Should little banks fear the Consumer Financial Protection Bureau?

The American Bankers Association has a bone to pick along with the CFPB, writes Investor’s Business Daily. Community banks and credit unions think over 1,000 of their kind will disappear, due to what they see as over-regulation from the Dodd-Frank Act. They see this action as likely, and feel it would be an abuse of power on the part of the Consumer Financial Protection Bureau.

Strong enforcement arm in consumers’ corner

Elizabeth Warren, the interim chief of the Consumer Financial Protection Bureau, has warned that “change is coming” and that all U.S. financial institutions will have to play by new rules. Warren has spoken time and time again about how the United States consumers’ financial rights will be protected by the Consumer Financial Protection Bureau with the Customer Financial Protection Bureau’s budget. Half of the budget will be going to supervision and enforcement.

Community banks and credit unions fear their own Rapture

ABA representatives have stated publicly that if Dodd-Frank rules go into effect as they are currently written, more than 1,000 banks will be forced out of business before the end of the decade. Any information requested, in any format requested, must be given to the Consumer Financial Protection Bureau by banks. The resources taken to put this together could possibly be devastating to small banks. The Home Mortgage Disclosure Act is meant to stop predatory lending, which the Consumer Financial Protection Bureau would want to make sure of. The bureau will probably ask for even more information from a borrower so it can choose if there has been any discrimination.

According to Investor’s Business Daily, ABA Chairman Stephen explained that this is bad for credit unions and small community banks. They will make the loans larger banks won’t most of the time. The more small banks that shut down, the fewer capital sources remain accessible. This is passed on to customers in higher rates and fees, argues Wilson.

“If we tie up our capital system, it’s going to take money away from the people who need it to create jobs,” warned U.S. Chamber of Commerce President Tom Donohue.

Elizabeth Warren debated

On July 21, the CFPB will be launching. There is no permanent chairperson still. Warren will likely be nominated by President Obama, but numerous lawmakers who support the banking industry have attempted to derail the Warren nomination. The Consumer Financial Protection Bureau has too much power, Republicans argue. Warren is hoping the Consumer Financial Protection Bureau will be “toothless” she states.

By way of comparison, the Sarbanes-Oxley Act of 2002 – one of the more critical pieces of financial regulatory legislation, pre-Dodd-Frank – changed sixteen rules over two-and-a-half years. The Dodd-Frank Act will require more than 250 rule changes over several years.

Articles cited

American Bankers Association

aba.com/default.htm

Florida Realtors

floridarealtors.org/NewsAndEvents/article.cfm?id=259538

Investor’s Business Daily

investors.com/NewsAndAnalysis/Article/572889/201105201812/1000-Small-Banks-May-Be-Shut-Down-Due-To-Dodd-Frank.htm

SEC

sec.gov/about/laws/soa2002.pdf

Rep. Sean Duffy (R-Wisc.) fights for community banks and credit unions

youtube.com/watch?v=8yqmp_kIucQ

Joplin, Mo., may deal with 2nd tornado right after catastrophe

More than a hundred people are dead in Joplin, Mo., due to a savage tornado touchdown in the town, and a second one might soon be on the way. A storm front is at the moment converging on the lower Midwest region. There’s a strong probability of tornadoes. An extreme thunderstorm alert, including a huge chance of tornadoes, is in impact for five states.

Which states need to worry a tornado might hit

MSNBC explains that a storm system has produced tornadoes already after starting in the south of the U.S. and continuing with more tornadoes after hitting Joplin, Mo., on Sunday, May 22 and killing 116. A thunderstorm advisory is in effect for Missouri, Arkansas, Oklahoma, Kansas and the northeast corner of Texas, and people are told to view for tornadoes, hail and strong winds throughout the region. The tornado risk was commented on by a National Weather Service official. The official said the risk is “not through … not by a long shot.” As the storm progresses in the week, the chance of another tornado just like the one that hit Joplin taking place will decrease, although the chance is still there, reports USA Today.

