Archive for the ‘banks and banking’ Category

New From the GAO

December 19, 2014 Comments off

New GAO Reports
Source: Government Accountability Office

1. Fair Labor Standards Act: Extending Protections to Home Care Workers. GAO-15-12, December 17.
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2. Federal Emergency Management Agency: Opportunities Exist to Strengthen Oversight of Administrative Costs for Major Disasters. GAO-15-65, December 17.
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3. Department of Homeland Security: Continued Action Needed to Strengthen Management of Administratively Uncontrollable Overtime. GAO-15-95, December 17.
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4. Tax-Exempt Organizations: Better Compliance Indicators and Data, and More Collaboration with State Regulators Would Strengthen Oversight of Charitable Organizations. GAO-15-164, December 17.
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5.   State and Local Governments’ Fiscal Outlook: 2014 Update. GAO-15-224SP, December 17.

6.   Dodd-Frank Regulations: Regulators’ Analytical and Coordination Efforts. GAO-15-81, December 18.
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7.   Electronic Submissions in Federal Procurement: Implementation by the Army Corps of Engineers and Department of the Interior’s Bureau of Reclamation. GAO-15-253R, December 18.

8.   Federal Food Safety Oversight: Additional Actions Needed to Improve Planning and Collaboration. GAO-15-180, December 18.
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Does Financing Spur Small Business Productivity?

December 19, 2014 Comments off

Does Financing Spur Small Business Productivity?
Source: Cato Institute

cess to adequate financing is an important issue for firms, particularly younger and smaller ones. Given the role these firms play in the process of creative destruction, alleviating financial constraints for start-ups and small businesses is an important concern around the world. More recently, the financial crisis of 2008 demonstrated the critical role of bank financing, at both the firm and economy wide levels. While prior studies have examined how financing affects entrepreneurial firm starts and closures (e.g., Black and Strahan, 2002; Kerr and Nanda, 2009), no study has directly analyzed the link between bank financing and firm productivity, particularly for smaller firms where access to financing is critical. This is important given that most start-ups appear to rely on bankdebt financing (Robb and Robinson, 2013).

Determining the relation between bank financing and firm productivity is difficult because of the possibility of reverse causality. A positive correlation between bank financing and productivity might mean that more productive firms seek additional bank financing, or that increased access to bank financing enhances productivity. Yet another possibility is that unobserved factors affect both access to financing and productivity.

Our research addresses reverse causality by exploiting an exogenous shift in firms’ access to bank financing due to deregulation of interstate bank branching. During the 1990s, states began allowing out-of-state banks to set up and acquire local branches. This increased interstate banking and thus allowed greater access to financing for firms. Consistent with prior literature, we show that deregulations were not driven by prior productivity of firms. The key question is whether this increased access to cheaper financing is dissipated by firms taking on unproductive or less productive pet projects or whether it increases firms’ ability to undertake additional productive projects.

Global Risk 2014-2015: Building the Transparent Bank

December 16, 2014 Comments off

Global Risk 2014-2015: Building the Transparent Bank
Source: Boston Consulting Group

  • The new era of bank transparency will require competitive, structural, and operational adjustments in order to succeed.
  • For the first time since 2007, global banking has regained overall profitability on a global scale, with sharp divergence among regions.
  • Increases in global profit were driven by the positive performance of banks in North America as well as the Middle East and Africa.
  • Banks must establish a comprehensive control framework, based on the three-lines-of-defense model, to reduce nonfinancial risks such as fraud, misconduct, and reputational damage.

Digital Enablement for Retail Banking

December 15, 2014 Comments off

Digital Enablement for Retail Banking
Source: Nielsen

In the traditional analog banking world, huge investments were made in physical bank branches, canvasing many geographies, staffed with cadres of tellers and advisors engaged in high-touch transactions. But times have changed, and technology and digital channels are now top of mind for retail banks.

Banks are now focused on a seamless end-to-end digitized experience for their customers, a trend that’s likely compounded by fear that tech companies will invade their territory. While many banking professionals rank digital channels and mobile technology as top priorities, it’s important for the banking sector to maintain their focus on the greenest areas of opportunity. And in that respect, consumers with robust assets and deep pockets should be top of mind.

This group, coined the mass affluent, live in households with $250,000 to $1,000,000 in liquid assets. They also control about 26% of total U.S. wealth. The important thing with this group is that its digital banking needs vary by generation. While the Baby Boomers and Silent Generation make up 77%, younger generations are growing in importance and financial prowess. So in light of the differences, a one-size-fits-all approach to digital in retail banking is not a viable way to encourage success.

Free registration required.

Report: FDIC Senior Officials Acted on Personal Animus against Legal Businesses (Payday Lenders)

December 12, 2014 Comments off

Report: FDIC Senior Officials Acted on Personal Animus against Legal Businesses
Source: U.S. House of Representatives, Committee on Oversight and Government Reform

The House Oversight and Government Reform Committee today released a new report, “Federal Deposit Insurance Corporation’s (FDIC) Involvement in ‘Operation Choke Point’,” detailing the agency’s close relationship with the Department of Justice (DOJ) to effectively target legal businesses the administration deemed morally objectionable. Documents produced to the Committee reveal that the DOJ actively partnered with the FDIC in the prosecution of Operation Choke Point. FDIC’s participation in Operation Choke Point included requests for information about the investigation, discussions of legal theories and the application of banking laws, and the review of documents involving FDIC-supervised institutions obtained by DOJ in the course of its investigation. FDIC also originated the list of “high risk” industries included in the DOJ subpoenas. Documents provided to the Committee also show that senior leadership at the FDIC opposed certain industries on purely moral grounds.

Documents produced to the Committee reveal that senior FDIC policymakers oppose payday lending on personal grounds, and attempted to use FDIC’s supervisory authority to prohibit the practice. Personal animus towards payday lending is apparent throughout the documents produced to the Committee. Emails reveal that FDIC’s senior-most bank examiners “literally cannot stand payday,” and effectively ordered banks to terminate all relationships with the industry.

Checks and Balances, Stars and Stripes: Banking practices at financial institutions serving the military

December 9, 2014 Comments off

Checks and Balances, Stars and Stripes: Banking practices at financial institutions serving the military
Source: Pew Charitable Trusts

Service members, like all consumers, need access to concise, easy-to-understand documents that lay out the key terms, conditions, and fees associated with their checking accounts. Clarity and transparency are especially important for Americans and their families serving in the military, who face unique challenges associated with repeated deployments and frequent relocations.

This report highlights the account practices that Pew has identified as having a significant impact on account holders and documents their prevalence among banks and credit unions located on military installations. Institutions were evaluated on how well their disclosure, overdraft, and dispute resolution practices align with Pew’s policy recommendations.

The report found some areas in which banks and credit unions with an on-installation presence were excelling, but many areas that require improvement, demonstrating the need for new rules from the Consumer Financial Protection Bureau to make checking accounts safe and transparent for all consumers.

PDF Accessibility: Regulations, Risks, Solutions for Compliance

December 9, 2014 Comments off

PDF Accessibility: Regulations, Risks, Solutions for Compliance
Source: American Banker

Financial and other institutions are required to provide customer documents in accessible formats. This white paper, co-authored with the American Foundation for the Blind (AFB), discusses applicable legislation and recent litigation cases. It also suggests best practices for compliance and for providing accessible account statements and other electronic documents to customers with vision loss. In conclusion, the paper focuses on a solution for overcoming the challenges associated with meeting document accessibility requirements.

Free registration required.


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