Banks Heap Suits on Target Over Breach

February 12, 2014

Member News

Case in Point: Testing an Affordable Alternative to Payday Loans in Mississippi

The Washington Post

Southern Bancorp, based in Arkadelphia, Ark., is testing affordable consumer credit products and ways to educate low- and moderate-income individuals about managing debt. Southern's new Liberty Line has a one-time application fee of $25 and an interest rate equal to the sum of the prime rate and 5 percentage points, with no collateral requirements. Southern has made 99 Liberty Line loans, with an average outstanding balance of nearly $1,000 out of an average available credit line of $1,600. Customers can withdraw funds the same day they apply, with loan amounts up to either 1.5 times their monthly gross income or 20 percent of their net worth. So far, the default rate has been low. The process takes longer than applying for a payday loan, but it helps borrowers improve their credit scores, develop better financial habits and achieve long-term financial security.

Virginia Community Capital Working with Jessie Ball duPont Foundation to Expand Impact

Virginia Community Capital

Virginia Community Capital has partnered with the Jessie Ball duPont Fund to help underserved communities in the same area where Mrs. duPont was born in 1884—Virginia’s Northern Neck. VCC staff identified several potential projects for application of the Fund’s support, including the Armstrong Place apartments. That renovation project combines a VCC loan with an Affordable Housing Program grant from the Federal Home Loan Bank of Atlanta to provide 28 apartments for people with disabilities and low incomes. "Leveraging the loan through the Jessie Ball duPont Fund PRI advanced this project with uncommon speed. Residents will soon have safe, affordable housing available," explains Monique Johnson, VCC Senior Loan Officer.

Of Interest

Three States Propose Crackdowns on Predatory Payday Lenders


Lawmakers in Idaho, South Dakota and Alabama are looking to make payday lending less predatory. A measure intorduced in Idaho would allow borrowers extra time to repay loans without racking up further interest on the debt. It would also cap the total amount of short-term debt a person could take out from the predatory lenders at 25 percent of monthly income. A reform package introduced last week in South Dakota would combine the borrowing caps and extended repayment windows featured in the Idaho proposal with changes to rules for how the loans are marketed and regulated by state authorities. Alabama’s effort is more ambitious and would cap payday loan interest at 100 percent APR. Alabama lawmakers are also renewing an effort that the industry blocked last year to create a public database to track payday lending in the state.

Banks Heap Suits on Target Over Breach

Wall Street Journal


So far, seven financial institutions have filed class action suits against Target Corp. for their losses after hackers stole 40 million customer card numbers from the retailer. The banks and credit unions allege the retailer didn't adequately protect consumer data. Minnesota, where Target is based, requires retailers to pay back banks if they fail to comply with credit card security standards, such as prohibitions on retaining account data. In another class action suit, New York-based Amalgamated Bank alleges that “in violation of its legal obligations, Target retained sensitive customer data collected through debit and credit card transactions such that the hackers were able to easily transmit that data to outside webservers days after the relevant debit and credit transactions had been conducted.” A spokeswoman for Amalgamated said the bank has reissued close to one thousand cards, resulting in significant costs.

Shifting the Lens: A De-Risking Toolkit for Impact Investment

Bridges Ventures
(January 2014)

A report by Bridges Ventures IMPACT+ and Bank of America explores methods of minimizing risk in impact investments. The report notes that "[d]espite the compelling win-win of generating both a financial and societal return, the addition of an impact lens to investment propositions has increased the sense of risk for many asset owners, deterring or even prohibiting them from entering the market." The report offers several recommendations for decreasing the risk of social impact investments, including limiting potential financial losses for investors, designing bundled products to provide diversification, building credible track records, enhancing impact investments with liquid features, introducing more robust IT systems, increasing marketing efforts and tracking social impact metrics. CDBA Member Southern Bancorp's risk reduction strategies are profiled on page 26. 

This Plan Could Save the Post Office From Extinction

Time Magazine

The U.S.P.S. Office of the Inspector General's proposal to introduce banking services has drawn praise from those who say it could improve access to financial services for the unbanked and criticism from others who are concerned about creating a new government-sponsored banking entity. Experts who study the Postal Service have expressed skepticism; if serving low-income Americans with financial services is profitable, why aren't banks already doing it? Some banks are reluctant to meet regulations that demand they offer lending services to low-income communities where they accept deposits, so they stay out of these areas entirely. Other analysts have wondered how the post office should balance revenue generation with civic duty. “What exactly is the goal?" asks Rick Geddes, an associate professor of policy analysis and management at Cornell University. "Is the goal to make the Postal Service more efficient, more like a utility, more profitable, or is the goal to address this fundamental problem of poor communities not having adequate banking?”

Fed's Yellen Sets a Steady Policy Course

Wall Street Journal


The Federal Reserve's outlook for the U.S. economy would have to seriously darken before officials would consider halting their gradual reduction of bond purchases, Janet Yellen said during her first appearance before the House Financial Services Committee since becoming the central bank's chairwoman. She said "very serious concerns" that low inflation wouldn't move closer to the Fed's 2% target could sway that thinking. Fed officials announced in December they would start scaling back their monthly bond purchases by $10 billion to $75 billion, and said in January they would trim them again to $65 billion. Ms. Yellen said that she expects the Fed to keep reducing the pace of its bond purchases in measured steps. She also told lawmakers to expect "a great deal of continuity" between her policies and those of Mr. Bernanke. 

Job Announcements

Several Open Positions with Sunrise Banks

CDBA Member Sunrise Banks seeks to fill several open positions

Commercial Loan Officer
(Minneapolis, Minn.)

The commercial loan officer services and maintains a portfolio of commercial loan accounts. This position is responsible for interviewing, assessing and analyzing prospective loan clients and their financial position. The commercial loan officer will establish new business loans and deposit prospects through sales calls, networking and a referral base while granting new loans according to bank guidelines and loan policy.

Commercial Loan Officer - Government Lending
(St. Paul, Minn.)

This position has similar responsibilities to the role described above, but specializes in New Market Tax Credit (NMTC) and SBA Loans. The commercial loan officer is responsible for Interviewing, assessing and analyzing prospective loan clients and their financial position. This role is also responsible for establishing new business loans and deposit prospects through sales calls, networking and a referral base as well as granting new loans according to bank guidelines and loan policy.

Third Party Risk Specialist
(Sioux Falls, S.D.)

The third party risk specialist will assist the third party risk manager within the Risk Department of Sunrise Banks’ holding company. Daily responsibilities will include performing due diligence, risk assessments and periodic review of the bank’s key business relationships. Other duties include policy development, issue remediation, contract review and maintaining relationships with third parties. The Third Party Risk Department interfaces with the following lines of business: prepaid, national lending, tax products and core banking.
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