Help Center

Ranks of the "Unbanked" Decline, FDIC Survey Finds

ABI Bankruptcy Brief
ABI Bankruptcy Brief
Click here to view online version.

September 8, 2016

ABI Bankruptcy Brief

Ranks of the "Unbanked" Decline, FDIC Survey Finds

Fewer Americans are going without bank accounts, according to a new government survey, a trend expected to support consumer spending and housing investment in the coming years, the Wall Street Journal reported today. Reflecting economic recovery, the percentage of Americans without access to banking services fell to 7 percent in 2015 from 7.7 percent in 2013 and a peak of 8.2 percent in 2011, according to the survey by the Federal Deposit Insurance Corp. Last year’s proportion of “unbanked” households was the lowest since the FDIC started the biennial survey in 2009. That year, the share was 7.6 percent. A household is considered unbanked if no one in the family has an account with a federally insured financial institution. The survey also looks at “underbanked” households, which have a bank account but also use services such as check cashing, money transfers, payday loans and pawnshops. The percentage of the underbanked was 19.9 percent last year, little changed from 20 percent in 2013.
read more

Analysis: Implosion of ITT Technical Institute Tough on Students, Taxpayers

The closure of ITT's 136 campuses threatens to throw nearly 29,000 indebted students off their educational tracks and to saddle taxpayers with nearly half a billion dollars in losses, according to a Bloomberg News analysis today. The collapse of ITT Tech, owned by ITT Educational Services Inc., wasn't unexpected: The Consumer Financial Protection Bureau had sued it in 2014, saying that it misled students into taking out loans with false promises about their career prospects; last year, the Securities and Exchange Commission sued, too, accusing it of defrauding investors. ITT has vigorously denied all allegations of wrongdoing. In June, the U.S. Department of Education demanded ITT stump up additional collateral, beyond the $94.4 million on file, to cover the costs of a potential failure. And last month, after the school's accreditor expressed concern about its operations, the agency barred new students from using federal aid to enroll and ratcheted up its demand for collateral—a move experts warned would trigger the school's demise. ITT soon stopped accepting new students altogether. Since another big for-profit college chain, Corinthian Colleges Inc., went under last year, the government has as of June canceled at least $97.6 million in student loan balances on students' requests. That's less than half of the roughly $214 million owed by Corinthian students at the time it shut down. ITT's students carry a total of $478.8 million in federal debt. The Education Department is frantically trying to limit debt cancellations. Students who transfer even one ITT credit toward what the agency considers "comparable" programs at other schools and then complete their studies aren't eligible to have their loans wiped. But federal regulations don't clearly define "comparable"—giving the department the authority to reject borrowers' pleas for forgiveness. The application borrowers must fill out is similarly vague.
read more

BlackRock Says Bond Market Views Puerto Rico Board as Positive

The bond market is viewing a new federal control board charged with overseeing Puerto Rico’s finances as a positive for investors, according to BlackRock Inc.’s Sean Carney, Bloomberg News reported yesterday. "Some of the better-secured bonds had a bit of a relief rally after the board was named,” Carney, head of municipal strategy, said yesterday. BlackRock manages about $124 billion of municipal debt, including Puerto Rico bonds. President Barack Obama last week appointed seven members to the board from lists submitted by congressional leaders of both parties. The panel must curb the island’s recurring budget shortfalls, oversee any restructuring of its $70 billion of debt and address a $43 billion unfunded pension liability. “We don’t know what questions they’re going to have to answer or what hurdles they’ll have to clear," Carney said. "So there’s still a lot of unknown, but I think the market appreciated a little bit of certainty in an uncertain environment.”
read more

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage

Commentary: What’s Next if Payday Loans Go Away?

As the Consumer Financial Protection Bureau prepares to finalize proposed rules cracking down on payday lenders, critics and proponents alike are speculating on what would fill the need for short-term, small-dollar loans, according to a commentary yesterday. Payday lending has garnered criticism from progressive Democrats, such as Sens. Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, who argue that the practice preys on the poor, trapping low-income borrowers in a cycle of deepening debt. If payday lending were to become less profitable because of the rules, it could result in increased use of installment loans, advocates say. Stronger regulation of payday lending could increase the use of financial technology such as online marketplace lending, said William Michael Cunningham, founder of Creative Investment Research, which studies trends in banking in black communities. Democratic lawmakers have also expressed hope that financial technology will fill credit access gaps in underbanked communities. The proposed CFPB regulation — with a comment period ending in October — would require lenders to confirm that borrowers are able to repay a loan, aiming to prevent borrowers from being stifled by high interest rates and monthly payments. It would also take aim at repeated short-term borrowing practices, require lenders to offer lower-risk loan options and crack down on fees against delinquent borrowers.
read more

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!

Tap into Rochelle’s Daily Wire via the ABI Newsroom and Twitter!

ABI Live Webinar: 546(e) and 547(c)(6) Safe Harbors: Expand or Limit? September 12, 2016 Online Webinar
Annual Charity Golf & Tennis Outing September 12, 2016 Alpine, N.J.
Turnaround and Secured Lending Program September 29, 2016 Alexandria, Va.
Midwestern Bankruptcy Institute & Professional Development Workshop September 29-30, 2016 Kansas City, Mo.
International Insolvency Symposium October 7, 2016 Amsterdam, Netherlands
Bankruptcy: Views from the Bench October 7, 2016 Washington, D.C.
Hon. Eugene R. Wedoff 7th Circuit Consumer Bankruptcy Conference October 10, 2016 Chicago, Ill.
ABI Endowment Event: An Evening at the Grove November 1, 2016 Houston, Texas
ABI Live Webinar: Administration of a Mega Ponzi Scheme Case: Receivership v. Bankruptcy November 8, 2016 Online Webinar
2016 Western Region Endowment Wine November 9, 2016 Los Angeles, Calif.
Complex Financial Restructuring Program November 10, 2016 Philadelphia, Pa.
13th Annual Corporate Restructuring Competition November 11, 2016 Philadelphia, Pa.
Hon. Steven W. Rhodes Detroit Consumer Bankruptcy Conference November 11, 2016 Troy, Mich.
Cross-Border Insolvency Program November 14, 2016 New York N.Y.
Baltimore Endowment Event November 17, 2016 Baltimore, Md.
Winter Leadership Conference December 1-3, 2016 Rancho Palos Verdes, Calif.
Consumer Connect December 2, 2016 Rancho Palos Verdes, Calif.
40-hour Mediation Training Program December 11-15, 2016 New York, N.Y.
Click here for Full calendar

New on ABI’s Bankruptcy Blog Exchange: Actual Change in De Novo Policy Proving Hard for FDIC

A recent blog post found the Federal Deposit Insurance Corp.'s recent statements encouraging new bank applications to be promising, but that some barriers to new charters may remain inside the FDIC as we are still waiting for the first de novo of 2016.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

© 2016 American Bankruptcy Institute
All Rights Reserved.
66 Canal Center Plaza, Suite 600,
Alexandria, VA 22314

To UNSUBSCRIBE from future bankruptcy brief emails
click here.

Article Tags: