Lumin Digital’s Post

The CFPB put its thumb on the scale by including credit unions in its recent Data Point comparing credit card APRs between large and small issuers. Credit unions are fantastic (so fantastic that some are even CBA members). But, by Federal law, they serve different consumers than large banks. The Consumer Bankers Association re-ran the CFPB's math, per attached. The inclusion of credit unions accounts for 70% of the difference between the APRs for subprime/deep subprime applicants. Further, once you remove credit unions, only a handful of small issuers even offer cards to subprime/deep subprime applicants. We understand that the CFPB may feel the need to flood the field with a parade of horribles in the run-up to the release of its Late Fee rulemaking and the State of the Union next week. But consumers, media, and industry need to be able to trust the government to state facts accurately. https://lnkd.in/e9WY75eh #CFPB #SOTU #CreditCards #policy #factsmatter

I commented on this post, (semi-) joking about the CFPB getting it's math wrong again. I take this back. Having read the article quoted, I'm sorry to say that the Consumer Bankers Association got this one wrong.... The crux of the CBA's argument is that "the CFPB’s math is skewed by its inclusion of credit unions." The CBA claims that "removing credit unions from the CFPB’s survey data reduces the difference between big and small credit card issuers APRs." Technically, that might be true. However, the Consumer Financial Protection Bureau's claim is about "card issuers" -- not just banks. Credit unions are card issuers. There is no reason why they should be excluded from the CFPB's analysis. Now, if the CBA wants to point out the rate differences between community banks and credit unions, that's their prerogative. But the CFPB's math isn't at fault here.

October 3, 2023 San Francisco: Today the Supreme Court will hear oral arguments in the case, Consumer Financial Protection Bureau v. Consumer Financial Services Association of America (CFPB v CFSA), in which payday lenders are challenging the constitutionality of the Consumer Financial Protection Bureau’s (CFPB’s) funding structure. The outcome of this case will have tremendous implications for communities across the country, as well as for the nation’s financial regulatory system. The CFPB is America’s financial protection regulator, developing rules of the road for financial companies to prevent predatory practices, filing lawsuits when laws are broken, and returning over $17.5 Billion to American consumers who have been ripped off. The CFPB shares a similar funding structure with the other key financial regulators, raising the specter of financial chaos if the Supreme Court ignores the plain language of the Constitution and legal precedent to side with the payday lenders. “The CFPB is critical to the financial well-being of all consumers in America. It is a shining light in the fight against consumer financial abuse, and against discrimination by the financial sector. Bank attacks on the CFPB are outrageous and show that, despite rhetoric to the contrary, the banking industry does not share the values of community organizations working to build wealth and financial health in their neighborhoods. It is telling that the banking trade groups are making the same arguments as the payday lenders,” said Paulina Gonzales-Brio, CEO of Rise Economy. Last month, Rise Economy and 100 nonprofit organizations throughout California and the nation, including CASA of Oregon, sent a letter to 39 Bank CEOs, asking if they disagree with the damaging legal positions taken by the banking trade organizations, especially in the context of bank pronouncements regarding racial equity in the aftermath of the George Floyd murder. The letter requested that CEO recipients respond to five questions posed within 3 weeks, or by October 1. To date, only 6 banks have provided a substantive response. The Banks responding to the community group letter include: Amalgamated Bank, Beneficial State Bank, East West Bank, HomeStreet Bank, PNC, and U.S. Bank, Capital One offered to discuss the issues contained in the letter. Morgan Stanley shared related corporate documents. A few banks informally requested more time to respond or indicated they would be responding soon. Rise Economy and the other 100 organization endorsing the letter await further responses from other banks and will be watching the Supreme Court case closely. Rise Economy decries damaging lobbying and litigation practices embraced by banking organizations, especially so if they do not reflect the perspectives of banks that may be working to build wealth in all communities and to honor anti-discrimination, consumer protection and just climate transition principles.

When it comes to today’s world of evolving financial markets and fluctuating interest rates, consumers are becoming more discerning when choosing their financial institutions for credit products. In this PYMNTS interview, Chief Product and Digital Officer Denise Stevens highlights new ways for credit unions to compete for consumer business, the role of data in credit unions’ success and why CUs need to focus on innovation and creativity. ➡️ Read the article and watch the interview: https://bit.ly/3QMjgS9 #CreditUnions #personalization #DigitalLending

In a new report, the CFPB conducted research which demonstrated that consumers tend to pay more for products that have more complex pricing structures. The article cites, "The research has implications for understanding how junk fees impede fair and competitive pricing in markets like auto loans or mortgages, where consumers have to evaluate extended warranties, add-ons, closing costs, and a wide variety of other fees instead of an all-inclusive price." https://lnkd.in/g7d-YhDe

To celebrate #NationalCreditEducationMonth ware giving you tips to establish and build credit. Our newest blog goes over the basics, smart credit building strategies, and more. Check it out here. https://lnkd.in/d-jFEjrh #CreditEducation #WaypointBank

Credit unions are co-ops. What does that mean? Credit unions are not banks. But we are financial institutions. When you open an account with a credit union you’re not just a customer—you’re an owner. That means when we profit, you profit. It means you have a say in how we operate, your money stays local, and we are accountable to you.

Getting a first credit card is often a dreadful experience, especially if you are one of the 45 million Americans with a thin credit file. My story in The Financial Brand details the odyssey my 19-year-old daughter endured (three declines!), despite having a supposed financial health expert (me) advising her. The article also lays out the actions that financial firms can take to not only enhance the “new to credit” experience, but also win more of that segment’s business. https://lnkd.in/gWWxAAd4 #financialhealth #banking #creditunions

A consumer’s credit score isn’t the most indicative measure of their capacity to pay. So how can you get a fuller picture? In a Q&A with insideARM, Experian's Matt Baltzer explains how a solution like Collection Triggers℠ can help debt collectors effectively manage and monitor capacity to pay. Listen to it here: https://lnkd.in/gdGjxnd9

“Nickels and Dimes Come at a Cost” sheds light on the caustic effects of nuisance fees in banking. Join us as we uncover the true costs and advocate for fairness and transparency in financial services. Read the full post here: https://lnkd.in/eEtm2bMc