ABA analysis examines security ratings

A recent American Bankers Association (ABA) white paper explains the pros and cons of security ratings, how the ratings work, and how financial institutions should use them.© Shutterstock “As we see more security ratings hit the market, we want to ensure that banks and others understand how they fit into a broader risk management program,” […]

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A recent American Bankers Association (ABA) white paper explains the pros and cons of security ratings, how the ratings work, and how financial institutions should use them.

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“As we see more security ratings hit the market, we want to ensure that banks and others understand how they fit into a broader risk management program,” Paul Benda, senior vice president, risk and cybersecurity policy at ABA, said regarding Security Ratings: A Tool as Part of a Risk Management Program. “A robust plan includes multiple tools in the toolbox, and if used appropriately, security ratings can be one of those tools.”

The paper maintains security ratings can provide insight and serve as a starting point when evaluating a firm’s cybersecurity program, but the association said ratings could not offer a full picture of an organization’s cybersecurity program, because the providers rely on a combination of data points collected or purchased from public and private sources and are unable to evaluate a firm’s internal infrastructure and controls.

“Cybersecurity remains a top priority for banks across the country, and we are continuously looking for ways to improve effectiveness and efficiency,” Benda said. “There are many resources out there, so understanding how they work is key.”

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CFPB appoints Robert Cameron for ombudsman position

Robert G. Cameron has been appointed to serve as the Consumer Financial Protection Bureau’s (CFPB) private education loan ombudsman.© Shutterstock Cameron joins the CFPB from the Pennsylvania Higher Education Assistance Agency, where he was a high-ranking official responsible for litigation, compliance, and risk mitigation efforts. In his new role officials said Cameron would be responsible […]

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Robert G. Cameron has been appointed to serve as the Consumer Financial Protection Bureau’s (CFPB) private education loan ombudsman.

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Cameron joins the CFPB from the Pennsylvania Higher Education Assistance Agency, where he was a high-ranking official responsible for litigation, compliance, and risk mitigation efforts.

In his new role officials said Cameron would be responsible for receiving, reviewing and attempting to resolve complaints from private student loan borrowers while also compiling and analyzing complaint data on private education loans and making appropriate recommendations to the Secretary of the Treasury, the Bureau Director, the Secretary of Education and Congress.

Consumer Bankers Association (CBA) President and CEO Richard Hunt said the organization is pleased the CFPB has filled the role and believes it should remain separate from the Office of Students.

“CBA looks forward to working with Mr. Cameron to help improve the student lending marketplace to benefit all borrowers,” Hunt said. “Through responsible lending practices and a 98 percent repayment rate, private student loans set students up for success. We believe there is a role for the federal government to help families most in need, but the current system has led to increased tuitions and double-digit default rates.”

The Dodd-Frank Act gave the Treasury secretary, in consultation with the CFPB director, the authority to designate the ombudsman.

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Analysis examines retirement instability

Lawmakers are encouraging Social Security’s protection and strengthening, following the release of a report examining the nation’s retirement instability.© Shutterstock “Despite Social Security’s success, the other two major components of our nation’s retirement system – private savings and pensions – are failing hard-working Americans,” Rep. Carolyn B. Maloney (D-NY), vice chair of the Congress Joint […]

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Lawmakers are encouraging Social Security’s protection and strengthening, following the release of a report examining the nation’s retirement instability.

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“Despite Social Security’s success, the other two major components of our nation’s retirement system – private savings and pensions – are failing hard-working Americans,” Rep. Carolyn B. Maloney (D-NY), vice chair of the Congress Joint Economic Committee said via a statement accompanying recent publication of Retirement Insecurity, a report written by the Democratic committee members.
“As a result, roughly half of Americans are at risk of losing their current standard of living in retirement. Americans find it increasingly hard to save for retirement amid stagnant wages and the rising cost of housing, healthcare, and college.”

Maloney noted the share of workers who receive pensions has almost fallen in half since the late 1980s, adding only about half of middle-income workers and less than 10 percent of the poorest Americans have defined-contribution accounts like 401(k)s.

“These problems are particularly acute for women, minorities, and people with low earnings or less education,” Maloney concluded. “Women, African Americans, and Hispanics on average have less saved for retirement and less retirement income. Women, in particular African American and Hispanic women, are at greater risk of outliving their retirement savings.”

Maloney emphasized the importance of protecting Social Security while also recognizing that the rest of our retirement system is in crisis.

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Survey probes long-term impact of student loan debt

TD Bank’s Student Debt Impact Survey results have determined loan payments have a dramatic impact on young adults’ daily finances, placing their long term financial health in flux.© Shutterstock “The results of our survey show that student loans can have a ripple effect on borrowers’ financial futures,” Mike Kinane, head of US Bankcard at TD […]

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TD Bank’s Student Debt Impact Survey results have determined loan payments have a dramatic impact on young adults’ daily finances, placing their long term financial health in flux.

