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Daily Archives: October 31, 2013

Pew Unveils Policy Recommendations to Solve Payday Loan Problems

“A report released by The Pew Charitable Trusts today provides guidance for federal and state policymakers on how to make the payday loan marketplace more safe, transparent, and predictable. According to a series of studies by Pew, repayment of these short-term loans takes 36 percent of the paycheck of the average borrower, who can afford to pay only 5 percent. As a result, the typical customer has to repeatedly “re-borrow” the money every two weeks, spends five months of the year in debt, and ultimately pays $520 in fees for the original loan of $375. “Payday loans fail to work as advertised,” said Nick Bourke, who directs Pew’s payday lending research. “They far exceed borrowers’ ability to repay, and—by a 3-to-1 margin—payday loan users say they want more regulation of the product. All small loans must have affordable payments. Payday loans do not. Pew’s research demonstrates effective ways to address this problem.” Payday Lending in America: Policy Solutions is the third report in a series that provides information for policymakers as they consider ways to make small-dollar loans work better for borrowers. Research is unclear on whether high-interest small loans are beneficial to consumers with poor credit histories, but better regulation is needed regardless. Based on findings from the reports, Pew recommends that when policymakers choose to allow these loans, the following regulations should be in place to minimize harm to consumers and to maintain a marketplace for lenders:

  • Limit payments to an affordable percentage of a borrower’s periodic income.
    (Research indicates that payments above 5 percent of gross income are often unaffordable.)
  • Spread costs evenly over the life of the loan.
  • Guard against harmful repayment requirements or collections practices.
  • Require concise disclosures that reflect periodic and total costs upfront.
  • Continue to set maximum allowable charges for small-dollar-loan markets that serve those with poor credit.”

BIS – Property price statistics

“The property price statistics bring together data from different countries. The BIS, with the assistance of its member central banks, 1 has obtained approval of various national data providers to disseminate the statistics as long as the original national sources are clearly indicated. The sources and any relevant disclaimers are listed separately (sources of data). Copyright in these… Continue Reading

Fundamental review of the trading book – second consultative document

“The Basel Committee on Banking Supervision has today issued a second consultative paper on the fundamental review of capital requirements for the trading book. The paper comprises a detailed set of proposals for a comprehensive revision of the market risk framework. This initiative forms part of the Committee’s broader agenda to reform regulatory standards for… Continue Reading

Market volatility and foreign exchange intervention in EMEs: what has changed?

BIS Papers No 73 – October 2013: “Huge swings in capital flows to and from emerging market economies (EMEs) over the past five years have led many countries to re-examine their foreign exchange market intervention strategies. Quite unlike their experiences in the early 2000s, several countries that had at different times resisted appreciation pressures suddenly… Continue Reading

Liquidity stress testing: a survey of theory, empirics and current industry and supervisory practices

BCBS Working Papers No 24 – October 2013: “Stress-testing is an important tool in developing a complete picture of an institution’s liquidity risk profile. What constitutes a good stress test is, however, not universally clear. Practices still differ widely, not only in the supervisory community, but also in the banking industry. The Research Task Force’s… Continue Reading

Sports-Related Concussions in Youth: Improving the Science, Changing the Culture

“Young athletes in the U.S. face a “culture of resistance” to reporting when they might have a concussion and to complying with treatment plans, which could endanger their well-being, says a new report from the Institute of Medicine and National Research Council.  The report provides a broad examination of concussions in a variety of youth… Continue Reading

Six Trends Driving Change in Government

The IBM Center for The Business of Government has looked across our interactions with government leaders and stakeholders, as well as the considerable work and thinking of our authors, to identify a set of trends that will drive change in government. Dan Chenok; John M. Kamensky; Michael J. Keegan; Gadi Ben-Yehuda – October 2013 “Today, government is in the midst… Continue Reading