NEWS: August 24

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GOP governors question whether consumer chief violated Hatch Act

The Republican Governors Association (RGA) wants to know what Consumer Financial Protection Bureau (CFPB) Director Richard Cordray has been up to the past two months.

The group is pushing Cordray to release his official schedule for June and July, which it believes contains key dates and events in which he has reportedly discussed his intentions to run for Ohio governor.

Ohio Supreme Court Justice Bill O'Neill told Politico in July that it was clear from a conversation with a mutual friend that Cordray was planning to launch a campaign to replace retiring Republican Gov. John Kasich.

RGA said it's been three weeks since it filed its first Freedom of Information Act request for Cordray's schedule. The CFPB website only has Cordray's schedule posted from January through May.
"It's time for Richard Cordray to stop hiding his schedule and come clean," said RGA Spokesman Jon Thompson.

"Cordray should quit stalling, release his schedule, and prove to taxpayers if he engaged in political activity that violated the Hatch Act. Ohioans deserve to know if Cordray used his Consumer Financial Protection Bureau office improperly for political gain."

The conservative group America Rising Squared filed a formal complaint with the Office of the Special Counsel (OSC) last week against Cordray calling for a investigation into his alleged Hatch Act violations.

"For Richard Cordray to use his perch at the CFPB to plot a run for Governor violates his pledge to taxpayers and proves that the only thing he cares about is advancing his political career," Brian Rogers, the group's executive director said in a statement. Read more at THE HILL
Wells Fargo Accused Of Closing Accounts Customers Needed

Wells Fargo, the embattled national bank, disclosed in a Securities and Exchange Commission (SEC) filing that the Consumer Financial Protection Bureau (CFPB), a government regulatory agency, is investigating if it closed accounts of customers that needed them.

According to a news report in Reuters, citing the regulatory filing, the CFPB is looking into whether Wells Fargo hurt customers by shutting off their access to accounts with money they needed to access. In some of the cases, the actions happened after customers' accounts were breached.

Reuters reported that a review by the news services uncovered several cases in which customers said they experienced financial hardship after Wells Fargo froze or closed an account unexpectedly. Reuters stated that some of the complaints included claims there were fraudulent deposits made to accounts. Some customers said they were victims of identity theft, and, as a result, Wells Fargo canceled their accounts but wouldn't reopen them or give them new ones.

One of the account closings happened when a hacker breached it and changed the personal information of the client, resulting in Wells Fargo sending funds to the incorrect address, reported Reuters. "I moved money from my mother's savings account into her checking account the day before she passed away," one Wells Fargo customer wrote, according to Reuters. "This checking account has been 'locked' by the fraud department for almost three months ... Now her debts are delinquent and mortgage about to go into foreclosure." Read more at PYMNTS.COM
CFPB report details who gets hit by overdraft fees

Perhaps the most despised bank fee among consumers is the overdraft fee, an ugly $30 (or so) insult to your wallet.

Many consumers have been hit with it at one time or another, usually when it's the absolute last thing they need. The depth of consumer disgust for such a high fee is, alas, equally matched by the abiding love banks, thrifts and credit unions have for the billions of dollars in annual revenue they provide.

Overdraft services began decades ago as a simple service for customers without calculators: If you didn't have enough money to cover a check, your bank saved you from bouncing it.

But we're talking banks, here, so nothing is for free. A report issued this month by the Consumer Financial Protection Bureau shows just how much of a bite overdraft fees can take out of some consumers, and provides new prototype disclosure forms it hopes banks and credit unions will adopt.

The CFPB examined overdraft fees on debit cards and ATM withdrawals for people who frequently find themselves overdrawn on their checking accounts.

Among those who paid 10 overdraft or nonsufficient fund (NSF) fees a year, those who opted into a bank's overdraft service paid as much as $450 more in fees than those who had similar behavior but who didn't opt in to overdraft coverage. Those consumers made up 9 percent of the 40 million accounts the CFPB studied at a small number of large banks, and they paid 79 percent of the banks' total overdraft and NSF fees. Read more at ST LOUIS POST-DISPATCH
Richard Cordray defends CFPB arbitration rule amid speculation he plans to run for Ohio governor

Richard Cordray, the head of the Consumer Financial Protection Bureau, went on the offensive Tuesday to publicly defend an agency rule that has roiled Wall Street by allowing consumers to band together and sue their banks.

The "arbitration rule" takes aim at the fine print in many of the agreements that consumers sign when they apply for credit cards or bank accounts. These agreements typically require customers to settle any disputes through arbitration in which a third party rules on the matter. A new CFPB rule would weaken a company's ability to make arbitration mandatory, allowing more people to file or join a lawsuit to press their claim.

"In truth, by blocking group lawsuits, mandatory arbitration clauses eliminate a powerful means to get justice when a little harm happens to a lot of people," Cordray said in an editorial in the New York Times.

