April 5, 2018

Acting consumer bureau leader asks Congress to limit its power

The acting director of the Consumer Financial Protection Bureau (CFPB) on Monday asked Congress to restrain the power of his agency.

Trump budget director Mick Mulvaney, who is pulling double duty as the acting CFPB chief, asked Congress to take control of the bureau's funding, make his successors fireable at will by the president, install an inspector general and give itself the sole power to finalize the bureau's rules.

All four measures would be drastic blows to the CFPB's power and independence.

They are in line with the views that Mulvaney had as a member of Congress. In fact, Mulvaney voted for the changes as a Republican lawmaker from South Carolina in 2017.

Mulvaney wrote in the CFPB's semiannual report that "Congress established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism."

"The Bureau is far too powerful, and with precious little oversight of its activities," wrote Mulvaney, who as a congressman had opposed the CFPB's existence. Read more at THE HILL

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The CFPB Is Too Powerful, Says Head of CFPB

Mick Mulvaney is a rarity: an executive branch official who pleads with Congress to take away his power. The rest of us should listen.

The Consumer Financial Protection Bureau is too powerful and lacks meaningful oversight, says Mick Mulvaney, the acting director of-yes-the Consumer Financial Protection Bureau.

It's not often that an official calls for a reduction in his own office's powers, but that's what Mulvaney has done in a semi-annual report to Congress about the bureau's activities. Since taking over as the head of the CFPB in November, Mulvaney has limited the agency's activities. But he says Congress should address a fundamental mistake it made when creating the CFPB as part of the Dodd-Frank Act in 2011.

"By structuring the Bureau the way it has, Congress established an agency primed to ignore due process and abandon the rule of law in favor of bureaucratic fiat and administrative absolutism," Mulvaney writes.

The report, submitted to Congress on Monday, details CFPB actions from April through September 2017, when Obama appointee Richard Cordray was running the agency. Aside from periodically having to report to Congress, the CFPB has little oversight from other branches of government, an arrangement that was meant to insulate the bureau from political influence but has instead turned it into a omnipotent regulator. Congress does not even have budgetary authority over the bureau, which is funded directly from the Federal Reserve. Read more at REASON

Complaints About Credit Reporting Agencies Almost Doubled in 2017: CFPB

Consumer grievances regarding credit or consumer reporting made up 31 percent plurality of all complaints

Complaints to the Consumer Financial Protection Bureau about the conduct of credit reporting agencies almost doubled in 2017 compared to the previous year - in part because of last year's massive data breach at Equifax Inc., according to a new CFPB report published Monday.

The Consumer Response Annual Report shows that consumer grievances regarding credit or consumer reporting comprised a 31 percent plurality of all complaint types received in 2017, followed by debt collection (26 percent) and mortgages (12 percent).

The bureau received a total of approximately 100,000 complaints about the credit reporting sector in 2017, according to the 45-page report, up from 53,900 the previous year and 54,900 in 2015. Since the CFPB started compiling grievances in July 2011, the credit reporting industry has been the subject of 281,100 complaints, according to the independent federal regulator that was established by the 2010 Dodd-Frank Act.

Fifty-five percent of complaints about credit or consumer reporting last year dealt with receiving incorrect information on a report, down from 74 percent in 2016. One-fifth of consumers who submitted complaints about the industry had a "problem with a company's investigation into an existing issue," according to the CFPB, up from 11 percent in 2016.

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NEW MEXICO: Mayor proposes employee loans to offset predatory lenders

A few months after a new annual 175 percent cap on small-loan interest rates in New Mexico went into effect, Mayor Alan Webber is proposing a short-term loan program to help municipal workers avoid payday lending businesses viewed as predatory by consumer advocates.

Webber's proposal, his first piece of formal legislation, would allow city employees to take out "emergency short-term small loans" and pay them back over a year's time through direct paycheck deductions, according to a city fiscal analysis.

This would preclude or at least discourage employees' use of storefront lenders, who, the analysis states, "charge often exorbitant rates that can result in a debt trap that is difficult to overcome." Such a program might also mitigate workers' financial distress that could otherwise impact retention.

If the city indeed takes up Webber's initiative, it would join at least seven counties and a few other local governments in New Mexico that make short-term loans available to employees, a group that has grown in recent months. Read more at The Santa Fe New Mexican

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Average American owes $16K in credit card debt. by Walt Wojciechowski

The unbanked and underbanked may not have as many financial services available to them as others, but they also don't have something plaguing others: credit card debt. The same can't be said for the average American, according to newly released figures.

The typical U.S. household owes roughly $16,000 in payments on their credit cards, based on recent data crunched by NerdWallet. Additionally, credit card holders pay out almost $1,300 per year just on credit card interest fees, an average that is expected to jump in the coming months, given that the Federal Reserve has raised interest rates by an additional quarter percent.

Sean McQuay, credit and banking expert at NerdWallet, noted that many Americans have fallen behind the eight ball due to the cost of living increasing faster than wages - although income levels have started to pick up the pace more recently in states with low unemployment rates, according to The Wall Street Journal. This has led a number of Americans to borrow money by putting charges on their credit cards.

"While credit cards are an attractive option to cover today's purchases, they come at a high cost - 18.76 percent per year on average," McQuay explained. "Paying down credit card debt will mean changing spending habits or increasing earning power, both of which may be difficult adjustments, but  Read more at MICROBILT

Dreher Tomkies LLP

Finding the Balance Between Recovery Liquidation Performance and Regulatory Compliance

Creditors in the early 2000's were very focused on one thing, portfolio liquidation performance. As time has passed and rules have changed, today the focus is split. Now, rather than just looking at the raw liquidation data, creditors now have a balance to strike, a balance between performance and compliance.

