%1

In early 2014, hundreds of employees at Maine’s banks and other financial institutions began learning how to recognize unusual account activity that might indicate fraud or financial exploitation, the New York Times reported. The pilot program went so well that one of Maine’s senators, Susan M. Collins (R), introduced legislation to take it national. The result, the Senior Safe Act, which became law in May, gives banks that accept such training more certainty that they would not be punished for disclosing account information to the authorities. Without that protection, banks and their employees run the risk of being sued by clients, or fined or penalized by regulators. "As baby boomers hit their milestones and retire, there’s been a growing focus on what we can report,” said Robert G. Rowe, associate chief counsel for the American Bankers Association. “The law gives us safe harbor to report suspicious activity.”

The credit scores of millions of U.S. consumers have risen following a broad overhaul of how credit-reporting firms handle negative credit information, the Wall Street Journal reported. Consumers who had at least one collections account removed from their files experienced an 11-point increase, on average, in their credit scores, according to a report released yesterday by the New York Federal Reserve. The report was based on a sample of millions of anonymous credit reports from credit-reporting firm Equifax Inc. Collections were completely removed from 8 million consumers’ credit reports in the 12 months through June, resulting in an average 14-point increase. The improvements come after the three largest U.S. credit-reporting firms changed how they deal with certain kinds of negative credit events that some have said are prone to error and unfairly drag down credit scores. The firms — Equifax, Experian PLC and TransUnion — agreed to revamp the reports following settlements with state attorneys general dating back to 2015.

U.S. household debt continued to increase in the second quarter, propelled by an advance in mortgage borrowing, according to a Federal Reserve Bank of New York report that also noted a decline in seriously delinquent student loans, Bloomberg News reported. Total household debt rose 3.5 percent from a year earlier in the April-to-June period to a record $13.3 trillion, while mortgage debt rose 3.5 percent to $9 trillion. The majority of newly originated mortgages continued to go to borrowers with the highest credit scores, extending the pattern of most of the current economic expansion — 58 percent of new mortgage loans were taken by those with scores of 760 or higher. As borrowing advanced, borrower stress continued to decline. Loans slipping into delinquency fell to 4.52 percent in the second quarter, the lowest in data from 2003. The drop was primarily due to student loans, for which the transition rate has fallen 1.3 percentage points over the last year. Read more. 

Be sure to check out yesterday's ABI Chart of the Day. 

A humming U.S. economy is pushing inflation up to levels that the central bank considers healthy. But there’s a downside: Americans’ paychecks are barely keeping up, the Wall Street Journal reported. Consumer prices rose 2.9 percent over the past year, a rate last exceeded in late 2011, the Labor Department said on Friday. Core prices — those outside of volatile food and energy-related expenses — climbed 2.4 percent, the biggest annual gain since September 2008. The rising cost of things like rent, gasoline and health care is another sign the economy is kicking into a higher gear after years of slower growth. But rising prices are now eating up much of Americans’ wages gains, restraining their ability to spend in the future. For just the second time in four years, average hourly earnings — after inflation — fell over the past 12 months, a separate Labor Department report Friday showed. Workers still came out ahead — barely — but only because they increased the number of hours they worked. Weekly earnings, adjusted for inflation, grew 0.1 percent in the past year.

America never made up the growth it lost in the 2008 global financial crisis and the recession it triggered, according to research from the Federal Reserve Bank of San Francisco, Bloomberg News reported. Gross domestic product remains well below what its 2007 trend would have implied and it’s unlikely the economy will ever make up that lost ground, according to the research published yesterday. The hit will cost the average American $70,000 in lifetime income, the study estimates. “Without the large adverse financial shocks experienced in 2007 and 2008, the behavior of GDP would have been very different,” Regis Barnichon and his co-authors write. They find that the hit to growth was persistently 7 percentage points deeper than it would have been in the mild recession that they think would have occurred without the financial meltdown.

The Trump administration is planning to suspend routine examinations of lenders for violations of the Military Lending Act, which was devised to protect military service members and their families from financial fraud, predatory loans and credit card gouging, according to internal agency documents, the New York Times reported. Mick Mulvaney, the interim director of the Consumer Financial Protection Bureau, intends to scrap the use of so-called supervisory examinations of lenders, arguing that such proactive oversight is not explicitly laid out in the legislation, the main consumer measure protecting active-duty service members, according to a two-page draft of the change. The proposal surprised advocates for military families, who have urged the government to use its powers to crack down harder on unscrupulous lenders. The consumer bureau conducted dozens of investigations into payday and other lenders during the Obama administration without any significant legal opposition, and no lenders are currently challenging its oversight based on the law, according to administration officials. The bureau will still bring individual cases against lenders who are found to charge in excess of the annual interest rate cap of 36 percent mandated under the law, and continue to supervise lenders under other statutes. But it will scrap supervisory examinations, which are the most powerful tool for proactively uncovering abuses and patterns of illegal practices by companies suspected of wrongdoing, former consumer bureau enforcement officials said. Read more.

ABI President Ted Gavin of Gavin/Solmonese LLC (Wilmington, Del.) and John Ames of Bingham Greenebaum Doll LLP (Louisville, Ky.), a former ABI President), talked with ABI Executive Director Sam Gerdano about ABI's new Veterans' Affairs Task Force on a podcast. Providing more details on the formation of the Task Force, which also includes former ABI President John Penn of Perkins Coie (Dallas) and former ABI Resident Scholar Jack Williams and Susan Seabury of Baker Tilly (Atlanta), Gavin and Ames discuss what the Task Force aims to accomplish — and ways that ABI members can help. Listen here.

The retirement savings made possible for millions of Americans thanks to automatic enrollment in 401(k)-style plans is proving to be an alluring pool of money for workers to borrow from or cash out when they leave a job, the Wall Street Journal reported. The findings, from academic economists known for their work on retirement-savings plans, answer a question that has long concerned employers that put workers into 401(k) plans and give them the option to drop out, rather than requiring them to sign up on their own: Will auto-enrolled workers treat their 401(k)s like automated-teller machines? The answer, according to the study, is yes — but not to the extent that the workers spend all their gains from auto-enrollment. Within eight years of joining a 401(k) plan, the results indicate that automatically enrolled workers withdraw nearly half of the extra they manage to save, compared with workers left to sign up for the retirement plan on their own. The findings illustrate how difficult it can be to change savings and spending habits. And this tapping or pocketing of retirement funds early, a phenomenon known in the industry as leakage, threatens to reduce the wealth in U.S. retirement accounts by about 25 percent when the lost annual savings are compounded over 30 years, according to a separate analysis by economists at Boston College’s Center for Retirement Research.

A lawsuit filed yesterday accuses an Arkansas judge of running an unconstitutional debtor's prison, locking up defendants for low-level misdemeanor crimes, and suspending their driver's licenses unless they pay thousands in fines, Reason.com reported. The Lawyers' Committee for Civil Rights Under Law has filed a class action suit representing six named clients and others against Arkansas state District Judge Mark Derrick, accusing him of violating citizens' rights by locking them up in White County because of their inability to pay court-imposed costs and fees. Derrick oversees eight low-level courts in different towns in White County (population: 79,000) and two in nearby Prairie County. These district courts handle non-jury cases like traffic and contempt proceedings. Judges are elected to four-year terms. The lawsuit describes Derrick's practices as among "the most extreme" among judges who do whatever they can to extract fines from defendants.