June Newsletter 2011


IN THE NEWS

Editorial

In a new study, Credit Supply to Personal Bankruptcy Filers: Evidence from Credit Card Mailings the Feds are asking, "Are consumers who have previously filed for personal bankruptcy excluded from the unsecured credit market?" (See: FED NEWS below) I have a brief answer and a rant! Answer-No, they are not! RANT-About 25 years ago we noticed that consumers that filed Chapter 13 bankruptcies where opening credit while they were still under the bankruptcy plan. New credit could affect their ability to repay the wage earner plan. Hmmm, thatís not good!

We had a simple idea that was very economical and beneficial to the courts, consumers, and creditors. If a Chapter 13 appeared on a consumerís credit report, and they opened any new credit during the plan, then we would provide a monthly report to the Federal Bankruptcy Courts. They could check and see if the consumer filed a petition to open new credit. If not, we could bring in the plan and modify it before the consumer could roll it into a Chapter 7.

Here's the rub- the courts did not care that the consumers were violating the requirements. Enforcing these requirements would mean more work for the courts, so they put on their blinders and ignored us. So, we got the support of our state and national credit reporting associations, Equifax, and merchants everywhere. We thought it was a no brainer, however, the Federal bureaucrats shot it down before it even got to the gate.(to continue using my racing metaphors) And, then I see studies like these and remember the bankruptcy reform of 2005, and I get mad all over again!

Not to dump everyone in the same no-good basket, but unbridled use and abuse of revolving credit is one of the main reasons consumers have to or want to file bankruptcy. This behavior can be determined fairly easily by checking whether consumers open new credit while under a Chapter 13 bankruptcy plan and by researching the number of habitual bankruptcy filings. The stats are available and the information is incredibly accessible. All three stats may be on a consumerís personal credit report. Some may say that it is not legal to use a consumer credit report in this way, however, the Feds have a way of making anything legal if it suits their agenda.

- Greg

NEWS

FACTA doesnít apply to "electronically printed" receipts...

Ninth Circuit: FACTA Doesnot Cover Emailed Receipts -- Simonoff v. Expedia
May 26, 2011, Eric Goldman
FACTA is a statute which requires merchants to truncate the customer's credit card information on receipts that are "electronically printed." Plaintiffs have brought claims against online retailers for including credit card information on emailed receipts. Courts have not been receptive to these claims, and in Simonoff v. Expedia, the Ninth Circuit joins other circuit courts in holding that FACTA does not apply to email receipts... Read More

Private employers may refuse to hire applicants because of bankruptcy filing
May 20, 2011, Duane Morris
The Bankruptcy Code does not make it unlawful for a private employer to deny employment to an individual on the grounds that the individual is or has been in bankruptcy, according to the 11th U.S. Circuit Court of Appeals. In February 2008, Eric Myers moved to Florida from North Carolina looking for a fresh start. The month before, he had filed a Chapter 7... Read More

Sony mulls hacker bounty offer: Cash for Anonymous heads on platters
May 9, 2011, John Leyden
Sony execs are mulling the possibility of offering bounties for any information that leads to the arrests of hackers who breached its network. The unspecified reward might be only offered by Sony through the FBI in a bid to tease out information on a security breach that affected as many as 100 million customers, All Things Digital reports. No firm decision has been taken on the Wild West-style bounty idea... Read More

Bankrupt video chain, AG settle on debt filings
May 10, 2011, Joseph G. Cote
More than 8,000 Granite Staters should get a boost to their credit score after the state announced Monday it had reached a settlement with a bankrupt video rental chain. The chainís debt collection practices damaged millions of peopleís credit... Read More

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FED NEWS & ENFORCEMENT ACTION

See Editorial

Credit Supply to Personal Bankruptcy Filers: Evidence from Credit Card Mailings
Song Han, Benjamin J. Keys, and Geng Li
Are consumers who have filed for personal bankruptcy before excluded from the unsecured credit market? Using a unique data set of credit card mailings, we directly explore the supply of unsecured credit to consumers with the most conspicuous default risk--those with a bankruptcy history... Read More

