FTC starts Equifax probe; CFPB blesses alternative credit data

Receiving Wide Coverage ...
FTC dives into the breach: The Federal Trade Commission confirmed it is investigating the Equifax data breach. “The FTC typically does not comment on ongoing investigations. However, in light of the intense public interest and the potential impact of this matter, I can confirm that FTC staff is investigating the Equifax data breach,” said Peter Kaplan, the agency’s acting director of public affairs. The FTC, which regulates the credit bureaus, joins the Consumer Financial Protection Bureau, the FBI, and some Congressional committees, among others, in looking into the hack. Wall Street Journal, Financial Times

Equifax CEO Richard Smith wrote a column in USA Today explaining what the company is doing in the wake of the hack. “We are devoting extraordinary resources to make sure this kind of incident doesn’t happen again,” he wrote. “We will make changes and continue to strengthen our defenses against cyber crimes. We will make sure every consumer who wants protection has a full package of services. And we will continue to update everyone on our progress.”

The next few months will surely test Smith, the Financial Times says.

Shares of Equifax dropped another 3% on Thursday, bringing its cumulative decline this month to 31%.

The time is right: The CFPB gave the green light to Upstart Network, an online lender started by former Google employees, to use alternative credit data, such as cellphone payment records and employment status, to underwrite consumer loans.

Andrew Harrer/Bloomberg

“The CFPB’s decision could spur further development of new underwriting methods at a time when the credit reporting industry is under scrutiny following the expansive data breach at Equifax,” the Wall Street Journal reports.

Wall Street Journal
Good news, bad news: There’s good news and bad news for banks in the mortgage business from continued low interest rates. On the plus side, low rates mean more demand for mortgages and refinancing. On the downside, more refis cause mortgage-backed securities to prepay, reducing their balance sheet value and forcing banks to reinvest the proceeds at lower rates.

“The drag on earnings will be minor, but it comes as banks are facing other headwinds, from slow loan growth to weak trading activity,” the Heard on the Street column warns. “Lenders keep hoping they have escaped the low-rate environment of the past several years, only to wake up right back in it.”

Chicago help: JPMorgan Chase pledged $40 million to help ailing neighborhoods in Chicago, “following a similar model it applied in Detroit that focuses on economic growth to address poverty and violent crime.” The money will be distributed over three years to nonprofits, small businesses and others.

New York Times
No more trading: BTC China, the country’s first and largest digital currency exchange, announced it will stop trading bitcoin and other cryptocurrencies by the end of the month. The decision follows the decision by the Chinese government to ban initial coin offerings. “The exchange’s decision is the first of its kind in China, and it raises the specter of other exchanges shutting down bitcoin trading in the future,” the paper says.

Quotable
“It’s a sad day for the bitcoin community here in China.” — Wei-Tek Tsai, director of the Digital Society and Blockchain Laboratory at Beijing’s Beihang University.