FRIDAY3pt AUGUST stroke, 100% 27, 2021 size f VOL.or top 186of newspaper No. 165 = 8.9931 inches AMERICANBANKER.COM Follow us on Twitter @AmerBanker Fintechs can help narrow 5 racial gaps: San Francisco Fed president Accelerating Mary Daly called for new partnerships Through July 31, far more U.S. auto loans had been refinanced among fintechs, banks and community groups aimed at improving long-standing than2.5pt at stroke the sa= 6.75me inches point in the two previous years inequities in the financial system. Page 9 See story on page 2 Berkshire Hills selling 6 insurance business for $41.5 million The sale to the Florida-based insurer Brown 20192pt stroke = 5.75 inches & Brown would give Berkshire Hills Bancorp 1.6M an infusion of capital that it intends to invest in more profitable businesses, executives 2020 said. Page 9 1.7M 1.5pt stroke = 4.6667 inches Cyberattacks draw tech, 7 bank CEOs to White House 2021 for brainstorm Chief executives from across the business 2.1M world are set to join President Biden for a 1pt stroke = 3 inches discussion Wednesday on how industry and 0 200K 400K 600K 800K 1M 1.2M 1.4M 1.6M 1.8M 2M the federal government can partner to improve cybersecurity in the face of debilitating Source: Experian ransomware and cyberattacks. Page 10 Mortgage lender offers 8 vaccinated borrowers a dailybriefing It’s getting harder to keep discount 3 the Fed out of politics In addition to the incentive, Neat Capital in Institutional independence is a big part of Colorado mandated that its employees get What’s driving the boom what makes the Federal Reserve work. But inoculated against COVID-19. Page 11 1 in auto refinancing quantitative easing, new forays into climate Subprime borrowers whose credit scores and digital currency and a blurring of the Forbearance numbers decrease, have risen since they bought their cars are line between monetary and fiscal policy 9 with protections set to expire increasingly looking for a better deal. Credit might make that independence harder to The overall pace of both entries and exits unions and small banks are seizing the maintain. Page 4 slowed, even as the private-label securities opportunity, often with the help of fintechs. and portfolio loan segment saw a spike in its (See chart above.) Page 2 Inside Facebook’s plans for a numbers. Page 11 4 banking super app Tech vendors endorse David Marcus, Facebook’s financial Fraud prevention is hit 2 Fed’s caution on central services chief, discusses how its Novi 10 or miss. The misses cost bank digital currency digital wallet and the Diem stablecoin customers dearly. The U.S.’s measured approach will allow project it’s involved in can be the backbone Banks talk a good game about thwarting it to learn from other countries that are of a platform that offers real-time digital fraud and protecting consumers and pioneering their own cryptocurrencies, transactions, acts as a merchant acquirer businesses, but the experiences of this author, according to executives from IBM, R3 and and helps commercial banks handle central a former bank regulator, illustrate how the Public Mint. Page 3 bank digital currencies. Page 7 quality of such efforts varies dramatically from one bank to the next. Page 12 FRIDAY AUGUST 27, 2021 AMERICANBANKER.COM PAGE 2 loans nor refinances them. Instead, it recruits they fell into at the dealership.” AUTO LENDING lenders to join its network by offering them But McWethy is skeptical that new entrants ways to reach borrowers who may be looking into the refinancing market will remain to refinance. committed over the long run. What’s While iLendingDirect does not report Texans Credit Union reaches out to about specific loan volumes, a company spokesman 20,000 auto loan holders per month about a driving the provided an internal chart showing a 177% potential refinance, which can come at a heavy compounded annual growth rate so far in cost to a lender that is new in the market, he 2021, which could almost double next year, said. boom in auto according to the firm’s forecasts. “You see a real desire to get into this market, In the last 15 months, iLendingDirect has but an unawareness,” McWerthy said. “So refinancing been connecting with more small banks, but they’re having to leverage companies like in particular with credit unions, Holgate said. iLending and many others to do it.” By Jon Prior Credit unions, which have long seen auto Despite the market’s recent growth, an even August 25, 2021 loans as a good way to grow their membership, bigger pool of borrowers could soon become A boom in subprime auto lending has given accounted for about 18% of the total U.S. auto interested in refinancing their auto loans, way to a new frenzy for refinancing the same loan market in