View from CBA April 25, 2014

CBA/AOL March Finance Optimism Index Results: Partly Cloudy

Results for the CBA/AOL Finance Optimism Index show a decline for the second month in row. Consumer polling in March showed a -6.2 level of optimism, compared to -2.6 last month - a decline of 3.6 points - as Americans grow more concerned about their current financial situation. With the impending tax deadline in April, consumers were likely taking stock of their financial situation and facing a looming tax bill. The Index is measured continuously with results calculated and reported monthly atFinanceOptimism.org.
 

Verizon’s Cybersecurity Report Ominous

The initial effects of the Target breach may be past, but CBA’s members will be dealing with cybersecurity well after Target, Michaels, and many other retailers. This week, Verizon issued their annual Data Breach Investigations Report which found web app tampering, distributed denial-of-service attacks, and the increased use of payment card skimmers as the largest threats to banks. Specifically, the report tracked 1,367 confirmed data breaches and 63,437 security incidents across 95 countries.
 
CBA members, including U.S. Bank and Wells Fargo, are piloting biometric security to stay ahead of hackers. As we heard from former Homeland Security Secretary Tom Ridge at CBA LIVE: “Our friends on the Hill won't call your IT guy to testify when something goes bad.”
 
This is something which has not escaped the eye of our regulators. Comptroller of the Currency Tom Curry noted in a speech last week noted the financial sector is one of the most attractive cybertargets for both criminals and terrorists. But as our members build defenses he stated, “…smaller institutions can provide a point of entry into larger networks, and they may have less-sophisticated defense.”
 

CFPB Has Opinions on Student Lending and Mortgage Process

The CFPB held a media event on Monday, April 22, 2014 to release findings associated with their mid-year study on the private student loan market. Despite widespread media coverage, the CFPB did not cite just how many of these unverified complaints were related to loans being called into an accelerated payment schedule because of the death or bankruptcy of a borrower’s cosigner, insinuating it to be a practice of CBA’s members. CBA issues a response to the CFPB. We wish to work as a partner with the CFPB to identify possible shortcomings as this better serves consumers. However, information provided without supporting documentation, as well as its midnight-embargoed press release, does not lead to this outcome.
 
Just how many private student loans are in the national market place? About 18,500,000. The CFPB’s report, which covers a six month period of October 2013 – March 2014, addressed 2,300 unverified private student loan complaints and 1,300 unverified debt collection complaints related to private and federal student loans altogether lumped into vague and general categories including: “Getting a loan,” “Can’t repay my loan,” and “Dealing with my lender or servicer.” Simple math shows the CFPB only received complaints for approximately 0.019 percent of outstanding private student loans over the six month period described in their report.
 
If you are like me, you are totally confused by the mortgage closing process which involves lots of paperwork and not much time to read it. This is a direct result of mandates from regulators and lawyers afraid of liability. CFPB Director Cordray said in a speech on April 23, 2014 some mortgage closing documents required by federal, state and local governments may have become “outmoded,” and may result in “information overload” for consumers. The bureau will begin to look at ways to streamline the closing process for borrowers, which today often includes 100 pages or more of documentation, and whether electronic closings would be easier. We look forward to working with the CFPB throughout this process.
 

Meeting Our Bankers

I was on the road this week to meet with PNC’s Mark Pregmon, Executive Vice President - Commercial Lending Operations, and Dawn Price - Senior Vice President, Retail Deposit Products while in Pittsburgh. Integral parts of the CBA family, Mark serves on our Membership Council and is a past Board Member, while Dawn is the Chair of the CBA Deposits & Payments Committee. A big thank you to them both for their continued support of CBA and for hosting us in the Steel City!
 

Citi, PNC Win 2014 Community Reinvestment Awards

The Federal Reserve Bank of San Francisco, the OCC, and the CDFI Fund recently presented the 2014 Community Reinvestment Award, focusing on cross-sector community development collaborations. We are proud to note both PNC and Citi were recognized with an award this year.
 
PNC Financial Services Group was recognized for “Grow Up Great,” an initiative begun in 2004. The $350 million, multi-year, bilingual program helps to prepare children, from birth to age five for school and life. Approximately 39,000 PNC employees have logged more than 410,000 volunteer hours, two million children have been served, and 138,000 teachers have received professional development throughout the program’s lifetime.
 
The CS4C initiative, funded by Citi, combined efforts of RAISE Texas, local nonprofit financial coaching entities and the Texas Attorney General – Child Support Division to help families in the child support system save for their children’s college education. From February 2012 - August 2013, 62 custodial parents opened up 116 college savings accounts totaling nearly $51,000 in deposits.