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A fintech company has agreed to stop referring to itself as a "bank." Digital payments trends look to continue after the pandemic. The Treasury Department is pushing to raise the debt ceiling. New data looks at labor market trends. The CDC's vacated eviction moratorium is on hold – for now. Get more details on these key news items from this week.

Chime agrees, it's not a bank

After being investigated by the California Department of Financial Protection and Innovation, Chime has agreed to stop referring to itself as a "bank." The California regulator for banking licenses and state-chartered banks said that the fintech company "was not licensed to operate as a bank in California or in any other jurisdiction, nor was it exempt from such licensure." However, Chime used "chimebank" in its web address and used "bank" and "banking" in advertisements.

NAFCU is leading efforts to secure a level playing field between fintech companies and traditional financial institutions, such as credit unions. The association has raised concerns to policymakers and consumers about the growing issue of fintech companies applying to become a bank or acquiring a bank, arguing that these companies are taking advantage of regulatory loopholes to evade regulation.

"Fintech companies have taken root in the cracks of a fragmented regulatory system, and consumers deserve to be fully aware of what this landscape might entail, including lack of oversight of data and lack of guarantees on funds," said NAFCU President and CEO Dan Berger last month when the association released a new video detailing the issue. "The longer this mounting issue goes on without proper supervisory oversight, the greater the risk of a significant loss or violation of consumer rights. Federal regulators must ensure that new models of banking are held to the same high standards that exist for credit unions and banks. A level playing field for all financial institutions is necessary to prevent damage to the financial system."

Relatedly, the Federal Reserve this week issued proposed guidelines – containing six principles – the central bank will use when evaluating requests for accounts and payment services at Federal Reserve Banks to ensure transparency and uniformity.

Growth continues in digital payments

Even as coronavirus-related restrictions are lifted and more parts of the economy open back up, several companies are seeing the shift toward digital payments continue. According to PayPal's first quarter earnings report, it saw a 46 percent increase in its digital payments from 2020's first quarter. In addition, it saw users grow 28 percent over the same timeframe. A recent blog from Visa revealed that contactless payments are exceeding face-to-face transactions, with only 16 percent of consumers saying they plan to return to pre-COVID ways of payment.

As credit unions look to meet members need and adapt to changes accelerated by the pandemic, NAFCU's upcoming State of the Industry – a complimentary virtual event happening June 24 – will provide sessions on payment trends and changes in consumer behaviors. See the full agenda and register today.

Treasury Department calls on Congress to address debt ceiling

As the U.S. debt ceiling is set to be reinstated at the end of July, the Treasury Department is urging Congress to act soon on raising the agency's borrowing limit. In 2019, Congress and the Trump administration reached an agreement to suspend the debt ceiling for two years in exchange for spending cuts.

Once the debt limit is reinstated, the Treasury Department wouldn't be able to sell government securities to raise additional cash and would instead look to redeem certain investments and suspend others. Treasury officials are warning that its "extraordinary measures could be exhausted much more quickly than in prior debt-limit episodes," after which the department wouldn't be able to pay obligations and could default on debt. It believes it would have enough cash-on-hand to last through October, though the coronavirus pandemic makes it more difficult to predict.

Unemployment filings fall, but job shortages remain

The Labor Department's latest data revealed that filings for unemployment benefits fell to the lowest level since the pandemic started. Just under 500,000 initial jobless claims were filed, a drop of 92,000 from the previous week. The insured unemployment rate stood at 2.6 percent for the week ending April 24. The Bureau of Labor Statistics will release April employment data this morning. After a stronger-than-expected March report, economists are expecting an even bigger gain this month.

But while unemployment filings fall and jobs report numbers look strong, the Wall Street Journal yesterday flagged hiring concerns, with certain sectors like manufacturing, restaurants, and constructing having a hard time finding workers. The article notes that there are currently more job openings than before the pandemic hit in March 2020. Some of the reasons behind the worker shortage: Fear of getting or spreading COVID, lack of childcare, higher unemployment benefits, and skills gaps.

ICYMI: Judge vacates CDC eviction moratorium, then places it on hold

A U.S. district court judge Wednesday vacated the Centers for Disease Control and Prevention's (CDC) Public Health Service Act order that halted residential evictions nationwide through June 30, determining that the agency overstepped its authority. However, later in the day, the judge placed a temporary stay on the decision as the Justice Department works to appeal it. The plaintiffs in the lawsuit have until May 12 to file their response to oppose the delay, after which the Justice Department will have four days to respond.

The CDC issued the order last year and has extended it several times to help prevent the spread of COVID-19. Federal housing agencies have also extended their foreclosure and eviction moratoriums through June 30.