Incident Prevention and Detection-Protecting Information Security of National Banks
April 18, 2011, US Department of the Treasury
This alert highlights the need for national banks and their technology service providers (TSP) to take steps to ensure their enterprise risk management is sufficiently robust to protect and secure the bankís own and their customersí information. Several recent security breaches have highlighted the need for national banks and their TSPs to perform periodic risk assessments of their information security programs with respect to the prevention and detection of security incidents. Most security-related incidents occur because of the lack or failures of basic controls that allow attackers to gain entry into a target environment through phishing, spear-phishing, drive-by malware injection, and other techniques... Read More

FBI warns of millions lost in fraudulent transfers to China
April 27, 2011, Dan Kaplan
The FBI is asking U.S. banks to be on the lookout for large wire transfers being sent to accounts registered to companies located in Chinese port cities near the Russian border. In a fraud alert posted Thursday, federal authorities said they are investigating 20 cases in which the bank accounts of small and midsize businesses in the United States were hijacked to initiate transfers to the bank accounts belonging to Chinese economic and trade companies... Read More

HR company gets into hot water with the FTC...

FTC Testifies on Data Security: Agency Settles With Two Firms That Allegedly Failed to Protect Consumersí Personal Data
May 4, 2011, FTC
The Federal Trade Commission told Congress today that companies should protect consumersí data so that it doesnít fall into the hands of identity thieves. In testimony before the House Committee on Energy and Commerce, Subcommittee on Commerce, Manufacturing, and Trade, the agency recommended that Congress pass legislation that would require companies to implement reasonable security policies and procedures and to notify consumers when there is a security breach... Read More

FBI Defends Cyber Investigation Capabilities
May 3, 2011, Matthew J. Schwartz
Exclusive: The FBI's field offices lack the skills and expertise that they require for investigating national cybersecurity intrusions, with many field offices facing a shortage of forensic investigators and intelligence analysts, as well as tactical intelligence for guiding investigations... Read More

News & Enforcement Actions

OCC Enforcement Actions
April 15, 2011 - OCC
The Office of the Comptroller of the Currency (OCC) today released new enforcement actions taken against national banks and individuals currently and formerly affiliated with national banks... Read More

Federal Reserve Enforcement Actions

FRB: 2011 Banking and Consumer Regulatory Policy

FDIC Bank Failure in Brief

OCC News releases

NCUA New Releases

DODD-FRANK

Agencies Extend Comment Period on Risk Retention Proposed Rulemaking
Washington, D.C., June 7, 2011
Six federal agencies have approved and will submit a Federal Register notice that extends the comment period on the proposed rules to implement the credit risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act... Read More

OCC Proposes Rule to Implement Provisions of the Dodd-Frank Act
May 25, 2011, Robert Garrson
The Office of the Comptroller of the Currency today issued a proposed rule implementing several provisions of the Dodd-Frank Act, including the transfer of functions from the Office of Thrift Supervision and changes to national bank preemption and the OCC's visitorial authority. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the OCC will assume responsibility for the ongoing examination, supervision, and regulation of Federal savings associations on July 21... Read More

CFPB Releases Draft Mortgage Disclosure Options

Agent: The Dodd-Frank Act Might Limit Number of People who Want to buy Homes
May 30, 2011, Joan Probala
Some in the real estate industry argue that the law, which has certain guidelines for mortgages, has produced an unintended consequence. Our economic problems have led to new reform guidelines for qualified residential mortgages (QRM). Looking closely at one such new law, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), it is clear that the intentions of the act may have been good, but the results would severely restrict the access to homeownership... Read More

Lobbyists maintain high profile on Dodd-Frank
By Peter Schroeder - 06/01/11
Lobbyists seeking to influence Wall Street reform have shifted their focus from lawmakers to regulators in 2011, but are still maintaining a large presence in Washington... A total of 488 companies, trade associations, unions and other advocacy groups reported lobbying on the Dodd-Frank financial reform law in the first quarter of 2011, according to new analyses from the Center for Responsive Politics... Read More

FRAUD

Man sentenced to 3 years for ATM hack scheme
A North Carolina man has been sentenced to three years in prison after admitting he planned to pocket as much as $200,000 by hacking into automatic teller machines... Thor Alexander Morris, 20, targeted at least 35 ATMs in the Houston area that were vulnerable to attacks that let hackers administer them, according to court documents filed in the case. Once he took control, he planned to reprogram the machines to overpay him by changing the cash denominations for $20 bills to $1bills. He pleaded guilty to the offense in January... Read More

