If anyone needs a lesson in the unintended consequences of regulation, read the press release from the FHLB New York. They will cease international wires at year end for their members, due to "the uncertainty posed by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Act”) and rules promulgated by the Consumer Financial Protection Bureau."


http://www.fhlbny.com/news-events/press-releases/index.aspx

I would not have thought that "consumers" would be their issue.

Am I reading this right?

The Bank began processing international wires for its members on a very limited basis in the mid-1990s. Member requests to process international wires slowly increased. In 2006, the Bank contracted with a correspondent bank to process the wires. In 2008, the Bank offered members the ability to process international wire transfers through its 1Linksm system; currently, approximately 86 percent of international wire transfers are processed through 1Linksm.
Is this to mean that 86% of ALL international wire transfers in the US, or just 86% of those for the FHLBNY? Hard to believe it's all in the US; if so this is huge. (I already thought it was pretty big.)

For FHLB. And they have left banks hanging, because they won't process their business wires either. Banks have to rush to get a new correspondent.

Interesting article in the Financial Times last week. Apparently other countries are starting to put pressure on the CFPB to back off as they see the flow of funds from US consumers basically disappearing.

That is very interesting.

I as overjoyed to learn that we did NOT have 100 CONSUMER international wires so far this year. We are monitoring but it doesn't look like we'll hit that magic number. Most of our international wires are business purpose.

However it is a pain to monitor and be ready to implement if we reach that number. I wonder if keeping the money in the states is the real reason for this law.

I haven't been able to determime what problem they are trying to fix with this rule.

I agree, I'm glad we are not where near the 100 as most of our are business purpose. It is just a pain to have to set up monitoring procedures incase we do hit that magic number.

Congress was convinced that lots and lots of consumers transfer funds "back home" to family or to make other remittances to foreign countries, and that they are unfairly at the mercy of both exchange rates and fees, without information from anyone as to what the fees in particular might be.

Whether or not I agree that Congress passed a solution in search of a problem, I do think that the solution is particularly ham-handed and could result in doing little more than making it harder to complete those transfers by pushing large numbers of providers out of the marketplace.

So some FI's are over the threshold and will get out of the game, and other FI's are under the threshold and will stay in the game. I suspect some of those smaller FI's will find themselves deluged with new wire requests, since there will be fewer players in the game--ironically pushing them up to (and perhaps over) the threshold.

^^ That's our fear. We're around 75-80. Thankfully, one of our larger competitors that serves the area's largest employer and does a lot more international wires is going to continue to offer them, so hopefully we won't see much of a change. If we do go over, we'll be getting out of doing them, quickly.

About the same number here, Matt. There is a Western Union right around the corner. They charge less than we do. Hopefully, most consumers already use them.

My biggest beef is that banks absolutely did not need to be included in the scope of this requirement. If any abuses were going on it was on the part of closed loop money transmitters. The Western Unions and MoneyGrams of the world are in control of the process from start to finish. Banks are not, nor do they want to be.

It's just absolutely beyond idiotic to include banks, and then to add insult to injury, the CFPB director decides to make us responsible for erroneous payment orders provided by the sending consumer.

You gotta wonder if somebody is paying somebody somewhere for favors. (Did I say that out loud?)

I wonder how much the FHLBNY announcement had to do with today's CFPB announcement of its "intent" to "adjust" the rules.

Simple fix:
The new remittance rules should apply ONLY to those transfer providers that have a controlling interest or agreement for both the initiating and receiving points of the transfer.

If the CFPB would simply add THAT component to the definition of a remittance transfer, it would solve 99.9% of the problem.

BTW - I was in a US Bank branch the other day, and Moneygram had a space in the branch for consumers to use for sending remittances.

So - what do you suppose this new rule will be BOON to Moneygram and Western Union as it seems likely that financial institutions will outsource their consumer service to them.

Ah irony - thy name is Dodd-Frank.

More COFFEE* anyone?


*Compliance Officers Full and Feared Employment Edict

I have two theories. Either a congressperson tried to do an internation wire and was shocked at the fees charged without prior knowledge and wanted to correct this grievous wrong (which is actually how the credit card rules for under 21 borrowers came about) or a congressperson has a large interest in Western Union, Moneygram or both and figured this was a way to grow their business.

You hit the "moneyGram" on the head! Ditto. As John put it, "its a solution looking for a problem...". We will have to deal with it or get out of the way.

What does "ham-handed" mean. Not familiar with that expression down here in cajun land.

clumsy, inept, bumbling...so the LSU quarterback is not ham-handed.....