Understanding the Need for a Balance
Performance and compliance are not polar opposites, but strict compliance often creates additional steps to processes or other barriers to recovering the balance of an account. Since the creation of the CFPB (Consumer Financial Protection Bureau) compliance has taken over the driver's seat of many debt buying organizations. The threat of receiving a $10 mm fine for non-compliance has become a real threat and for many businesses protecting against that type of consequence has taken priority over the ability to perform the businesses core function, liquidating receivables accounts.

Finding the Right Balance for Your Business
With these two forces each calling for priority, each business needs to find the right balance for them. Compliance is very important, but if you are not collecting any money, your business cannot survive. That is not to say that you should consider breaking the law, but it might require your business to make investments into the technology and tools needed to automate compliance functions, so you can continue to concentrate on the core of your business. Finding the right balance for your business can be a difficult task and the decisions you make should be driven by the type of business that you are, which types of accounts you are working and other factors.
National Debt Holdings

Editorial: A consumer watchdog agency is about to be defanged

There's no better way to hobble a key federal agency than by putting someone in charge who wants to incinerate it. That's the game plan for Mick Mulvaney, the acting head of the Consumer Financial Protection Bureau, an entity he wants obliterated as an independent watchdog.

In his previous role as a Tea Party congressman, Mulvaney denounced the agency for its tough oversight of banking and consumer issues. Since President Trump put him in charge, he's begun the demolition work by easing back on investigations. Now he's signaling further steps that will gut the agency's power in a more sweeping way.

In a message to Congress, he suggested nothing less than an overhaul of its finances and design. The consumer entity was created in 2010 in the wake of the financial meltdown that nearly wrecked the global economy. Its independent stance is protected with its budget coming from the Federal Reserve, eliminating congressional meddling. Its director can't be fired except for serious causes, not politics or personality. The bureau's investigative powers at the heart of its work are insulated from Capitol Hill interference.

Mulvaney wants to roll back these features, offering appealing thoughts about bureaucratic overreach and an uncontrollable, rules-happy fiefdom that punishes the banking and business worlds. He's expected to sound these chimes at a Washington hearing next week.

Finfit's financial wellness is catching on

David Kilby wants to leave his competitors in the dust.

And he believes he's already doing a good job of it.

The president of Virginia Beach-based Finfit, an online platform that provides financial wellness resources and services to employees, started the company in 2008 and had 17 clients at the end of that first year.

"That was the extent of all the friends that I had that owned businesses," he said.

By January 2016, the company had around 300 clients and 12 months later, it had increased its client base to nearly 1,700.   Now FinFit is working with about 100,000 employers.

Kilby said the company is the largest provider of financial wellness in the nation and that its growth is partly due to how much the industry is catching on with employers. 

"We're working with 100,000 employers. That's how big we've become and what's happening with financial wellness," he said. "The thing that I get really excited about is we're building a business that helps people ... We're building a business that is able to help the individual out there deal with the financial stress, the financial challenges."      Read more at INSIDE BUSINESS

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Critical employment information
As a collection attorney, finance company, debt buyer or other collection focused organization, you know that a critical component of judgment collection is having a constant flow of verified employment information on the customers you are seeking collections.

What Borrowers Do When Payday Loans Go Away

For South Dakota consumers, payday loans used to be available at storefronts, but since late 2016, this access and annual interest rates have been cut.

Following an intense campaign highlighting the payday loan cycle borrowers endure with extreme fees and interest, South Dakota voters approved the Payday Lending Initiative IM 21 in November 2016. This measure limited the annual interest rate of short-term loans (one week or a month) to 36 percent. Soon after its passage, South Dakota's short-term loans became unprofitable, and today this industry is almost nonexistent in the state, reported KELO.

While IM21 curtailed high-interest payday lending, proponents of the measure believe people needing cash quickly haven't gone away; they are just going to sources offering lower interest rates such as credit unions and banks, employers, or even family. In reality, many nonprime borrowers in South Dakota aren't doing that.

High-Risk Emergency Loan Options
Although South Dakota limited payday lending, it didn't outlaw it. And some borrowers are hitting online lending agencies found through Google searches under "payday loans"-a familiar option for South Dakota consumers, according to KELO. This alternative carries risks such as a lack of oversight and inconsistent regulation; however, this is a national issue with these lenders.

A report by the Consumer Federation of America found that online payday loans are very high-risk; they are also predisposed to corruption. Furthermore, online payday lenders can legally get access to borrowers' bank and credit union accounts, making deductions without explanation.
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Consumer protection bureau's chief formally asks Congress to slash his agency's power

The head of the Consumer Financial Protection Bureau formally called on Congress to sharply reduce his agency's authority. Among the suggestions he delivered Monday: Any major new rules the bureau makes should be subject to lawmakers' approval.

Mick Mulvaney - who has been an outspoken critic of the consumer protection bureau since before President Trump appointed him as its acting director last year - also wants Congress to change how the bureau is funded, make its director subject to dismissal by the president for any reason and create an inspector general specifically for it.

"The bureau is far too powerful, with previous little oversight of its activities," Mulvaney said in submitting his first report to Congress.

"The power wielded by the director of the bureau could all too easily be used to harm consumers, destroy businesses, or arbitrarily remake American financial markets," Mulvaney said as he sent the bureau's semiannual report to lawmakers ahead of hearings next week, adding that the changes he proposed would "establish meaningful accountability." Read more at LOS ANGELES TIMES

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