February 27, 2018

Dreher Tomkies LLP

FLORIDA: Payday-loan bill ready for Florida House floor

A heavily debated proposal that would change regulations for payday lenders in Florida continued moving forward Thursday and is ready to go to the House floor.

The House Commerce Committee approved the bill (HB 857), which would allow the businesses to make "installment" loans up to $1,000, with repayment over 60 to 90 days. Current law limits the high-interest loans to $500 for periods of seven to 31 days.

The Senate version of the proposal (SB 920) also has steadily moved through committees and will go to the Senate Rules Committee on Monday. Supporters say the proposal was prompted by potential changes in federal regulations that could affect the types of smaller-dollar, shorter-term loans made by payday lenders in Florida. During debate, backers have focused on what they see as a need for payday loans because many people don't have access to other sources of credit.

"I think these types of loans, certainly for my constituents, are very useful," Commerce Committee member Bobby Payne, R-Palatka, said. But the proposal has drawn opposition from some consumer-advocacy groups and credit unions, which argue that payday loans can lead to borrowers getting stuck in "debt traps." Read more at THE LEDGER

Here's Why 33% of Employees Are Distracted at Work

It's not unusual for workers to get distracted Opens a New Window. from time to time, or even somewhat frequently. And when we think about common sources of distraction, we tend to gravitate toward chatty coworkers, constant emails, and the persistent dinging of our cell phones. But it's not just people and technology that cause employees to lose focus on job-related tasks. A good 33% of workers are distracted by personal financial issues, according to a PwC study Opens a New Window. , and it's potentially putting their jobs on the line.

In fact, 46% of those distracted by financial stress say they spend three hours or more each week dealing with related issues at work. Not only is that a lot of productive time to potentially be giving up, but it's also the sort of habit that could cause those already plagued with financial anxiety to compromise their job security. (Notice the irony: You're stressed about money, so your behavior causes you to risk your sole source of money. Not a good thing.)

If you've been spending countless working hours harping over financial issues and not getting your job done, it's imperative that you take steps to break that routine. Otherwise, your stress level might rise exponentially when your employer catches on. Read more at FOX BUSINESS


INDIANA: Payday lending bill faces uncertain fate in Indiana Senate

The Republican leader of the Indiana Senate says he is opposed to legislation to expand payday lending and allow for rates more than triple what is currently permitted under the state's criminal loansharking law.

"It's treading water and the water is pretty deep," Senate leader David Long of Fort Wayne said Thursday, referring to a payday lending bill that narrowly passed the House last month and is now before the Senate. "... I'm not a big fan of it, personally."

It's a felony under state law to offer loans with an annual percentage rate greater than 72 percent, according to the Indiana Department of Financial Institutions. But the new payday lending bill would lift that, allowing payday lenders to charge annual percentage rates as high as 222 percent on short-term loans between $605 and $1,500, an analysis by Indiana Institute for Working Families found.

Many payday loans are for two weeks, but the bill would create a new class of loan that would be paid off over the course of three months to a full year.

Long's comments come amid a chorus of faith-based groups announcing their opposition to the bill, including leaders of the church attended by House Speaker Brian Bosma, who voted for the measure. The bill cleared the House in January on a closer-than-expected vote of 53-41.

Giving the middle class credit: New bill a step in right direction

Consumers need access to credit, and bank-fintech partnerships are one way to meet their needs. Indeed, bank-fintech partnerships are good for both consumers and banks.

A couple of weeks ago, during a hearing on the opportunities and challenges in the fintech marketplace, I explained how these partnerships work to Congress.

As I noted, consumers benefit because banks can use fintech to deliver safer, more transparent, lower-cost and more convenient financial products and services over the internet and mobile devices.

Banks benefit because fintech companies can leverage big data and technology, offering the infrastructure banks need to serve and welcome more people into the financial system.

For instance, fintech companies can provide access to a broader range of data and analytics, potentially helping banks to provide more consumer loans responsibly. Richard Cordray, the former director of the Consumer Finance Protection Bureau (CFPB), noted how "alternative data from unconventional sources may help consumers who are stuck outside the system build a credit history to access mainstream credit sources."

Additionally, as a recent article in the American Banker explains, point-of-sale lending is popular with millennials, who are reluctant to take on credit-card debt but are comfortable borrowing for specific purchases.     Read more at THE HILL

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'Payday Lending Alternative' Program Can't Replace Payday Lenders: Pew

The highly touted NCUA Payday Lending Alternative model is not an effective replacement for storefront short-term lenders that charge customers exorbitant interest rates, Nick Bourke, director of The Pew Charitable Trusts' consumer finance project said Monday.

"The PAL program is well-regarded, and it has helped some people gain access to loans that are better than payday loans and cost less," Bourke said, in an interview, as Pew released its guidelines for payday loans.

