OTHER BANKING NEWS
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CFPB Asks Court to Vacate Section 1033 Data Sharing Rule
The CFPB has asked a federal court to vacate its rule on financial data sharing, citing the rule’s “numerous legal infirmities.”
The 2024 rule implemented Section 1033 of the Dodd-Frank Act, which requires banks and other financial institutions to make a consumer’s financial information available to them or a third party at the consumer’s direction. The rule required data providers to maintain a “developer interface” and forbid the charging of any fees. It also banned third parties from using consumer data to advertise products the consumer didn’t request and required businesses to delete personal information once customers have revoked access to that data.
The Kentucky Bankers Association joined the Bank Policy Institute and other plaintiffs in challenging the rule, arguing it jeopardized consumers’ privacy and account security.
The rule was implemented under the CFPB’s prior leadership. In separate court filings last week, both the plaintiffs and CFPB asked the U.S. District Court for Eastern Kentucky to vacate the rule. The CFPB cited numerous issues with rule, including that it unlawfully prohibited data providers from recovering any fees to offset the burden of compliance. The bureau also said the sought to regulate open banking by mandating the sharing of data with “authorized third parties,” whereas Section 1033 is limited to ensuring that consumers – and potentially the fiduciaries of individual consumers – can access their own data.
“In light of the president’s directive to review existing regulations, the bureau’s new leadership has considered the rule and the arguments set forth in plaintiffs’ complaint and amended complaint and has concluded that the rule exceeds the bureau’s statutory authority and is arbitrary and capricious,” the CFPB said in its court filing.
Public Comment Sought on Plan to Phase Out U.S. Treasury Paper Checks
The Treasury Department is taking public comment on plans to implement President Trump’s executive order directing it to no longer issue paper checks for disbursements, including tax refunds, vendor payments, benefit payments and intergovernmental transfers.
Beginning Sept. 30, all federal payments that are currently made by paper check will be made electronically, the Treasury Department said. The department’s request for information is seeking public feedback on the change, including why individuals and organizations continue to use paper checks. It is also seeking feedback on how to increase public awareness to help consumers, including unbanked and underbanked populations, transition to digital payments.
The deadline for comments is June 30.
To read more, visit: https://home.treasury.gov/news/press-releases/sb0150
One In Five Americans Victims of Financial Fraud, Scams
More than one in five U.S. adults have experienced financial fraud or scams involving their money, with older adults more likely to experience fraud than younger individuals, according to a new survey by the Federal Reserve.
The Fed this week released its report on the Economic Well-being of U.S. Households in 2024, which surveyed individuals on a wide range of financial topics. Among other things, the survey found that 73% of adults said they were doing okay financially or living comfortably, a figure largely unchanged from the year before.
For the first time in the survey’s history, the Fed asked respondents about their experience with fraud and scams. Credit card fraud was the most reported type of fraud at 17% of respondents. Adults ages 45 and older were more likely than younger adults to experience financial fraud or scams, largely driven by their higher rates of experiencing credit card-related fraud, according to the survey.
While only 8% reported financial fraud not involving credit cards, 63% of that group said they lost money, with roughly a third saying their money was not recovered. The total amount of non-credit-card fraud was an estimated $84 billion in 2024.
Other findings from the report:
- Six percent of adults were unbanked in 2024, the same percentage as the previous three years.
- Eight percent of adults used cryptocurrency either as an investment or for making financial transactions. That figure has remained roughly the same in recent years.
- Sixty-two percent of adults felt very confident their credit card application would be approved if they were to apply, down from 65% in 2021. Still, credit confidence remained at the same level as 2019, before the pandemic.
- Fifteen percent of people used buy now, pay later products in the past 12 months, up from 14% in 2023 and 10% in 2021, when the survey first asked about BNPL.
To read more, visit: https://www.federalreserve.gov/publications/files/2024-report-economic-well-being-us-households-202505.pdf
CSBS Initiative Aims to Improve Regulatory, Supervisory Solutions Via Technology
The Conference of State Bank Supervisors has rolled out what it calls its “Catalyst Initiative,” which, according to the group, “seeks to address state financial regulatory agencies’ key supervisory challenges and reduce regulatory burden.”
The initiative, announced during CSBS’ recent Mortgage Policy Summit in Washington, D.C., will focus on partnering with the private sector to use modern technology and improve the efficiency and effectiveness of financial services supervision, CSBS officials said.
“The Catalyst Initiative reflects the state system’s commitment to innovation,” said CSBS President and CEO Brandon Milhorn. “Just as NMLS transformed mortgage industry regulation, new supervisory technology can fundamentally change how the states help protect consumers and financial stability. These investments in new tools — made in parallel with ongoing private sector efforts — will provide better data, improved analytics, and more effective systems to quickly identify and mitigate financial risks.”
For this year, the Catalyst Initiative will focus on two areas for innovation and improvement, CSBS said. It will examine ways to make bank data reporting less costly, more transparent and timelier than the current quarterly submission process. It also will include experimenting with ways to leverage the new Mortgage Industry Standards Maintenance Organization, or MISMO, mortgage compliance dataset. The dataset was created to help regulators more efficiently review mortgage files for compliance with state and federal laws.
New activities will be planned for subsequent years.
To read more, visit: https://www.csbs.org/catalyst-initiative