© Shutterstock

“The results of our survey show that student loans can have a ripple effect on borrowers’ financial futures,” Mike Kinane, head of US Bankcard at TD Bank, said. “Consumers owe money before they even earn their first paycheck, which is troubling.”

The analysis involved asking more than 1,000 Americans who paid off or are currently repaying student loan debt, ages 18 to 39, how the debt is impacting their lives and factors they considered before taking out the loan.

The average total student debt held by survey respondents is $26,495, officials said, with the average debt payment being $579 a month. The reported average monthly take-home pay is $2,689, which officials said translates to one-in-five take-home pay dollars being spent on repaying a student debt.

“The reality is many Americans need to take on student loan debt to finance higher education, but most are unaware of how it will impact their lives long-term,” Kinane said. “We’re seeing an alarming lack of education surrounding student loans, repayment terms and borrowers’ earning potential after graduation.”

The survey results indicated student loan borrowers overwhelmingly lack education about the impact of loans on credit health, as well as how to maintain payments and save for the future.

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NASAA opens investigations into rise of crypto-related fraud

In the wake of regulators noticing a rise in potential crypto-related frauds, the North American Securities Administrators Association (NASAA) has opened probes into questionable cryptocurrency-related investment offerings.© Shutterstock NASAA officials said the 130 new investigations are in addition to 35 pending or completed enforcement actions since the beginning of this year. “Recent headlines of potentially […]

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In the wake of regulators noticing a rise in potential crypto-related frauds, the North American Securities Administrators Association (NASAA) has opened probes into questionable cryptocurrency-related investment offerings.

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NASAA officials said the 130 new investigations are in addition to 35 pending or completed enforcement actions since the beginning of this year.

“Recent headlines of potentially new cryptocurrency products and the near tripling in value of some cryptocurrencies and the sharp increase in market capitalization for all cryptocurrencies are again creating an environment that attracts white-collar criminals, bad actors, and other promoters of illegal and fraudulent securities schemes,” Michael S. Pieciak, NASAA president and Vermont Commissioner of Financial Regulation, said. “Investors should be mindful of the hype and be aware of the risks when considering whether to jump into cryptocurrency-related investment products.”

The NASAA said among the factors to be considered to address potential fraudulent activity are volatility. Cryptocurrency markets are highly volatile, making them unsuitable for most investors looking to meet long-term savings or retirement goals; cryptocurrency and many crypto-related investments are subject to little regulatory oversight, and there may be no recourse should the cryptocurrency disappear due to fraud or a cybersecurity breach; and cryptocurrency or crypto-related investments only exist on the internet – and issuers can be located anywhere in the world, so it may be impossible to trace and recover lost funds through the courts.

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ABA report examines banks’ social media use

A newly released American Bankers Association (ABA) report maintains just over eight in 10 banks believe social media is important and are active on their social media accounts.© Shutterstock “It’s remarkable how much bank social media engagement has evolved and matured since we first conducted this survey two years ago,” Jim Edrington, ABA’s chief member […]

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A newly released American Bankers Association (ABA) report maintains just over eight in 10 banks believe social media is important and are active on their social media accounts.

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“It’s remarkable how much bank social media engagement has evolved and matured since we first conducted this survey two years ago,” Jim Edrington, ABA’s chief member engagement officer, said. “Bankers overwhelmingly recognize the power of social media to increase visibility and humanize their brand as they connect directly with their customers on a personal level.”

The State of Social Media in Banking report showed 40 percent of institutions revealed they have used social media for five years or more, which represents a rise from 25 percent two years ago. In addition, only 6 percent of banks do not currently use social media and 3 percent indicated they plan to begin social media engagement within the next one to two years.

The most preferred social media platforms are Facebook, LinkedIn and Twitter, Instagram, YouTube and blogs.

An examination of the numbers also determined 52 percent of survey respondents planned to increase spending on social media resources this year and an additional 8 percent sought to increase that budget.

“Social media engagement is rewarding in so many ways, and can provide a big return on a modest investment,” Edrington added.

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ICI study shows retirement plan participation continues to increase

A recently released Investment Company Institute (ICI) study has found that workers’ participation in employer-sponsored retirement plans is significantly higher than suggested by some commonly cited statistics.© Shutterstock The analysis showed nearly two-thirds of workers between ages 26 and 64 are participating in such plans, either directly or through a spouse, according to the study, […]

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A recently released Investment Company Institute (ICI) study has found that workers’ participation in employer-sponsored retirement plans is significantly higher than suggested by some commonly cited statistics.

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The analysis showed nearly two-thirds of workers between ages 26 and 64 are participating in such plans, either directly or through a spouse, according to the study, Who Participates in Retirement Plans, 2016.

“By the time they retire, the vast majority of American workers will accumulate resources in employer plans,” Peter Brady, ICI senior economic adviser, said. “This is not well understood for two reasons. First, participation is often understated in household surveys, which are used to study participation. Second, many younger and lower-income workers who are not participating in retirement plans today will do so later in their careers.”