He added that "Most credit unions do not participate, and there are fewer than 200,000 PAL loans per year compared to about 100 million payday loans."

"Millions of households could benefit if banks and credit unions were to offer small installment loans and lines of credit with standards strong enough to protect consumers, clear enough to avoid confusion or abuse, and streamlined enough to enable automated low-cost origination," Pew said.

Pew has been at the forefront of the battle over payday lending.

In its new report, Pew said that regulatory uncertainty has hampered efforts to develop fair products. The CFPB has issued final rules governing payday loans. Those rules would exempt loans modeled on the PAL program.

But Acting CFPB Director Mick Mulvaney has said he may roll back the rules, which were issued by his predecessor, Richard Cordray. Read more at CREDIT UNION TIMES

New Survey Shows 70% Increase in Employee Savings Thanks to FinFit Financial Wellness Benefit

VIRGINIA BEACH, Va.-- FinFit, a leader in providing voluntary financial fitness benefits, announced today the results of their annual Employee Financial Wellness survey. "From the companies surveyed, we saw an 85% increase in mid-to-large businesses actively offering financial wellness,"1 said Jennifer Creech, SVP of Strategic Partnerships. "This shows how important financial wellness is to today's workers, and our new survey clearly demonstrates its positive impact on both employees and the companies they work for."

This survey included a broad cross-section of industries, and assessed workers taking part in the FinFit Financial Wellness Program. It reveals marked improvements in just about every area of their finances: over 69% of those surveyed indicated that their financial stress decreased by using the tools and resources available to them as part of the program. Moreover, before enrolling in the program, most employees were unable to save any significant amount of money for emergencies or retirement on a regular basis. However, after taking part in the program almost 70% of employees were able to begin saving on a regular basis, some as much as $400 per month.

This is significant, as 56% of workers struggle with day-to-day financial issues, such as medical, home, or car repair expenses, insufficient savings, credit card or student loan debt, or any number of other financial challenges. And that can cause stress that leads to lack of workplace focus, illness, absenteeism, and lost productivity. Employers lose an estimated $7,000 per employee when this occurs.2.    Read more at YAHOO FINANCE


Some Perspective on "Payday" Loans. by Abdul Hakim-Shabazz

Let's say you needed to borrow $100 from me, and you'd give me my money back tomorrow. I told you, yes, but you could only do it if you paid me back $101. You'd probably say sure. Paying $1 to get the $100 you need; no big deal, right? Well, guess what, when you pay me back that dollar, you are fundamentally paying me back with at a 365% APR. Say what? Yup. Now let's say I was the bank and you wrote a bad check for $100 (yes, people still write checks), and I charged you a $35 overdraft fee. Guess what, you just paid me a 135 percent increase over the original amount. Why am I playing ECON 101? Because I think when it comes to what some have labeled as "payday" loan legislation, we need to take a step back from the histrionics and have a grown-up conversation.

The legislation, HB 1319, would allow for small installment loans for these folks of limited means who don't use banks and credit unions the way we do. Now save your "payday loan" outrage, because I'm not a fan of them either, but I do think there needs to be a way for these folks to get access to credit because I doubt if you're going to see them at the drive-thru window of the credit union.

HB 1319 would allow low-income Hoosiers to borrow between $605 and $1500. It limits fees and interest charged. There's an origination fee of 15% on the first $605 and 7.5% on any additional balance. There's a monthly maintenance fee of $8 per $100 of original principal every month, which can be refunded under certain circumstances. There are no balloon payments or prepayment penalties. Payments are amortized. And it helps those Hoosiers build credit by supporting financial literacy programs offered through the Secretary of State's Office. This isn't the old "payday loan" scam where you're basically mortgaging everything but your first and second born, but they can be used as collateral. Read more at WIBC

Consumer Credit Market Concludes 2017 on a High Note

Q4 2017 TransUnion Industry Insights Report reveals strength is due to increased access to loans, greater usage and relatively low delinquency levels

The consumer credit market concluded 2017 on a high note with strong performance across multiple credit products. TransUnion's (NYSE: TRU) newly released Q4 2017 Industry Insights Report, powered by PramaSM analytics, found that most indicators point to a healthy credit market, though there are a few signals that lenders are being more active in rebalancing portfolio risk.

"Consumers continue to gain access to more credit, and balances are generally rising at a healthy clip," said Matt Komos, vice president of research and consulting at TransUnion. "For the most part, consumers are paying their debts in a timely fashion, which has been especially evident for mortgages and personal loans. This is likely a result of the strong economy, which has helped consumers manage their personal balance sheets and build confidence."

