Wall Street Journal
Fair Isaac is developing a new credit score that's aimed at the millions of people who currently don't have credit scores and are cut off from auto loans, credit cards and mortgages. About 53 million Americans are now unable to qualify for most types of bank-issued consumer credit because they don't have a credit history. The product "is largely a response to banks desire to boost lending volumes by increasing loan originations to borrowers who otherwise wouldnt qualify, many of whom tend to be charged more for loans." Instead of using credit reports from Equifax, Experian and TransUnion, the new Fair Isaac credit score for underbanked consumers will be developed from data gleaned from consumers' histories in paying utility bills, how often they change addresses, and other factors.
While some equity analysts may have serious concerns about Bank of America's ability to post consistent profit growth and boost its stock price, other equity analysts are more bullish about B of A's prospects. Analysts at Goldman Sachs and Deutsche Bank project B of A's first-quarter earnings to be among the best of what's expected to be a lackluster bank earnings season. As a result, B of A's stock is a top pick for Goldman and Deutsche.
Questions have been raised about the banking venture launched by Bob Diamond, the former chief executive of Barclays. Included in the criticisms being lobbed at Atlas Mara, the company Diamond formed: lavish pay for managers at an Atlas Mara investment vehicle; a tanking stock price; delays in getting regulators' approval for an executive hiring; and a lack of disclosure about Diamond's personal shareholding in an Atlas Mara acquisition target. Diamond formed Atlas Mara to serve commercial clients in sub-Saharan Africa. The bank has about $2.6 billion in assets and holds stakes in banks that operate in Nigeria, Tanzania and several other African nations.
The Obama administration should stop its policy of taking 100% of the profits of Fannie Mae and Freddie Mac, and allow the GSEs to build up capital buffers against future losses, William M. Isaac writes in an op-ed column for the Wall Street Journal. Isaac's recommendation comes after the Inspector General of the Federal Housing Finance Agency reported the GSEs could need another bailout if housing markets decline.
The Consumer Financial Protection Bureau met with representatives for a group of about 100 borrowers who refuse to repay federal student loans for classes taken at schools run by Corinthian Colleges. The CFPB has requested relief in the courts, but does not have the authority to cancel federal student loan debt. A senior official from the Department of Education attended the meeting between the CFPB and the borrowers' group. ECMC Group, a loan servicer that agreed to acquire about 50 campuses from Corinthian, in February agreed to forgive about $480 million in student debt, although only for private loans. That deal did not apply to federal loans taken out through Corinthian.
Bloomberg: BMO Harris can double the number of its clients in the U.S. in five years without making an acquisition, Bank of Montreal CEO William Downe said at the company's annual investor day on Tuesday. One reason for Downe's optimistic forecast is that BMO Harris is using "deadly accurate" brand placement to generate growth.
San Diego Union-Tribune: Dwight Freeney, a former San Diego Chargers and Indianapolis Colts linebacker, has sued Bank of America, saying the bank aided and abetted a scheme to swindle him out of more than $20 million and caused him to close a Los Angeles restaurant he owned. The restaurant was named Rolling Stone, as Freeney had secured a licensing agreement with Rolling Stone magazine to use its name, USA Today reported. Freeney's losses were tied to a former financial adviser with Bank of America Merrill Lynch, who was involved in a scheme to fraudulently wire $2.2 million out of Freeney's account. A Bank of America spokesman said the former Merrill Lynch adviser committed her illegal acts after she left Merrill Lynch. Freeney also named a current Bank of America senior vice president, Michael Bock, as a defendant in his complaint.
The Record (Bergen County, N.J.): The paper looks at how small community banks in northern New Jersey have been able to offer mobile-banking apps via their core processors. Glen Rock Savings Bank, Atlantic Stewardship Bank and Bogota Savings Bank each added mobile-banking to its retail-product lines. "If you are at the front end of the trend, it's more expensive than if you are running with the pack," Glen Rock CEO Henry Ingrassia said, explaining why he at first resisted adding a mobile-banking app. It's typically too expensive for a community bank to develop its own mobile-banking app, so most obtain the software through their core processors, bank consultant Robert Kafafian said.