Tag: bank accounts

03
Feb

Bank Accounts: Lenders, Check Cashers

Bank Accounts for Payday Loan, Installment Loans, Small Dollar Loans, Consumers…

The CFPB issued a “policy directive” suggesting banks and credit unions do more for consumers lacking bank accounts. This is a laudatory action. Those of us offering payday loans, installment loans, car title loans, line-of-credit, check cashing… know well how difficult this negative situation makes a consumer’s life.

BUT WHAT ABOUT SMALL BUSINESSES! How about bank accounts for lenders, check cashers, gun shops…? Who the hell creates ALL the jobs for these consumers in need of a bank account?

By now, we’re all aware of the devastation the small dollar loan industry has experienced as a result of “Operation Choke Point.” [Here’s a list of ALL the industries attacked by Operation Choke Point.] And everyone knows it wasn’t us who nearly brought down the financial system and then asked for bailouts from taxpayers.

So what’s up with Richard Cordray, head of the CFPB. Why not help consumers by helping all the small businesses who experienced “bank discontinuance?”

Senseless!

Here’s the CFPB’s opening salvo letter to banks and credit unions with a link to the entire letter from Richard Cordray:

February 3, 2016
[Address of financial institution]
Dear [CEO of financial institution]:

I am writing to you and your peers, as leading executives in the banking industry, to bring an important matter to your attention. This letter is not being sent in reference to any sort of regulatory requirement, but instead is simply a suggestion that I urge you to consider in serving your customers.

As you know, each year millions of Americans open new checking accounts, making them one of our most widespread financial products. Right now, much of the industry presents consumers with a binary result – either an applicant passes a standard screening process to obtain an account after identifying any credit risks posed by the applicant’s history of misuse or mishandling of some prior account, or the applicant is blocked from accessing the banking system altogether.

payday loan car title loan banks and consultingThere is, however, a third possibility, which is to offer all applicants a lower-risk account (whether a checking account or a prepaid account) whereby the applicant cannot pose the same level of risk to the institution. Accordingly, the same applicant need not be screened out of the banking system by applying the same risk thresholds that are used to determine eligibility for a standard checking account. Millennials, in particular, seem to be expressing great interest in the availability of such lower-risk products.

This is important because an estimated ten million American households are currently “unbanked.” You know very well that having a checking account or a reloadable prepaid account enables… Here’s the link.

Need help starting or improving your lending business? Reach out to Trihouse Consulting. We’re lenders, operators, consultants and more. Selling your business? Buying a small dollar loan business? Want to learn more? Jer@TrihouseConsulting.com 702-208-6736

28
Jan

Bank Accounts for Payday Loan, Check Cashers and MSB Lenders

Great news today for consumers and small dollar lenders regarding bank accounts:

Financial Institution Letter
FIL-5-2015
January 28, 2015

Statement on Providing Banking Services

The FDIC encourages insured depository institutions to serve their communities and recognizes the importance of the services they provide. Individual customers within broader customer categories present varying degrees of risk. Accordingly, the FDIC encourages institutions to take a risk-based approach in assessing individual customer relationships rather than declining to provide banking services to entire categories of customers, without regard to the risks presented by an individual customer or the financial institution’s ability to manage the risk. Financial institutions that can properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customer operating in compliance with applicable state and federal law.

The FDIC is aware that some institutions may be hesitant to provide certain types of banking services due to concerns that they will be unable to comply with the associated requirements of the Bank Secrecy Act (BSA). The FDIC and the other federal banking agencies recognize that as a practical matter, it is not possible for a financial institution to detect and report all potentially illicit transactions that flow through an institution.1 Isolated or technical violations, which are limited instances of noncompliance with the BSA that occur within an otherwise adequate system of policies, procedures, and processes, generally do not prompt serious regulatory concern or reflect negatively on management’s supervision or commitment to BSA compliance. When an institution follows existing guidance and establishes and maintains an appropriate risk- based program, the institution will be well-positioned to appropriately manage customer accounts, while generally detecting and deterring illicit financial transactions.

Any FDIC-supervised institution concerned that FDIC personnel are not following the policies laid out in this statement may contact the FDIC’s Office of the Ombudsman (OO) at the following dedicated toll-free number, 1-800-756-8854, or dedicated email address, bankingservicesOO@fdic.gov. Communications with the OO are confidential. The FDIC also has an independent Office of Inspector General (OIG) that is charged with addressing allegations of waste, fraud, and abuse related to the programs and operations of the FDIC. Individuals or institutions may contact the FDIC OIG through its Web site at www.fdicoig.gov by using the “Hotline” button, by phone at 1-800-864-3342, or by email at ighotline@fdic.gov.

Doreen R. Eberley
Director
Division of Risk Management Supervision

Here’s a link to the FIL and the “Letter:” https://www.fdic.gov/news/news/financial/2015/fil15005.html