the second quarter of 2021, according to analysts. borrowers, as small banks and credit unions according to Experian. With auto purchases Roughly 1.6 million homeowners are hunt for sources of loan growth. currently slowed by the international chip still in forbearance plans on their home Rather than relying heavily on dealerships shortage, refinancing could offer credit unions loans, according to the Mortgage Bankers for business, smaller lenders are increasingly a way to supplement the car purchase loan Association. Once this relief is lifted, many of turning to intermediary fintech companies business. those borrowers could look for ways to lower like iLendingDirect to supply new customers Mike McWethy, chief experience officer their monthly payments on other debts. who are not visiting showrooms because auto at Texans Credit Union, which has been “If you went the past year without making inventories remain quite low. offering auto refinancing in the commuter- a mortgage payment, you weren’t too worried Lenders are sometimes halving borrowers’ heavy Dallas-Fort Worth area for years, said about what your car payment was,” said Austin interest rates — or offering even bigger cuts — that three or four nearby credit unions have Kilgore, director of digital lending at Javelin from starting points that can be higher than jumped into the market in the last six months Strategy & Research. “Refinancing an auto 20%, according to industry executives. Many of alone. loan might be a way to manage a household these car owners are hesitant to trade in their “This is the exciting new toy,” McWethy said. balance sheet.” vehicles, particularly in light of skyrocketing Many consumers with overpriced auto It’s unclear if the auto refinancing growth, auto prices, and may now have higher credit loans would be surprised by how much their particularly for subprime borrowers, will scores after using recent government stimulus rates can be reduced, he said. He cited one balloon enough to introduce worrying payments to pay down other debts. particular borrower with an interest rate above amounts of risk in the financial system or Executives at companies that are riding the 20% who got refinanced down to 4%. attract the kinds of unsavory lenders that recent boom are hoping that auto refinancings, “The person who fell in love with a red could raise flags with regulators. which lenders have traditionally viewed warily Toyota Corolla was likely taken advantage of,” Jim Minge, CEO of Texas Trust Credit because car values depreciate, can become a McWethy said. “We can back them out of what Union, said his company has seen “significant” more mainstream product. “We’d like to grow it beyond a niche part of the financial ecosystem,” said iLendingDirect Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 CEO Tom Holgate, who was named to the spot Phone 212-803-8200 AmericanBanker.com in July after the company received a major 3pt stroke, 100% size for top of newspaper = 8.9931 inches infusion from the private equity firm J.C. Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 Flowers earlier this year. 2.5pt stroke = 6.75 inches Through July 31 of this year, about 2.1 Managing Editor Dean Anason 770.621.9935 Reporters/Producers million auto loans were refinanced, which was 2pt stroke = 5.75 inches up 23% from the same period last year and a Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 31% increase from the first seven months of Miriam Cross 571.403.3834 1.5ptWashington stroke = 4.6667 inches Bureau Chief Joe Adler 571.403.3832 2019, according to data from Experian. Jim Dobbs 605.310.7780 iLendingDirect estimates that one in four 1ptExecutive stroke = 3 inches Editor, Technology subprime auto loans is overpriced. There could Penny Crosman 212.803.8673 John Heltman 571.403.3847, Allissa Kline 716.243.2679 be as much as $300 billion in outstanding Hannah Lang 571.403.3855 auto debt that, if refinanced, could save each Community Banking Editor Paul Davis 336.852.9496 John Reosti 571.403.3864, Gary Siegel 212.803.1560 borrower as much as $144 per month, Holgate Contributing Editor Daniel Wolfe 212.803.8397 said. Kevin Wack 626.486.2341 Holgate’s firm neither issues new auto For up to date and complete coverage go to AmericanBanker.com FRIDAY AUGUST 27, 2021 AMERICANBANKER.COM PAGE 3 growth in auto refinancing offers over the Executives from IBM, R3 and Public Mint descriptions about what a payment is for in as last 18 months and is starting to reach out to shared their thoughts on CBDCs and on many data fields as needed. nonmembers. So far, he is not worried about Facebook’s attempt to launch its own digital “It would be very hard for banks to move regulators restraining growth in an effort to currency.