Category:Finance & Banking
Locked Out: How the FDIC is ‘Banking’ on Transparency
As a result of Synapse, a banking as a service (BaaS) provider, declaring bankruptcy back in May 2024, millions of users were unable to access accounts for at least two weeks. Synapse was a startup that had contracts with 20 banks and 100 financial technology (fintech) companies. When the company filed for bankruptcy, it shut down its services to comply with banking laws to ensure that all customer deposits were accurate. Despite the word “banking” in BaaS and customers having credit or debit cards, Synapse is not like other banks. It is distinguishable, because it is not backed by the Federal Deposit Insurance Corporation (FDIC), like other traditional banks are. In the aftermath of the lock out, the FDIC has proposed a new rule to force banks partnered with fintech apps to strengthen record-keeping.
CFPB Takes Aim at Credit Card Late Fees in Latest Rule to Eliminate ‘Junk Fees’
In January 2022, the Consumer Financial Protection Bureau (CFPB) set out to increase transparency in the pricing of financial services products by implementing rules to eliminate ‘junk fees’ that often obscure the true price of financial products. Through this initiative, the CFPB analyzed the impact of numerous types of fees across banking while simultaneously attracting the scrutiny of banking advocacy organizations such as the American Banking Association (ABA) and the US Chamber of Commerce. These advocacy organizations have challenged the constitutionality of the CFPB funding structure. The CFPB examines all categories of financial products in the search for ‘junk fees’, including recently uncovering paper bank statement fees for statements that were never printed or mailed, add-on products being charged to paid-off auto loan accounts, undisclosed fees imposed on international money transfers, and bank operating systems double-dipping on non-sufficient funds fees. While litigation has recently settled in the Supreme Court to determine that the CFPB is constitutionally funded under the Appropriations Clause, the most recent rule by the CFPB to limit ‘junk fees’ imposed on credit card accounts remains on hold following a decision to grant a Preliminary Injunction by the US District Court for the Northern District of Texas.
SEC Launches Largest Regulatory Blitz Since the Great Recession, and Wall Street Readies for War: Part Two of a Two Part Series
Welcome back! Part One of this two-part series discussed the regulatory background of private funds and the increasing importance of private funds industry regulation today, particularly for retired and retiring Americans. Part Two of the series takes a closer look at the final new rules implemented by Securities and Exchange Commission (SEC) Chair Gary Gensler. The Chair released the new rules in August affecting private funds advisors and investors. This article also discusses Wall Street’s response to the new regulations and ends with its possible implications for the industry.
SEC Launches Largest Regulatory Blitz Since the Great Recession, and Wall Street Readies for War: Part One of a Two Part Series
Securities and Exchange Commission (SEC) Chair, Gary Gensler, has introduced more regulatory proposals impacting market participants than former SEC Chair, Mary Schapiro, did in the same time frame following the Great Recession almost fifteen years ago. The SEC has formally adopted 22 of 47 regulatory proposals since 2021, and in August released extensive final rules targeting private funds. The new regulations in part require private fund advisors to increase disclosure to their investors regarding fees, expenses, and other terms of their relationship. Other new rules prohibit preferential treatment of some investors that may materially affect other investors in the same fund.
Hey U.S. Government, The Romance Scammers Are Eating Americans Dry
The rise of online dating and social media has brought people closer together but has also given rise to a growing threat: romance scams. These fraudulent schemes prey on individuals seeking love and companionship, resulting in emotional and financial devastation. These scams involve perpetrators who create fake online personas to deceive individuals into forming romantic connections. Once trust is established, scammers exploit emotions to extract money from their victims, often under the pretense of financial emergencies or travel expenses.
Navigating the AI Frontier: Securing the Future of Financial Services
As artificial intelligence becomes more available, apprehension regarding its potential impact on security and data protection grows, especially within the financial services sector. AI technology undoubtedly provides some benefits to the financial sector by offering services that would otherwise be unwieldy, inefficient, time-consuming, and costly when undertaken by humans. The financial services sector is no stranger to security risks and with the increased prevalence of AI, the threat landscape grows larger, especially when considering the financial sector’s increasing dependence on web applications and APIs.
Do More Bank Failures Equal More Bank Regulations?
The recent closures of Silicon Valley Bank and Signature Bank, the second and third largest bank failures in U.S. history, have sparked intense discussions pertaining to banking regulations and resulted in both statements and ongoing investigations by the Biden administration, members of Congress, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and U.S. Government Accountability Office (GAO).
Democrats in Washington Push For Stronger Banking Regulations
The Biden Administration acted strongly last month in response to the recent collapses of Silicon Valley Bank (SVB) and Signature Bank. Each collapse sent shockwaves through the U.S. banking system and shook the confidence of consumers nationwide. The Biden Administration showed swift and steady leadership in urgently addressing the crisis. The President and leading Democrats in Congress continue to push for stronger regulatory oversight with respect to the banks. This shows that the Democrats are on the right side of the banking issue, as they have been for the 16 years following the 2008 financial crisis.
The External and Internal Causes of SVB’s Collapse and the Role of Regulators
Megan Aldworth Associate Editor Loyola University Chicago School of Law, JD 2023 Silicon Valley Bank (SVB) started in Silicon Valley in 1983 and found a booming growth in tandem with the tech industry and venture capital. At its collapse, which spanned over 48 hours and started on the eve of March 8, it was …
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Federal Response to the Collapse of Silicon Valley
The collapse of Silicon Valley Bank (SVB), the 16th-largest bank in the United States, in early March of this year is considered the biggest bank failure since the fall of Washington Mutual during the 2008 global financial crisis. After 40 years of success, the bank collapsed swiftly and unexpectedly. The collapse has ricocheted through the industry, provoking bank closures, rattling the global markets, and threatening the livelihood of startups. The Federal government has not only intervened and taken over the bank, but prosecutors and regulators from the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have initiated preliminary investigations. Inevitably the collapse will cause regulators to revise the current banking rules and pursue stricter regulation in order to prevent the demise of other banks and a financial crisis.