Because it is La Nina, possibility of storms goes up

Tornadoes have been the reason for 482 fatalities this year. The increased strength of storm systems and tornadoes is being credited to La Niña, a periodic weather phenomenon caused when the tropical Pacific Ocean cools. Storm systems become more severe meaning more tornadoes may occur when the Pacific cools since the jet streams get stronger and cool air rises to the atmosphere. Yahoo News explains that meteorologists aren’t surprised by the storms. They say that the events aren’t out of the ordinary even though they are terrible events. Weather patterns, such as low pressure systems conducive to tornadoes, can form in areas and stay for long periods of time. Last month, several tornadoes tore across several states and killed more than 300 people.

Insurance losses in the billions

Billions will be lost by insurance companies. Reuters reports that a lot will have to be paid out. A normal year means only $2 billion to $4 billion would be paid out by insurance companies while this year is expected to total $10 billion with all the tornado outbreaks and river flooding in the United States happening. All of the insurance companies in the world might have to pay up to $55 billion this year. This is just for the damage the New Zealand and Japan earthquake have caused. The Federal Emergency Management Agency is trying to get towns rebuilt after the 1,151 tornadoes that have already hit in 2011. There were 181 people killed in Woodward, Okla., in 1947 making Joplin’s tornado the deadliest since then. At one point during the storm, the Joplin tornado was three-quarters of a mile across. Speeds of 200 miles per hour came from it.

Citations

MSNBC

msnbc.msn.com/id/43147795/ns/weather/

USA Today

usatoday.com/weather/storms/tornadoes/2011-05-23-tornadoes-hit-plains_n.htm

Yahoo News

news.yahoo.com/s/ap/us_sci_midwest_storms_science;_ylt=AjjcCUBXXogIBRiQGeOupzqs0NUE;_ylu=X3oDMTNjM21oOHRnBGFzc2V0A2FwLzIwMTEwNTI0L3VzX21pZHdlc3Rfc3Rvcm1zBGNjb2RlA21vc3Rwb3B1bGFyBGNwb3MDMQRwb3MDNgRwdANob21lX2Nva2UEc2VjA3luX3RvcF9zdG9yeQRzbGsDcmVsYXRlZA–

Reuters

reuters.com/article/2011/05/24/us-insurance-disasters-idUSTRE74M6GH20110524

An increase in Cuba travel from law changes

Many people have longed to enjoy many different drinks in the same bars as Hemingway, but the ban against traveling to Cuba has made that impossible. However, the restrictions are slowly being lifted. There are ways around the travel ban, and a lot of people are aware of them. More people are starting to travel to Cuba annually. However, bear in mind that Cuba is not Disneyland.

Ability to get to Cuba elevated

The relationship between Cuba and the U.S. in the last half century has not been very good. It has been quite terrible actually. A small number of individuals were allowed to go to Cuba in 1999 when Clinton signed a bill to allow it, states MSNBC. The Kennedy administration’s Cuban embargo is still in effect though. As long as an individual is going to Cuba for “people to people contacts,” it is acceptable. This means that people have to go to Cuba with the intention of learning about the Cuban culture. Adjudicating the quality of the pina coladas doesn’t count; most groups have itineraries packed with museum, factory and farm visits.

Clampdown going away

An individual has to book a trip through a group authorized to go to Cuba if an individual wants to get in. The State Department won’t have to approve travel itineraries anymore ahead of time meaning it will be easier to get into a tour of Cuba. However, Cuba it isn’t an excellent place to take the children. People go to Cuba for religious, journalistic or governmental reasons. That means that even though there is still “person to person” travel, you should not just go to getaway, the State Department website explained. As long as relatives are Cuban nationals, individuals can go to Cuba to see them. There is no U.S. Embassy in Cuba, though a U.S. Special Interests Section is located in the Swiss Embassy in Havana, functioning as an embassy of sorts.