Arbitration is shaping up to potentially be one of Cordray's last major battle as the head of the CFPB, a watchdog agency established after the Great Recession to police the financial sectors' interactions with consumers. The agency - and Cordray - have been in the crosshairs of Republicans for years. The agency needs to be reined in and become more accountable to Congress, critics say. Read more at THE WASHINGTON POST
Community Involvement
Charitable Contributions to Date by Amscot and the MacKechnie Family: 
$7, 818, 120 .00

Amscot Financial is committed to serving its communities. We partner with service organizations throughout Florida to address critical needs in our State. To date Amscot
and its founders, the MacKechnie family, have given over $7 m to Florida non-profits.

U.K.: Doorstep And Payday Lending Interest Rates Are Too Low - Look At Provident Financial

Provident Financial's recent results give us an interesting method of looking at that campaign against payday loans and doorstep lending. For we have been regaled with complaints, shrieks even, that the interest rates being charged are too high. Much of this coming from people simply unaware about how APR is calculated but still, the campaigns have been successful in some jurisdictions. At which point we find out that Provident Financial is losing money--this being an obvious indication that the interest rates are too low. Never fear, there will be no walk back by those campaigners, no one ever does acknowledge the effects of what they demand when in full throttle moral mode:

The chief executive of subprime lender Provident Financial has quit as the firm warned of heavy losses following a period of "substantial under-performance".

If you're lending money and losing money by doing so then you're not charging enough for lending money, are you--your interest rate is too low.

It says it now expects to make losses of £80m to £120m as its debt collection rates have dropped to 57% compared with a previous rate of 90% in 2016.

There always will be loans which are not repaid, the interest rate charged upon all loans has to cover that portion which are not repaid:

It said: "The extent of this underperformance and the elongated period of time required to return the performance of the business to acceptable levels invalidates previous guidance. The pre-exceptional loss of the business is now likely to be in a range of between £80m and £120m."
Dreher Tomkies LLP
Banks are cutting back on lending to the riskiest borrowers

Banks are scaling back on lending to Americans with the lowest credit scores, according to a study from TransUnion.

Lenders processed fewer new personal loans, auto loans, and credit cards for subprime borrowers year-on-year in Q2 for the first time since 2012.

Lenders tightened their standards after the housing crisis a decade ago following several years of reckless lending to subprime borrowers. As the economy rebounded, they opened up access to the subprime part of the market. This new study shows that the trend is turning again.

But now is not a comparable time period to the financial crisis, said Ezra Becker, the senior vice president of research and consulting at TransUnion.

It would be alarming and a sign of another credit downturn if lenders pulled back on their underwriting and delinquencies still continued rising, Becker said. "Delinquency levels are still far below historical norms," he told Business Insider.

This pullback "is a great illustration of the kind of job lenders do on a regular basis to evaluate their portfolios, take a look at their risks and opportunities, and find and maintain that balance point."

Additionally, missed payments on subprime auto loans started to rise, and so the natural response was to pare lending in that segment.

Just like it doesn't signal economic trouble, this change in the trend is not a reason for people with lower credit scores to be more concerned, Becker said. "Subprime consumers are always in recession," he said. "And in fact, when recession hits the economy more broadly, they actually don't see delinquency rates rise all that much because in the subprime space, they are already high." Read more at BUSINESS INSIDER
Incite Business
Australians are still taking out a lot of payday loans

$271.5 million in revenue for Cash Converters despite regulatory crackdowns on short-term lending.
It seems Australian appetites for alternative credit remain strong despite the tightening of regulations on promoting those loans in Australia over the last year.

Cash Converters has announced its results for the 2017 financial year. The lender posted revenues of $271.5 million, down 12.4% on the previous corresponding period.

This dip in profit is actually quite low given tougher market conditions. Just before the start of the financial year in April 2016, an initial government review of payday loan laws was conducted. The government then announced its support for the "vast majority" of the review's 24 recommendations either in part or in full, with legislation expected this year.

Th crackdown continued in November with the Australian Securities and Investments Commission (ASIC) banning direct debit fees for payday loans. Then in January, Google enacted a global payday loan ad ban.

Interestingly, the ad ban appeared to increase the cost of payday loans in Australia as demonstrated by a analysis. The trend towards larger loans is visible in Cash Converters' results as well. Read more at FINDER.COM.AU
CFSA Conference
The Workplace Is a New Frontier for Financial Wellness. Will It Pan Out?

Traditional notions of the "employee benefits package" are changing as the field experiences a rapid expansion in both the number and diversity of financial wellness programs (FWP) marketed for the workplace. It is no secret that even as the economy continues to improve after the Great Recession, American workers still face significant financial insecurity and stress. It is estimated that one in four adults has no money saved for an emergency and nearly one in three is not saving for retirement. There are a variety of factors that contribute to this - several of which involve conditions at work. This has not escaped the attention of many employers who are looking for new ways to improve financial stability for their employees.

FWPs have not just gained popularity among employers but also researchers and practitioners in the asset-building community. The workplace is seen as a more scalable and sustainable solution to financial insecurity, particularly for low- and moderate-income workers. After all, the workplace is where money is earned and distributed, creating a natural environment to manage and appropriate funds before it walks out the door. Read more at ASPEN INSTITUTE

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