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James Sills, the new president and CEO of Mechanics & Farmers Bank, says that growing security threats will make experience in both financial services and technology more attractive to banks. "The bad guys are extremely sophisticated," Sills said. "They have some unbelievable tools to penetrate networks, databases and point-of-sale machines." In addition to maintaining web security, Sills will oversee implementation of M&F's huge conversion of its core processing system to Fiserv, a new platform that should help M&F expand into new product offerings. Sills succeeds Kim Saunders as president and CEO of the bank. Previously, Sills was the state of Delaware's chief information officer and secretary of the Delaware Department of Technology and Information.
A Bloomberg investigation has uncovered a secret financing network which connects investors including Harvard University to payday lenders. At the center of the network is Vector Capital IV, a San Francisco private-equity fund run by Alex Slusky. Slusky's fund consisted of $1.2 billion in funds raised from investors including Harvard University, who were told the fund would buy and turn around struggling software companies. But Slusky struggled to find enough companies to buy. When Harvard, fed up with delays, tried to pull out, Slusky invested the funds in Cane Bay Partners, owners of a network of payday-lending websites which uses overseas charters in Belize and the Virgin Islands to obscure ownership and circumvent U.S. usury laws.
The recent iCloud hack that led to the theft of celebrity photos from Apple's popular cloud storage service has fueled concerns about the safety of the data banks and their employees store in the cloud. Analysts warn that any service which backs up data to an external cloud server introduces a degree of security risk. Apple's iCloud was particularly vulnerable because some Apple service logins lacked brute force protection -- a measure which would have prevented hackers from entering thousands of randomly generated password guesses searching for a correct match. Security experts advise opting for solutions that require multi-factor authentication when remotely accessing data.
Banks are making less of their money from customer-account fees than at any time in the past seven decades as strict government rules and changing consumer behavior squeeze a major source of revenue. After peaking in 2009, the annual account fees collected at U.S. banks have declined, even as the volume of bank deposits has swelled. The fees have dropped nearly 21% to $32.5 billion last year from $41.1 billion in 2009, reversing a trend of fee growth that had lasted since 1942. Fees have become less profitable since 2010, when the Federal Reserve put in place a new regulation requiring that customers had to explicitly opt-in for overdraft coverage. Customers are also making greater use of Internet and mobile banking solutions which make it easier to check balances and avoid overdrafts.
ICBA is now accepting nominations for the 2014 ICBA Community Banker of the Year award. All community bankers are eligible, from C-suite to teller. Nominees should demonstrate outstanding leadership and results both in their community and within their bank. Self-nominations are permitted. ICBA will accept nominations until Sept. 30, 2014.
A HUD program to sell its most delinquent mortgages to private investors is producing modest returns when it comes to keeping those struggling borrowers in their homes. To date, 2,049 mortgages sold to investors under the program have been reworked to allow the delinquent borrowers to remain in their homes and start making payments again, although the overwhelming majority of the 73,000 sold troubled mortgages have been foreclosed on. Roughly half of the loans remain delinquent and have yet to be reworked, sold or foreclosed. HUD began selling the mortgages to private investors in an attempt to reduce the federal government’s potential exposure. Officials have said private buyers have a better chance of reworking the mortgages because the loans are bought at a significant discount.
The New York attorney general's office has filed a lawsuit against regional lender Evans Bank, accusing it of denying mortgages to African-Americans regardless of their credit. Prosecutors claim the bank created a map that defined a “trade area,” places in the Buffalo region where the bank would make mortgages and other loans. The map excluded much of Buffalo’s East Side, with its large minority population. From 2009 to 2012, Evans received 1,114 applications for residential mortgages, but only four came from African-American applicants. The charges come amid a spate of discriminatory lending lawsuits. Providence, R.I., sued Santander Bank in May, accusing it of refusing to lend in predominantly minority neighborhoods and the Los Angeles city attorney sued JPMorgan Chase in May, accusing it of both reverse redlining and traditional redlining.
A federal bankruptcy judge has told OneUnited Bank that it must wait for $2.9 million raised in a real estate auction by its borrower, the Charles Street African Methodist Episcopal Church, until the two sides have resolved their remaining legal disputes. The legal fight has dragged on since the church filed for bankruptcy in March 2012. The Charles Street AME church owes nearly $5 million to OneUnited after falling behind on a $3.4 million construction loan in 2008 and 2009 while building a community center. It also owes $1.3 million on a loan secured by the church building itself. In April, the church finally gave up hope of completing the community center and proceeded to auction it off, raising the $2.9 million currently at issue.
An ambitious 25-year social mobility study illustrates the strong effect of children's socioeconomic background in their adult lives. Starting in 1982, researchers kept track of 790 Baltimore first graders from diverse social and economic backgrounds as they matured and entered adulthood. Less than half of the group graduated high school on time. At age 28, more than 10 percent of the black men in the study were incarcerated. A mere 4 percent of the first-graders classified as the “urban disadvantaged” had by the end of the study completed the college degree. Just 33 of 314 raised in the low-income category managed to escape it. The only exception was among low-income white boys, whose inherited job networks facilitated entry into solid blue-collar jobs. They earned higher incomes than other urban disadvantaged despite attaining some of the lowest levels of education.
The CFPB has announced that David Reiling, CEO of Minneapolis-based Sunrise Banks, and Monica Thomas, Executive Vice President of Illinois Service Federal Savings and Loan Association in Chicago, Ill. will join the CFPB’s new Community Bank Advisory Council. The Dodd-Frank Act charges the CFPB with establishing the Consumer Advisory Board to advise and consult with the Bureau’s Director on consumer protection, financial services, community development, fair lending and civil rights. “These new members of our advisory board and councils will provide valuable input to help us better understand the consumer financial marketplace,” said CFPB Director Richard Cordray.