Get papers in order first

The State Department claims Cuba is “a totalitarian police state” that uses physical and other means to control its citizens. Do not worry about being safe while in Cuba. However, make sure you are respectful and have your paperwork in order if you are going to visit. Most Cubans cannot travel at all. In order to leave Cuba, Cubans need a “white card” exit visa. Costs have to be around $150 to go. Typically, Cubans have about $20 a month to live on. They typically don’t have enough to eat either, the Christian Science Monitor explains. President Obama, according to Reuters, is open to normalizing relations and lifting some restrictions on trade and travel if the Raul Castro regime makes meaningful changes to the notoriously tight-fisted Cuban regime. Cuba communism will not change, claims Castro, although he will let some trade occur.

Citations

MSNBC

msnbc.msn.com/id/43126754/ns/travel-news/

U.S. Department of State on traveling to Cuba

travel.state.gov/travel/cis_pa_tw/cis/cis_1097.html

Christian Science Monitor

csmonitor.com/World/Americas/2011/0513/Cubans-may-no-longer-be-stuck-on-Caribbean-isle

Reuters

reuters.com/article/2011/05/13/us-usa-cuba-obama-idUSTRE74C3P820110513

Smaller businesses get credit through OnDeck

In business, there are big-idea startups that attract a ton of funding. Several of the companies that all of us use every single day, however, are not a big idea. They’re the restaurants, boutiques, coffee shops, and hotdog carts that we use every day. A new startup called OnDeck is trying to help these 5 million companies qualify for loans more easily.

Small business lending issues

It could be difficult to qualify for a small company loan. Most financial institutions do not want to lend to individuals without a credit history or business history. This means companies may not be able to get a loan. Businesses typically do not like to do loans less than $100,000. The work involved in a 14-item business loan package just is not worth it. Financing can be secured by business owners with less than 25 employees as long as they use their personal credit. The business ends up tied to personal accounts with this, which can be dangerous. The risk is somebody potential owners will not like.

The best answer from OnDeck

Cloud-based and interconnected, OnDeck aims to streamline the creation of financial reports and information for lenders. It links companies with their accounting, credit card processing and online banking accounts. This will be in their business profile. The full financial profile, business credit report and prospectus is created with the information as well as industry data, regional information and tax data. Big businesses like reports to help them decide on loans while this program was created in five years. The information is much more real time than the information banks will give you. The process for loans between $5,000 and $150,000 will be much better with it.

Small Businesses have more resources

OnDeck provides new financing resources for smaller businesses, but it is not the only new resource for getting small company credit. A new government partnership called StartUp America aims to provide discounts, resources and information to help small business owners get their business going or growing. For counseling, information and loan guarantees, there is another place business owners can go. This is the Small business administration. There are lots of resources out there for entrepreneurs willing to watch for them.

Articles cited

Tech Crunch

techcrunch.com/2011/05/19/smart-lending-on-deck-gives-your-startup-a-credit-score-so-you-can-secure-a-loan/

Startup America Partnership

startupamericapartnership.org/

Crime rates worsened by cash advance lenders claims new study

A new study links payday loan lenders to increasing crime rates and falling property values. This is not the first time that a connection has been discussed between payday lending and crime, however the academic literature until now has never had much consensus. The total impact of payday lenders is not entirely known. It might be impossible to know if payday loans are truly a force for good, evil or occupies a gray area.

How cash advance lenders are connected to crime

WalletPop reports that a connection between payday advance lenders and crime would suggest payday loan lenders are responsible for crime rate increases after re-examination. Charis Kubrin and Gregory Squires of George Washington University and Steven Graves of California State University Northridge all worked together to write the study called “Does Fringe Banking Exacerbate Neighborhood Crime Rates?” which was really a paper that has been around since 2009. Environment influences crime over anything else, according to the report which utilizes social disorganization for its framework. The contention is that pay day loan lenders enter environments that are highly disorganized, such as poverty and crime-ridden areas, and cause things to get worse.