The ICI said younger and lower-income workers are the least likely to want to save for retirement, and thus less likely to search for an employer who offers a retirement plan or participate in a plan if given the choice. ICI’s study also noted that among workers between 26 and 64 years old in 2016, the probability an employee participated in a retirement plan at his or her workplace spanned the range of 22 percent for those who earned less than $20,000; 67 percent for those who earned $40,000 to $50,000; and 85 percent for those who earned $100,000 or more.

ICI said the study used tax data published by the Internal Revenue Service (IRS) Statistics of Income Division (SOI), with the tabulations including data on all taxpayers who were wage and salary workers in 2016.

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Study examines student loan debt impact

A Teachers Insurance and Annuity Association (TIAA) sponsored study maintains student loan debt has a significant impact on retirement savings, longevity planning, and family relationships.© Shutterstock The effort, which was conducted by the MIT AgeLab over one year, determined one-quarter of those not saving for retirement cite student loans as the reason. Among the 25- […]

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A Teachers Insurance and Annuity Association (TIAA) sponsored study maintains student loan debt has a significant impact on retirement savings, longevity planning, and family relationships.

© Shutterstock

The effort, which was conducted by the MIT AgeLab over one year, determined one-quarter of those not saving for retirement cite student loans as the reason. Among the 25- to 35-year-olds who are not saving for retirement, 39 percent said they are prioritizing student loan payments. Of the parents and grandparents taking out loans for children and grandchildren, 43 percent noted they would increase retirement savings once the student loan is paid off.

“To be sure, getting a college degree remains one of the smartest investments a person can make in their financial future – but saving for retirement is equally important,” Roger W. Ferguson, Jr., president and CEO of TIAA, said. “We believe that advice and coaching are key to navigating what can seem like competing demands. TIAA has found that people who engage with qualified financial professionals are better equipped to make decisions about paying for education for themselves or a loved one without sacrificing their future financial security.”

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Nearly half of U.S. states sign on to CSBS’s multistate licensing agreement

Multiple U.S. states have signed on to an agreement that standardizes key elements of the licensing process for money transmitters and money service businesses.© Shutterstock The agreement calls for one state regulatory department to review common licensing requirements, including the business plan; background checks; financial information and compliance with the anti-money laundering provisions of the […]

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Multiple U.S. states have signed on to an agreement that standardizes key elements of the licensing process for money transmitters and money service businesses.

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The agreement calls for one state regulatory department to review common licensing requirements, including the business plan; background checks; financial information and compliance with the anti-money laundering provisions of the federal Bank Secrecy Act. The state then communicates the review with all other participating states who have agreed to accept the findings. Then licenses follow those reviews.

Currently, 23 states have signed on to the agreement, including California, Connecticut, Georgia, Iowa, Idaho, Illinois, Kansas, Kentucky, Louisiana, Massachusetts, Mississippi, North Carolina, North Dakota, Nebraska, Ohio, Rhode Island, South Dakota, Texas, Tennessee, Utah, Vermont, Washington, and Wyoming.

“The collaboration among these 23 states has significantly streamlined the licensing process for participating companies. We look forward to more states joining. This is a new era in the state system where we are not only coordinating but actively relying on our fellow regulators to safely bring new financial service products to our citizens,” Charlie Clark, director of the Washington State Department of Financial Institutions, said.

The multistate licensing initiative is part of Vision 2020, an initiative launched by the Conference of State Bank Supervisors.

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FDIC releases annual banking risk publication

The Federal Deposit Insurance Corporation (FDIC) has published its 2019 Risk Review, which officials said highlights emerging risks and exposures in the banking system. © Shutterstock “The FDIC is committed to transparency and accountability, and the publication of our 2019 Risk Review provides an opportunity for us to communicate data and our analysis on key […]

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The Federal Deposit Insurance Corporation (FDIC) has published its 2019 Risk Review, which officials said highlights emerging risks and exposures in the banking system.

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“The FDIC is committed to transparency and accountability, and the publication of our 2019 Risk Review provides an opportunity for us to communicate data and our analysis on key risks facing the banking system,” FDIC Chairman Jelena McWilliams said.

Financial institutions, policymakers, analysts and regulators will find the publication of particular interest, the FDIC said, adding the most recent edition of Risk Review provides a summary of conditions in the U.S. economy, financial markets, and banking industry while also presenting critical risks to banks in two broad categories: credit risk and market risk.

The credit risk areas discussed in the document are agriculture, commercial real estate, energy, housing, leveraged lending and corporate debt and nonbank lending while the market risk areas discussed are interest rate risk and deposit competition and liquidity.

The FDIC insures deposits at the nation’s banks and savings associations, totaling 5,362 as of March 31, 2019, and promotes the safety and soundness of institutions by identifying, monitoring and addressing risks to which they are exposed.

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