast in May 10. Japan's economy is the IMF forecast a 1% increase, while the UK economy is the forecast increase of 2.2%.

Before the IMF, World Bank (WB) has lowered the economic growth prospects for the global 2016.

In its report Global Economic Prospects (Global Economic Prospects) announced on 6/1, the World Bank cut its forecast for growth of the world economy in 2016 to 2.9%, from the forecast increase of 3 , 3% given in the report released in June.

World Bank says global economy to grow 2.4% in 2015, lower than the forecast of 2.8% made in the report in June, and down from the 2.6% achieved in year 2014.

2 challenges of global stock markets in 2016

Page Syndicate recently have analysis of the difficulties that the world's stock continues to face.

Accordingly, in January is often considered a positive month's stock market, with the new money flowing into hedge funds, while investors are not subject to pressures related taxes (due to pressure this force has been softened at the end of the previous year).

However, the data on investment returns in the United States showed that the profitability of January this year inched just slightly more than the monthly indicator, so the confidence of investors for "January effect 1 "was not as expected. This shows that the world's stock markets this year will probably continue to be difficult.

According to the British news agency Reuters, in the first week of 2016, Wall Street tottering, along with the decline to 8% of the MSCI indices make up the worst event in January.

This is clearly a difficult signal for the global stock markets entering the new year. Most major markets are trading week recorded greeting New Year pretty bad.

For the whole week (from 4-8 / 1), China's Shanghai Composite fell nearly 10%; Dow Jones and S & P 500 lost about 6.0%; Japan's Nikkei 225 lost 7%; Britain's FTSE-100 lost 5.3%; France's CAC 40 slipped 6.5%; Germany's DAX 30 and the "evaporation" of 8.3%.

So what is the main concern for the global stock markets?

Analysts said the first concern is the slowdown of the Chinese economy could cause a negative impact to the world economy.

Even in the first four days of 2016, the Chinese stock market has fallen dramatically causing the global financial turmoil. However, the real fear is the yuan devalued and China can not control the situation.

This scenario took place partly in the summer of last year and has emerged as a threat in the first two weeks of the new year. However, market sentiment has returned to stability when fears about China's economic situation is eased.

A major concern is that the status of the oil price plummeted. In the second week of January, although sometimes pop up but overall the stock market in the world has paralleled the decline in oil prices.

Analysts said oil prices plunge 10% can cause market disruption in the short term. Fortunately, the panic in the market did not take place.

In the context of low oil prices, the global economy and many businesses will benefit, as lower oil prices will increase real incomes, stimulate spending and help increase profits for businesses to use energy measure.

Historical experience shows that high oil prices is not an index to the positive impact of economic activities.

The global economic downturn from 1970 to date have occurred when seeing a sharp increase in oil prices, while most of the 30% decline in oil prices could boost growth and pushing the stock price higher.

However, despite these benefits can be clearly seen from the low oil prices, it appears that most investors now believe that oil prices could lead to a collapse in economic activity, including the stock market.

Why the Japanese yen getting stronger?

The yen strengthened as investors poured money into haven assets, shows that market forces are overwhelmed efforts yencua BOJ lowered prices.

Japanese domestic currency increased while the stock market plunged Japan this week showed the bracket fragility of the stock market originate from the economic stimulus program of Prime Minister Shinzo Abe.

Main reason the yen hits day 112 JPY 1 USD exchange Thursday, 2.11 - 8.5% shortly after the Bank of Japan (BOJ) decided to apply negative interest rates - due to domestic investors apart from buying Japanese stocks while shorting the yen, betting the currency will decline against the US dollar.

When foreign investors sold Japanese stocks, they also buy yen to balance short-selling previous state. This move caused the yen appreciation - be investors considered signals continue to sell stocks because many Japanese companies are dependent on the currency cheap to maintain profits.

It is worth noting that foreign investors have a large influence in Japan as much as 60% of transactions on the Tokyo Stock Exchange. This proportion a decade ago to 38%.

But exactly what led investors to panic? Granted, the BOJ decided to apply the interest rate is a measure sound dramatic, but this policy is not strong enough and was made in a hurry.

Moreover, the application of negative interest rates is also recognition that the BOJ's quantitative easing program giant has reached the limit. BOJ also has launched a program of quantitative easing is not the right time when panic about the Fed, China and the price of crude oil causing massive sell-off on global markets.

