A newly discovered security bug nicknamed Heartbleed has exposed millions of usernames, passwords and credit card numbers — a major problem that hackers could have exploited during the more than two years it went undetected. Unlike most security breaches, which affect a single website or organization, this flaw affects code used across the web to keep servers secure. The bug could affect thousands of websites including online banking portals, marketplaces and social media sites. A fix has been circulated, but it is unclear how quickly and widely it was being implemented. Use this page to test whether a website is at risk. Technical information can be found here.
A new report by Pew Charitable Trusts finds that nearly half of banks, including four of the nation’s five largest, still "reorder" checking account transactions -- a practice that can dramatically increase overdraft fees by processing larger withdrawals first, leaving smaller transactions to pile up fees. The practice is particularly onerous for low-income consumers who are unable to maintain high average balances. The study also found that an increasing number of banks are imposing new limits on consumer rights when resolving disputes and that one-third of big banks have yet to adopt summary disclosure graphics to cut through confusing checking account agreements that average 44 pages.
The White House is reviewing individuals with community banking experience for an open seat at the Federal Reserve Board. Administration officials have mentioned Ann Marie Mehlum and Rebeca Romero-Rainey as potential candidates. Ms. Mehlum, who currently works for the Small Business Administration, previously served as the chief executive of Summit Bank in Eugene, Ore. Ms. Romero-Rainey is the chief executive of the Centinel Bank of Taos in New Mexico. Senate Banking Committee members from both sides of the aisle, including Sens. Heidi Heitkamp (D-N.D.) and Mark Kirk (R-Ill.), have also urged President Obama to fill at least one of the vacant seats on the Fed with a community banker to increase the diversity of experience on the seven-member board.
A new study by the FDIC found steadily improving trends for small community banks. According to the report, the number banks with assets between $100 million and $1 billion in assets has actually increased since 1985, but the number of banks with under $100 million has declined. Much of that decrease was due to consolidations and mergers. The pace of consolidation has steadily increased since 2010, when Congress passed the Dodd-Frank law. Richard Brown, chief economist at the FDIC, said the slowed-down real-estate market and low interest rates have been squeezing community banks that rely on mortgage lending and net interest income for their revenue.
Regulators from the FDIC and the Oregon Division of Finance and Corporate Securities have terminated the consent order issued against Albina Community Bank. The regulators determined the bank has met all the conditions of the consent order by reducing problem loans and maintaining higher capital levels. A stock purchase transaction with One PacificCoast Bancorp allowed Albina to return its regulatory capital ratios to the level required by regulators. “Having our regulatory consent order lifted is a very positive and significant step for the bank... [We] are proud of the progress we have made to strengthen the bank and ensure our mission and commitment to our local communities can continue," said Cheryl Cebula, President and CEO of Albina.
Virginia Community Capital has deployed a new loan to Glade Green Grocer, a whole foods retailer and food cooperative located in Glade Spring, Virginia. The new store will provide retail shelf space, marketing and commercial canning for local growers throughout the year, responding to increased demand for fresh foods by consumers. This loan is the latest in Virginia Community Capital's comprehensive revitalization effort in Glade Spring, Virginia as well as the first loan deployed by their Virginia Fresh Food Loan Fund, a $10 million fund earmarked for addressing the unmet capital needs of healthy food enterprises throughout Virginia.
Sen. Sherrod Brown (D-Ohio) predicted the plan to revamp the U.S. housing finance system sponsored by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) would not become law this year. The proposed legislation would phase out Fannie Mae and Freddie Mac in five years and replace them with a government re-insurer. The bill requires support from key Democrats on the banking panel, including Brown, before moving on to the Senate, where it will need to attract broad backing among Democrats to persuade Majority Leader Harry Reid (D-Nev.) to schedule a vote. Brown said the current bill is too complicated and doesn’t do enough to address too-big-to-fail concerns or to provide assistance for affordable housing, and he questioned whether eliminating Fannie and Freddie was necessary.
Warren Buffett has released his latest annual letter to Berkshire Hathaway shareholders. Since 2012, Berkshire has not repurchased shares at a price higher than 1.2 times book value. According to former investment banker Harvard Winters, this implies that banks and thrifts with ROE far below that of Berkshire buying shares at that book value multiple or higher are acting recklessly. Winters finds three takeaways for banks from the Buffett letter: care deeply about the price of an investment, don’t be overly-optimistic about the future and never assume the bank has an “edge” without empirical evidence.
Illinois Attorney General Lisa Madigan has filed a new lawsuit against MoneyMutual, a lead generator familiar to daytime television viewers from ads pitched by TV personality Montel Williams. MoneyMutual is one of dozens of lead generators that drum up business for payday lenders by taking customer information, such as bank-account numbers and email addresses, and selling that information to payday lenders. The suit alleges that the company is operating as an unlicensed lender, arranging loans that violate Illinois's law limiting the fees that can be charged to borrowers. MoneyMutual was also one of 16 lead generators subpoenaed for marketing illegal payday loans by Benjamin Lawsky, superintendent of the New York Department of Financial Services.
The Consumer Financial Protection Bureau is in the late stages of formulating the first nationwide rules for payday lending and industry observers have begun speculating on what changes will be made. The CFPB is barred by the Dodd-Frank Act from setting a nationwide interest-rate cap, but the bureau is likely to set a regulatory floor below which the states may not fall. The CFPB has not signaled whether the new rules will include ability-to-pay standards or whether they will include restrictions on requesting access to customers' bank accounts. The rulemaking process will continue for at least several months as the CFPB convenes panels to assess the rules' potential impact, proposes a rule and accepts public comment before issuing a finalized rule.