Receiving Wide Coverage ...
Bank Payday Loan Update: Regulators officially unveiled on Thursday their expected guidance on the payday-style loans or checking account advances offered by a few financial institutions. The guidance, which calls for more underwriting and stringent cooling-off periods between loans, was issued along with "a scathing assessment of the loans" from the OCC, which "warned banks that the loans could pose 'reputational risk,'" reports Dealbook. But proponents of bank payday-style products have argued they prevent needy customers from seeking out loans from less reputable and decidedly unregulated businesses. And a report, profiled today by the Washington Post, finds there is consumer demand for these short-term loans with nearly one in four Americans having used a payday product. "The rise of this kind of borrowing … reflects the needs of a population struggling to make ends meet," the Post notes. Meanwhile, this op-ed in the FT urges more British banks to challenge the burgeoning payday business by offering alternative short-term credit. "The banks have steered clear of high-interest microloans — they fear reputational damage — but I would welcome a responsible high-street challenger to the payday lending market," the author writes. But are there any suitable alternatives?
Trading Glitch: Computer problems caused trading on the Chicago Board Options Exchange to be delayed several hours on Thursday. The outage is likely to "increase concerns about the stability of the complex computer networks on which financial markets rely," notes the Journal. The glitch "stoked fear again among regulators and reignited concerns about the market's vulnerability to broader shocks," echoes Dealbook. High frequency trading malfunctions have been making news headlines this year. Just this week, a fake tweet from a hacked Twitter account caused the Dow Jones Industrial Average to fall "roughly 145 points" and then there was that time back in August where a rogue computer program forced trading firm Knight Capital to scramble for new financing.
Resigned: U.K. bailout Chief Jim O'Neil resigned on Thursday after, per the FT, having run "out of patience to see the job through." O'Neil plans to return to work for former employer Bank of America Merrill Lynch in the fall. His successor has yet to be named, notes Dealbook. Another FT article calls O'Neil's departure "an unwelcome reminder of the U.K.'s tardiness in returning to private sector hands the banks it bailed out" during the financial crisis.
