Concern over overdraft fees has been voiced by regulators for over a decade. The agencies, and in particular the CFPB, have focused more attention on this in the past few years, urging banks to change their practices in regard to such fees or eliminate them altogether. As a longstanding practice for banks, and for many […]
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The U.S. economy grew 3.0% in the second quarter, according to the “second estimate” of Real GDP released by the Bureau of Economic Analysis (BEA), on August 29, 2024. Growth in the 1st quarter was 1.4%, a marked slowdown from the 3.4% observed in the fourth quarter of 2023. The robust second-quarter growth was driven […]
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Risk exists when there is potential for harm coupled with uncertainty of outcomes. The fair lending environment for lenders contains both. The approach to risk mitigation should be one of reducing uncertainty. Below we provide a four-step strategy that can be used to reduce uncertainty and, therefore, mitigate fair lending risk. Step 1: Know Your […]
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Summary The conversation discusses the recent article from the CFPB on their enforcement work in 2023 and what lies ahead. The main themes include the emphasis on enforcement and the use of technology by the CFPB, the potential game-changing impact of technology in data analysis, and the importance of third-party support in analyzing data. The […]
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As promised, the Department of Justice continues to pursue enforcement actions against lenders for allegations of redlining. Two of the latest are Patriot Bank, announced January 19th, and First National Bank of Pennsylvania, announced February 5th. Of note, in the case of Patriot Bank, this is the 3rd redlining enforcement action pursued by Justice within […]
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While technological advances have increased efficiency and, in some ways, made things easier, these advances have also increased the speed at which things move and created more demands. One of these demands is the need to analyze ever-increasing quantities of data. This data contains potential risks and potential rewards for financial institutions. It contains risks […]
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On May 1, 2023, First Republic Bank (FRB), headquartered in San Francisco, became the third bank to fail this year. Silicon Valley Bank (SVB) and Signature Bank failed earlier this year; and Silvergate Bank, which was closely tied to the U.S. crypto economy, liquidated itself and is not listed by the FDIC as a bank […]
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In a recent post we highlighted the increases in aggregate HMDA lending between 2021 and 2022 in majority-minority census tracts (MMCT’s) as reflected in the preliminary public HMDA data recently released by the CFPB. Of the 412 Metropolitan Statistical Areas (MSA’s) as designated by the Office of Management and Budget (OMB), 75% reflected at least […]
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Credit conditions have changed rapidly and have created a situation for lenders which is very different than just a few years ago. As an illustration, consider the historical prime loan rate as shown in Figure 1. After years of volatility, the prime rate fell to an historically low 3.25 percent in the middle of the […]
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The upcoming reporting of small business lending under the 1071 section of the Dodd-Frank Act imposes additional compliance and fair lending burdens on banks and other lending institutions. The compliance aspects include data collection, reporting, and complying with the requirements; and the fair lending implications include the impact of these data with respect to fair […]
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