FBI Defends Cyber Investigation Capabilities
May 3, 2011, Matthew J. Schwartz
Exclusive: The FBI's field offices lack the skills and expertise that they require for investigating national cybersecurity intrusions, with many field offices facing a shortage of forensic investigators and intelligence analysts, as well as tactical intelligence for guiding investigations... Read More

Four arrested in bank scam: Police say ID theft suspects netted $33,000 with phony verification calls
May 31, 2011, Thomas Clouse
Four Seattle residents didnít just steal $33,000 from several Spokane banks in one afternoon; they were handed the money as if it were theirs, according to court records... In a chilling new example of identity theft, authorities say four people Ė one suspect has already pleaded guilty Ė went to local banks on March 12, 2010, with stolen credit cards. They identified themselves as the cardholders and sought cash advances, which were declined... Read More

Reports Of Mortgage Fraud Rose To Record Level Last Year
May 10, 2011, William Alden
After the housing market crashed, reports of suspected mortgage fraud soared. As lenders, homeowners and brokers rushed to close deals, the process during the boom years was tainted by fakery, according to reports later submitted to the Financial Crimes Enforcement Network, an agency of the Treasury Department. The number of reports of suspected mortgage fraud rose to its highest level on record last year, as 70,472 reports were submitted to the government agency, according to a new release from the LexisNexis Mortgage Asset Research Institute... Read More

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Credit Scoring: Rules, Regulations, Portfolio Development, and Loss Prevention
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Paper Checks, Remote Deposit Capture, ACH & Electronic Transfers: What Law Applies & Who is Liable?
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Increase Your Safe Deposit Box Income
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Officer Calling: Prospecting, Preparing, & Presentation
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Games Trainers Play
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Check Holds
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The Insider Threat - Don't Look the Other Way
Thur, June 16, 2011
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The New Adverse Action Notices and Reg B: Compliance Date July 21, 2011
Thu, Jul 7, 2011
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Reporting Your Credit Data, METRO2, E-OSCAR & FACTA Section 312 Accuracy and Integrity Compliance Deadline
Wed, July 13, 2011
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The New Adverse Action Notices and Reg B: Compliance Date July 21, 2011
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Reporting Your Company's Credit Data, E-OSCAR & Compliance
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Risk Based Pricing - FACTA Section Act 311 Compliance: Deadline Jan 1, 2011
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Armed Robbery: Preventing & Being in Regulatory Compliance!
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Section 312 FACT Act Integrity & Accuracy Compliance: Deadline July 1, 2010
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Bankruptcy: How the Law will affect Your Financial Institution's Mortgages
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Successful Collections: Scripting to Collect in Full !!!!
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Foreclosure: A Lender's Guide From Prevention to Recovery!
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FACING FACTA & RED FLAG Compliance - Surviving Your Audit
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Credit, Collection, & Compliance During a Down Market
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Effective Billing Collecting - Facing FACTA Red Flag Compliance
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Testimonials

"Greg, our Collections Department enjoyed and was enlightened by your presentation Collecting Past Due Loans: Preparation, Scripting, & Follow Up. Thank you very much."

- Susan Hinson, Lending Depart, Chocolate Bayou Community Federal Credit Union -

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"Greg, It was storming here and our internet went down, it was up and down the rest of the day. Thanks for asking...a CD would be great if possible. I really appreciate your willingness to help me out,"

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"Thanks for talking to our officer group regarding the circumstances under which we can legitimately request a credit report and also for teaching us how to understand the wealth of information contained in the reports. I certainly learned a lot from your presentation and I have numerous other favorable comments."

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"We do not have any questions at this time but do appreciate your follow up and your concern. It is refreshing that there are still companies that care about their level of service in the manner that you do. Although your presentation was professional and conducted in a manner that spoke well from experience, one of the things that will always stick out in my mind is your diligence to the level of your commitment to customer service. Thank you."

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"Your tips on identity verification and skip tracing helped me uncover two fraudulent accounts within four weeks of each other. We didn't loose a single dime on an exposure of $19,500! Also, through effective letter writing, collection calls and the PIF Principal, we have reduced our overall past due percentages to less than one percent of our entire portfolio. Your class was invaluable!"

- Matt Owens, First American Bank, Branch Manager -

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