Just a repeat

Areas with more payday cash advance lenders have higher crime rates in Seattle, according to the study. It claims that the more payday lenders, the higher the crime rate. The study is meticulously done, and does make a case for its central premise of payday loan lenders driving up crime rates. There was a rise of crime of only 1 percent shown in a 2010 study of payday loans and crimes done by Heather Luea. Poverty is a huge trigger of crime while individuals who are not able to get charge cards or rely on banks tend to use pay day loan lenders more often. More crime in an area causes more crime. That is the real problem.

Both sides of the issue

Deciding whether or not payday loans are morally acceptable has been hard for many. There are surely correlations with crime and payday lenders while there have been accusations of bias and other concerns for pay day loan positives. The United States Census data on Wikipedia shows that household income for the lowest 40 percent has stayed the same while income for the top 20 percent has increased steadily for the last 30 years. That’s demographic that personal loan companies cater to. Nobody has suggested how to help the individuals on the bottom. Without payday loans, they will need another solution.

Information from

WalletPop

walletpop.com/2011/05/12/payday-lenders-fuel-crime-drive-down-property-values/

Fringe banking and crime study

gwu.edu/|newsctr/09/pdfs/Payday_Lending_and_Crime_Working_Paper.pdf

Wikipedia

en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg

The United States to get new Ford Focus ST seven years after the last one

Years after the original, Ford is going to be unveiling a new Focus ST in America. The ST is the sport version of the Ford Focus, and it will have a sport suspension and far more powerful engine. The ST is slated to hit dealerships in 2012.

New Ford Focus in the U.S.

Before the Ford Focus performance version, or Focus ST, comes out in late 2011, it is doing a lot of tests, USA Today states. There can be good suspension and horsepower from the care. The U.S. did get some of the 60 prototypes of the auto Ford released. This was done so individuals know about the auto and to test it out. You may have seen the Focus ST if you see an odd colored Focus that is closer to the ground and works really well while photos show leopard-like black spots on silver.

Motor specifics

The new Focus ST has the same engine as the rest of the Focus lineup. Until 2004, the Focus SVT was sold in the U.S. MotorTrend reports that it had a five-cylinder engine with 227 horsepower and 2.7 liter tank. The ST will be turbocharged with Ecoboost direct injection which could be the only different between the 2.0 liter incline four cylinder other Focus models have. The horsepower on the ST is 246. It gets 250 foot pounds of torque on it too. Ford’s Electric Power Assist Steering and racing suspension could be on the auto too. The price of the automobile has not yet been put up. Still, most expect it to be in the range of upper Focus models. The Ford website shows that the Titanium package is probably the most expensive Focus at $23,000.

London wants it

The U.S. may be excited to have the performance Focus. It isn’t the first Ford has made though. The ST is a performance-oriented compact car as a hatchback, making it a European auto that several want. The 2.5 liter five cylinder Focus ST has been sold in Europe and Australia already. Ford started selling them in 2005, states Wikipedia. Soon the ST will hit international markets while the Focus itself is being re-released by Ford as an international model. London’s new Focus is the same as Melbourne’s and Los Angeles’ vehicles. In The United States, the Ford Focus sells really well. It sells even better with the British though. Top Gear explains the U.K. has made the automobile one of its best-selling cars. In Britain, it was the 3rd best in 2010. Number one was the Ford Fiesta.

Citations

USA Today

content.usatoday.com/communities/driveon/post/2011/05/ford-starts-us-testing-of-powerful-focus-st/1

Motor Trend

wot.motortrend.com/new-ford-focus-st-test-mules-force-76643.html

Ford

ford.com/cars/focus/features/#page=FeatureCategory1

Wikipedia

en.wikipedia.org/wiki/Ford_Focus_%28International%29

Top Gear

topgear.com/uk/photos/uk-top-ten-cars-of-2010-2011-01-07?imageNo=0