Top Story Lending Related

The NCUA on Friday reported that Florida's Office of Financial Regulation placed Alliance Credit Union of Florida into conservatorship, and appointed the NCUA as conservator.

According to the Credit Union Times, at the end of 2023, the credit union reported a loss of $184,231, and losses continued to pile up in each quarter of 2024.

The Federal Reserve Board has released the Statement of the Federal Open Market Committee following its meeting on November 6 and 7. The committee said that recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated.

The Committee "decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 to 4-3/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."

The implementation note released with the Minutes indicates that the Board of Governors voted unanimously to lower the interest rate paid on reserve balances to 4.65 percent, effective November 8, 2024, and to approve a 1/4 percentage point decrease in the primary credit rate to 4.75 percent, effective November 8, 2024.

Our monthly review of the Federal Reserve Board's archive of Community Reinvestment Act evaluations found that the Reserve Banks released ten evaluations of state-chartered member banks in the month of October, all with Satisfactory ratings.

The Federal Housing Finance Agency has announced two partnerships involving Fannie Mae, Freddie Mac, and Federal Home Loan Banks (FHLBanks) to boost awareness and liquidity for programs that expand housing access for tribal communities.

In one partnership, the FHLBank of Des Moines will promote a Freddie Mac mortgage product intended to improve credit access for federally recognized Native American tribes. In the other, Fannie Mae will purchase loans originated through the FHLBank Mortgage Partnership Finance (MPF) program — administered by the FHLBank of Chicago — to increase mortgage liquidity for tribal communities.

• Fannie Mae and FHLBank of Chicago press release
• Freddie Mac and FHLBank of Des Moines press release

The Federal Trade Commission yesterday announced it has filed a complaint against Dave, Inc., a Delaware corporation behind the "Dave" online cash advance app, for allegedly using misleading marketing to deceive consumers about the amount of its cash advances, charging consumers undisclosed fees, and charging so-called “tips” to consumers without their consent.

Dave describes the consumers it targets as being “financially vulnerable” or “financially coping,” including those whose spending exceeds their income, who have minimal savings, and who overdraft their bank accounts frequently. Dave’s advertising is dominated by claims that consumers can receive “up to $500” by using Dave, and that they can do so “instantly.” According to the FTC’s complaint, though, Dave’s service failed to live up to its promises. Despite promising “instant” or “on the spot” access to advances, Dave requires users to pay an “Express Fee” to get instant access to that money that is not disclosed until after the sign-up process is complete and the user has given Dave access to their bank account, according to the complaint. This fee ranges from $3 to $25, and consumers who do not pay the fee have to wait two to three business days to receive their advance.

Dave’s undisclosed charges go beyond this Express Fee, though, according to the complaint. Consumers who take advances from Dave are often charged a surprise fee of 15% of their advance that’s described by Dave as a “tip.” Many consumers are either unaware that Dave is charging them or unaware that there is any way to avoid being charged. Dave’s interface leads consumers to believe that, for every percentage of tip they are giving, Dave is donating an actual healthy meal to a needy child. But, according to the complaint, Dave donates just 10 cents for each percentage in “tip” the consumer clicks on and keeps the rest of the “tip” amount. Dave’s donation does not pay for the food required to actually provide a meal. Dave has reported receiving more than $149 million in revenue for these "tips" alone from 2022 through the first half of 2024. Dave also charges a poorly disclosed $1 monthly "membership fee" charged directly to members' bank accounts, and makes it difficult for consumers to cancel their membership.

The FTC's complaint seeks a permanent injunction, a monetary judgment, and other relief.

The FDIC has announced it will introduce a new online tool to help financial institutions, investors, and other interested groups to identify neighborhoods that could benefit from banking services. The FDIC’s new Minority Banking Opportunity Explorer will be presented at a meeting of the agency’s Minority Depository Institutions (MDI) Subcommittee to the Advisory Committee on Community Banking today.

This new tool supports FDIC’s statutory mission to promote and encourage the creation of new minority depository institutions by assisting financial institution organizing groups with exploring potential business opportunities in areas that may meet the "community served" part of an MDI designation. The tool can also support existing MDIs’ growth by identifying new branch locations or advertising opportunities.

The FDIC has issued Financial Institution Letters with guidance to help financial institutions and facilitate recovery in areas affected by severe weather.

• FIL-78-2024 for financial institutions in areas of South Dakota affected by the Cheyenne River Sioux Tribe severe storm, straight-line winds, and flooding on July 13 and 14, 2024
• FIL-79-2024 for financial institutions in areas of New Mexico affected by a severe storm and flooding on October 19 and 20, 2024

The Federal Trade Commission yesterday announced it has taken action against Global Circulation, Inc. (GCI), a Georgia-based debt collector that tricked consumers into paying more than $7.6 million in bogus debt by threatening them with jail time, harassing their family members, and other unlawful actions. In response to a federal court complaint filed against GCI and its owner, Kenneth Redon III, the court agreed to temporarily halt the company’s operation and ordered it to turn its assets over to a court-appointed receiver.

In its complaint, the FTC alleges that GCI and Redon contacted consumers under a number of fictitious company names, including Total Mediation Solutions, Total Consumer Solutions, and Consumer Impact Recovery. The company’s collectors call consumers out of the blue and threaten them with arrest, wage garnishment, and lawsuits if they don’t pay a supposed debt. However, the debts GCI is attempting to collect either don’t exist at all or are not debts GCI can legally collect. The company’s calls to consumers can be incessant, with some receiving calls multiple times a day, leaving voicemails saying to call about an urgent legal matter. When consumers answer, they’re told that, unless they pay the bogus debts on that phone call using a credit or debit card, they’ll face legal peril.

The complaint alleges that GCI’s deceptive statements and the urgency behind them have helped convince thousands of consumers to pay at least $7.6 million in bogus debts to the company.

The FDIC has released a list of 51 banks examined for Community Reinvestment Act compliance whose evaluations were recently made public. Forty-seven of the banks on the list received ratings of Satisfactory. Three banks received Needs to Improve ratings.

We congratulate NorthEast Community Bank, White Plains, New York, on its receipt of a rating of Outstanding.

The CFPB has announced it has filed a Proposed final judgment and order to resolve its case against Townstone Financial for discriminatory lending practices and redlining African American neighborhoods in Chicago.

If entered by the court, the proposed order would prohibit Townstone from taking any actions that violate the Equal Credit Opportunity Act (ECOA) and require the company to pay a $105,000 penalty to the CFPB’s victims relief fund. Today’s action follows lengthy contested litigation and a unanimous July 2024 decision from the United States Court of Appeals for the Seventh Circuit that stated that the ECOA prohibits lenders from discouraging prospective applicants on a prohibited basis from applying for loans.

The Seventh Circuit’s decision held unanimously that “an analysis of the text of the ECOA as a whole makes clear that the text prohibits not only outright discrimination against applicants for credit, but also the discouragement of prospective applicants for credit,” which is consistent with the Bureau’s regulation (Regulation B) interpreting ECOA.

• 2020 Complaint
• 2020 Amended Complaint
• U.S. Court of Appeals Opinion
• Stipulated final judgment and order
• Stipulated dismissal - Sturner