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The Examiner

"Our great Republic is a nation of laws and not of men"
Gerald R. Ford, sworn in as President of the United States on this day in 1974

In This Issue...

  • In the Media
  • ICYMI: Reengineering Nonbank Supervision
  • Data Corner: Population Migration and Bank Profitability

In the Media

Multistate investigation of online lenders. Eleven states and Puerto Rico are investigating online lenders for charging potentially usurious rates for cash in advance of their paychecks, reported the New York Post. Regulators from Connecticut, Illinois, Maryland, New Jersey, New York, North Carolina, Puerto Rico, South Carolina, North Dakota, South Dakota, Oklahoma, and Texas joined the investigation of Earnin and 10 other companies. In a statement announcing the action, Linda Lacewell, superintendent of the New York Department of Financial Services, said: "We will use all the tools at our disposal, including partnering with peer regulators, to safeguard consumers from predatory lending and scams that ensnare families in endless cycles of debt."

Federal Reserve planning real-time payments system. The Washington Post and The New York Times reported that the Federal Reserve plans to develop a service to eliminate the delay between when depositing a check and when that money is recognized in their account. The FedNow service is expected to be available to depository institutions by 2024. Read the speech by Federal Reserve Board Governor Lael Brainard. 

Capital One hack. CNN reported on the hack of Capital One via the Amazon Cloud, which potentially exposed information on more than 100 million consumers. From TechCrunch: “Capital One believes the breach exposed credit card application data for those who applied between 2005 and 2019 … roughly 100 million individuals in the U.S. and six million in Canada. The data leaked potentially includes everything from names and email addresses to credit and payment information and, for roughly 140,000 customers, their Social Security numbers. Meanwhile, CBS News reported that “House and Senate committee leaders want Capital One and Amazon to explain how a hacker allegedly accessed personal financial information.”

ICYMI: Reengineering Nonbank Supervision

CSBS is currently in the process of publishing a paper series on the nonbank financial services industry and how companies are supervised by state regulators. The goal of the paper series is to enhance public awareness of the industry and how it is regulated, and spur ideas on how to strengthen the supervisory system.

Chapter One: Introduction to the Nonbank Industry, published in July, provides an overview of the various sectors within the nonbank industry, such as mortgages, money transmission, consumer finance and debt collection. 

Chapter Two: Overview of Nonbank Supervision, published last week, details the existing authorities and supervisory processes granted to nonbank regulators. 

You can read more about the paper series here on the CSBS website. 

Data Corner: Population Migration and Bank Profitability

By Xiaokang Wu, Analytics Intern, Kyle Zhong, Analytics Product Director, and Brennan Zubrick, Senior Director, Analytics and Research

This edition of the CSBS Data Corner explores domestic population migration trends and the potential impact on bank profitability.

The map in the top panel shows net migration patterns between 2010 and 2015 on a 4 km by 4 km grid level. (See more here.) Warm colors indicate a net inflow tendency and cool colors indicate a net outflow tendency. Black dots are locations of bank branches. The bottom panel shows annualized return on average assets (ROAA) for two cities with comparable total populations and similar density of banks: Chicago and Houston.  

From 2010 to 2015 Chicago and Houston had opposite migration tendencies. Chicago had a net outflow of population while Houston shows an inflow of population. This pattern is reflected on the ROAA, as Chicago experienced a small net decline in ROAA during the period, while Houston demonstrated a clear upward trend. This analysis is a part of a banking industry research project by CSBS Analytics.  

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