Consumer lending

The Trump administration wants the Small Business Administration to shrink its workforce by 43%. At the same time, the agency is being asked to start managing the federal government's student loan portfolio.

Five Star Bank's parent company denied wrongdoing but said the agreement spares it the uncertainty and expense that might have resulted from a trial.

The Detroit lender will take a first-quarter hit due to a latest balance sheet restructuring, but said the play should boost profitability in the long term.

Serious delinquencies on auto loans rose to almost 3% in the fourth quarter of 2024, according to the New York Fed. Researchers blame the affordability problem on soaring car prices.

Founder Ken LaRoe says his decision to step back from daily management chores will help the Orlando, Florida-based Climate First Bancorp maintain its independence.

The Consumer Financial Protection Bureau found that auto lenders' use of reposession agents spiked to nearly 70% in 2022, up from 31% in 2018, resulting in higher costs for consumers.

The auto lender is selling its credit card business and halting new mortgage loans, abandoning its once-broader ambitions. Ally CEO touted the move as "the power of focus."

CEO Richard Fairbank told analysts executives have their "microscopes" out for any signs of trouble, but consumers remain "in a great place."

The Alabama-based regional bank reported stronger earnings on a bump in capital markets fee revenue and lower expenses, but its total loans declined and its charge-offs increased. It expects only modest loan growth this year.

The Consumer Financial Protection Bureau's research found that the majority of buy now/pay later users are subprime borrowers, holding high credit card balances and multiple loans, suggesting the offering is riskier to lenders than previously assumed.

Debt collection trade group ACA International and Specialized Collections Systems, a Houston-based debt collector, filed a lawsuit against the Consumer Financial Protection Bureau alleging its medical debt rule is outside its authority.

The industry should save on interest expenses this year as it follows the Fed's lead in cutting rates. The downside is that the lower deposit rates signal fewer opportunities to make loans.

An appeals court ruled that online lender CashCall had waived its right to a jury trial and that its other challenges "lack merit," in a lawsuit filed by the Consumer Financial Protection Bureau in 2013.

Fintech lenders often get criticized for high rates or fees on their consumer lending. But there's an argument to be made that the alternatives are worse.

As the Biden administration comes to a close, the agency called out "bait-and-switch tactics" by card issuers. It also announced a new tool allowing consumers to comparison shop for credit cards.

New bureau research digs into the fees that bettors get charged when they use credit cards to fund gambling accounts.

Affirm partners with Sixth Street to sell its buy now/pay later loans to the investment firm; Associated Banc-Corp promotes Steven Zandpour to deputy head of consumer and business banking; Visa Direct speeds up its money transfers; and more in this week's banking news roundup.

The post-pandemic increase in consumers falling behind on their credit card bills seems to be tapering off. "For 2025, we're seeing a lot of stability in delinquencies," an industry researcher said.

About $2 billion changes hands daily for the sale of new motor vehicles in the U.S., making auto dealers a prime use case for faster payments. So why aren't more using it?

There is a major opportunity out there, especially for community banks, to displace predatory lenders and earn a healthy return at the same time. It's just a question of making the leap.