During 2017, TransUnion observed 20.3 million more accounts spanning auto, credit card, mortgage and unsecured personal loans. The growth is likely due to continued declines in the unemployment rate, which decreased to 4.1% in Q4 2017 compared to 4.7% in Q4 2016. Read more at TransUnion

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Bankers seek public hearing on credit unions tax exemption

The Independent Community Bankers of America (ICBA) is requesting that the Senate Finance Committee hold a hearing on the credit union industry's tax-exempt status.

In a letter to committee chairman Sen. Orrin Hatch (R-UT), ICBA officials said credit unions not fulfilled their public mission and pose a threat to the American tax base.

"Today's credit unions are virtually indistinguishable from tax-paying community and regional banks," ICBA President and CEO Camden Fine wrote. "It is widely understood but rarely acknowledged that the tax exemption has outlived its purpose. Now is the time to have that discussion."

Fine expressed concerns that credit unions have strayed from its mission to serve people of modest means with a "common bond." He supported the concerns Hatch expressed about credit unions in a recent letter to CUNA.

Senate Finance Chairman Orrin Hatch (R-UT) to the National Credit Union Administration (NCUA) expressing concern that credit unions may be operating beyond their tax-exempt purpose.

"ICBA thanks Sen. Hatch for speaking out against the tax-exempt credit union industry, which for too long has enjoyed the benefits of competing with tax-paying community banks," Fine wrote. "Sen. Hatch's comments echo ICBA's belief that the credit union model has become outdated and that its charter, purpose and tax-exempt status should be reviewed by Congress."

The fight between Elizabeth Warren and Trump's budget director is starting to get ugly

The war of words between Sen. Elizabeth Warren and the Trump administration's budget director reached a fever pitch on Friday as the two sides clash over rules on payday lenders.

In a letter to Warren on Friday, Office of Management and Budget Director Mick Mulvaney pushed back against the Massachusetts Democrat after she questioned some of his decisions as head of the Consumer Financial Protection Bureau.

Warren was instrumental in the creation of the CFPB, which was set up to protect consumers against financial fraud by large institutions. Mulvaney- who has been critical of the CFPB in the past - was named by President Donald Trump to lead the agency after its former director, Richard Cordray, stepped down. Warren was not a fan of the selection.

The senator took particular issue when the CFPB, reportedly at the direction of Mulvaney, dropped investigations into payday lenders that were charging interest of up to 900% on loans, and put a new rule to regulate these lenders on hold. Read more at BUSINESS INSIDER

Amscot Financial Contributes Mini-Grants to 10 Non-Profit Service Groups

February 26, 2018.  Amscot Financial, a leading provider of convenient, consumer-oriented 
financial services, recently awarded mini-grants of $100 to $2,000 in support of 10 different 
non-profit service organizations located in the Florida communities where the company 
serves several million consumers.

"At Amscot, we want to be more than just a good business. We want to be a neighbor that 
stays involved in the community," says Ian MacKechnie, Founder and CEO of Amscot 
Financial. "Helping local organizations is a good way to do that."

Mini-grants went to the following organizations:

Why Employees' Financial Wellness Matters to Small Businesses

The links between financial stress and work-related issues - productivity, absenteeism, and sick days- are well-documented and widespread. More than half (53%) of workers report being stressed about their finances, and nearly one in three employees says that issues with personal finances have been a distraction at work.1 For small firms, every employee must be present and focused to keep the business humming.

Here are three steps small business owners can take to help improve employees' financial wellness and the company's bottom line.
Determine what employees need to learn. Never assume you know what's going on in employees' financial lives. Some highly-paid employees may be saddled with student loan debt, and others may be spending significant money to care for an elderly relative or a sick child. Conduct a quick survey to find out what kinds of financial concerns or issues most interest your workers.

Start with the basics. Focus on budgeting skills, debt repayment, building emergency funds and basic retirement planning before jumping into investment options. Consider asking your accountant, financial planner or 401(k) provider to make presentations at a monthly "lunch and learn" event, or leverage online education. For instance, organizations like the National Financial Educators Council offer financial literacy programs that your employees can complete on their own time.

U.S. Treasury recommends preserving Dodd-Frank bank resolution regime

WASHINGTON, Feb 21 (Reuters) - The U.S. Treasury Department has recommended preserving powers created after the 2007-2009 financial crisis that allow regulators to step in and wind down a failing bank.

In a closely watched report published on Wednesday, the administration of Republican President Donald Trump favored keeping the "orderly liquidation authority" (OLA) created by the 2010 Dodd-Frank law, in a win for big banks that had been lobbying to keep it.

The OLA affords bank regulators special powers to wind down a complex financial institution in an orderly manner. The Treasury said it should be kept as "an emergency tool for use under only extraordinary circumstances."

The Treasury also urged Congress to expand the U.S. bankruptcy code to accommodate large financial institutions as a first resort in cases of failure. Read more at CNBC

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