Either way away, losers will be savers Japan. For example, after the BOJ's move, yields on 10-year Japanese dipped into negative territory for the first time happened in this country and at a G7 member countries.

Much of the government bond market in Japan by domestic investors hold - this can greatly affect savers. Moreover, a characteristic feature of Abenomics are policy changes in the pension fund forefront of Japan to put money in stocks and bonds, domestic and foreign.

Retirement Fund the Government of Japan (GPIF) worth USD 1.13 trillion, as of late October 9/2015, with 43% in stock value compared to 24% time 3 years ago. This Fund will bear the brunt of the sell-off condition and will miss the rally history of Japanese government bonds. Meanwhile, a stronger yen also negatively affect the access of foreign assets of the GPIF.

Things to know about bank financing

1. What do I need to pay attention when creating an LLC with a foreign partner?

My potential partners in Taiwan and mainland China. The issues I need to be careful before heading on their foreign counterparts?

Nina Kaufman replied:

Whether your partner is local or foreign, there are many issues to keep in mind. Includes: that each party contributes capital in; situation decision; who will contribute (or his continued 1) the intellectual property created now, and what will happen when the partner wants to withdraw from the business, the business value of how, procedures What gate?

Especially with foreign partners, you want to know their role before you start, because they do not have an office near you, so you will not be sure how their explanations. You will also want to ensure any legal argument was resolved when you put together the business and location.

It is best to talk to a lawyer who will deal with the business partners and foreign investors to make sure that your understanding for the partnership are clear, and you have all the valid documents.

Nina L. Laufman is a business attorney is awarded, is a writer, speaker. Over 15 years, she has very successfully resolved thousands of small businesses through the legal difficulties they face when starting and operating companies. Under the name AskThe Business Lawyer.com, she drew thousands of entrepreneurs, and small business owners to legal services, professional chat sessions, information products and electronic magazine goods LexAppeal week.

2. How would be subsidized by the government?

If possible I would like to receive government subsidies, I do not want a loan. I know the government subsidy has run out here, but I need to find a legitimate one. Where should I start from?

Tim Berry responded:

Asian. Be aware that any benefits in connection with the public interest or nonprofit purposes. A typical example is but the region is developed and undeveloped, developing neighborhood a few techniques to meet the public interest, or focus on community goals such as diversification ( so a few grants are offered for a small number of businesses).

If you do not give legitimate reasons for the council goals, then you are wasting time. All the ads on television that we see are false. You should explain in two sentences why you deserve the community's money. It will create community benefits.

b. If you think you can argue about the legality of income communities, starting with finding the grants local, state, federal ...

It's more difficult when using business.gov and sba.gov state, federal, local search, but look for them. Ask chamber of commerce or the Development Center to help small businesses. Some bankers can access these pages.

C. Most business assistance towards forms of borrowing with lower income are the official subsidy. I know you do not want a loan, but this is a real world. Be practical!

Tim Berry, president of Palo Alto Software Inc. produced the software business plan guidelines for industrial, Business Plan Pro, and both plan common business applications.

3. Having to pay taxes on the sale of ads?

I'm starting an online newspaper. I need a cost of sale or any other taxes for which my ad space sold? Do I need an LLC in each state that I have customers?

Pam Newman replied:

You should contact the Secretary of State for taxes, the principle for their type of business.

Pam Newman is a certified accountant manager, and author, Certified QuickBooks Pro adviser of financial software and selling points. She also serves as president of RDPC.Inc, which provides business development services.

4. Do I have to pay income tax for non-payment of debts?

I intend to use the loan payment by the company to maintain credit and medical bills. I heard I may have to pay income tax for the retention of the debt amount.

Nina Kaufman replied:

The IRS said that the debt on the $ 600 may be taxable income, but in some cases you may have to pay income tax on the liabilities under 600USD. Also there are a few exceptions, for example, you are not able to pay their debts when the payment period then you do not have any reports about possible debt relief income tax, but there are exceptions their own exceptions. Do not make any assumptions about the consequences eventually your taxes until you talk to the person authorized to update the table and look at 1099-C.

Nina L. Laufman is a business lawyer was awarded a writer, orator. Over 15 years, she has very successfully resolved thousands of small businesses through the legal difficulties they face when starting and operating companies. Under the name AskThe Business Lawyer.com, she drew thousands of entrepreneurs, and small business owners to legal services, professional chat sessions, information products and electronic magazine goods LexAppeal week.