January 18, 2018

CFPB says it will reconsider its rule on payday lending

The Consumer Financial Protection Bureau has taken the first step to killing or revising the payday lending rule it finalized only a few months ago.

The watchdog agency said in a statement Tuesday that it intends to "reconsider" a regulation, issued in October, that would have required payday lenders to vet whether borrower can pay back their loans. It also would have restricted some loan practices.

If the rule is thrown out or rewritten, it would mark a major shift for an agency that had zealously pursued new limits on banks and creditors before Mick Mulvaney, President Trump's budget director, became the CFPB's acting director.

Mulvaney took over the top job at the CFPB in November following a leadership scramble. A vocal critic of the CFPB when it was run by President Obama appointee Richard Cordray, Mulvaney since said the agency would cut back on burdensome regulations.

Tuesday's announcement does not amount to a formal repeal of the payday lending rule. But it does cast doubt on whether it will ultimately be implemented.

Payday loans provide those in need with small amounts of cash -- typically between $200 and $1,000. The money needs to be paid back in full when a borrower receives his or her next paycheck, and such loans often come with exorbitantly high interest rates.

Consumer advocates that have supported the CFPB's restrictions on the loans say such transactions often take advantage of people in desperate financial situations.

Mulvaney requests NO funding for CFPB

Every quarter, the Consumer Financial Protection Bureau formally requests its operating funds from the Federal Reserve. Last quarter, former director Richard Cordray asked for $217.1 million. Cordray, an appointee of President Barack Obama, needed just $86.6 million the quarter before that. And yesterday, President Donald Trump's acting CFPB director, Mick Mulvaney, sent his first request to the Fed.

He requested zero.

In a letter to Fed chair Janet Yellen obtained by POLITICO, Mulvaney wrote that the bureau already has $177 million in the bank, enough to cover the $145 million the bureau has budgeted for its second quarter. Cordray had maintained a "reserve fund" in case of overruns or emergencies, but Mulvaney said he didn't see any reason for it, since the Fed has always given the bureau the money it needs. Mulvaney, who is also Trump's budget director, noted that instead of advancing the funds to the bureau, the Fed could return them to the Treasury and reduce the deficit.

"While this approximately $145 million may not make much of a dent in the deficit, the men and women at the Bureau are proud to do their part to be responsible stewards of taxpayer dollars," Mulvaney wrote. Read more at POLITICO
Dreher Tomkies LLP
Mick Mulvaney puts ALL CFPB operations under review

NEW YORK - The Trump-appointed acting director of the Consumer Financial Protection Bureau said Wednesday that he's launching a review of all the federal consumer watchdog agency's policies and priorities.

This is the second major step taken this week by Mick Mulvaney, who took over as acting director in late November, to reshape the bureau. On Tuesday, the bureau announced a review of its recently enacted rules for payday lending.

The review is the clearest sign yet that the future direction of the CFPB, which has existed for less than a decade, will be dramatically different than it was under the Obama administration.

Mulvaney said in a statement Wednesday that he's putting out formal requests for information for all "activities" of the bureau -- effectively the agency's entire operations. Requests for information are a beginning step by federal agencies such as the CFPB to make changes to any rules they may have already put into place. Read more at CBS NEWS
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CFPB Asks Public How It's Doing

The Consumer Financial Protection Bureau (CFPB) under Acting Director Mick Mulvaney is seeking out public comment to ascertain if the government watchdog agency is fulfilling its mission.

In a press release issued on Wednesday (Jan. 17), the CFPB said it is issuing a "call for evidence" to make sure the agency, which was created by the Obama administration, is acting in an appropriate manner to best protect consumers. The CFPB said that in the next few weeks it will publish in the Federal Register a series of requests for information, looking for comments on enforcement, supervision, rulemaking, market monitoring and education efforts. The request for information, said the CFPB, will give the public the opportunity to provide feedback and offer up ways to improve the agency.

"In this New Year, and under new leadership, it is natural for the Bureau to critically examine its policies and practices to ensure they align with the Bureau's statutory mandate. Moving forward, the Bureau will consistently seek out constructive feedback and welcome ideas for improvement," said Bureau Acting Director Mick Mulvaney in the press release. "Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process. I look forward to receiving public comments in response to this call for evidence and encourage all interested parties to participate." Read more at PYMNTS.COM

Federal payday lending rule could face repeal amid new battle

Consumer advocates and business groups are battling anew over the possibility the Trump administration will eliminate a rule enacted to ensure that borrowers who take out high-interest loans between paychecks can pay them back.

Clashing with support for a repeal by business groups, the policy arm of product tester Consumer Reports and other organizations say the so-called payday lending rule finalized last year by the U.S. Consumer Financial Protection Bureau should be fully implemented as soon as possible.

The regulation "targets the most abusive short-term lending practices" while "paving the way for more responsible lenders to emerge with safer alternatives," Suzanne Martindale, senior attorney for Consumers Union, said in a statement.

However, Dennis Shaul, CEO of the payday loan industry group called the Community Financial Services Association of America, said the consumer bureau rule was "crafted on a pre-determined, partisan agenda that failed to demonstrate consumer harm from small-dollar loans."

The escalating debate comes as the federal watchdog, whose leadership shifted from an Obama administration appointee to a Trump administration pick late last year, said Tuesday that it would take a new look at the rule. Read more at USA TODAY
CFPB Statement on Payday Rule
JAN 16, 2018

Washington, D.C. - The Bureau of Consumer Financial Protection (Bureau) today issued the following statement on the Payday Rule:

"January 16, 2018 is the effective date of the Bureau of Consumer Financial Protection's final rule entitled "Payday, Vehicle Title, and Certain High-Cost Installment Loans" ("Payday Rule"). The Bureau intends to engage in a rulemaking process so that the Bureau may reconsider the Payday Rule.

Although most provisions of the Payday Rule do not require compliance until August 19, 2019, the effective date marks codification of the Payday Rule in the Code of Federal Regulations. Today's effective date also establishes April 16, 2018, as the deadline to submit an application for preliminary approval to become a registered information system ("RIS") under the Payday Rule. However, the Bureau may waive this deadline pursuant to 12 C.F.R. 1041.11(c)(3)(iii). Recognizing that this preliminary application deadline might cause some entities to engage in work in preparing an application to become a RIS, the Bureau will entertain waiver requests from any potential applicant." Consumer Financial Protection Bureau
O_Keefe _ O_Malley
5 financial benefit trends to watch in 2018

With employee financial stress on the rise, more employers are realizing that they need to take action.

Half of America's employees are stressed out about dealing with their financial situation, according to the 2017 PwC Employee Financial Wellness Survey. Further, 77% of employees say their stress levels have increased over the past 12 months. Because employees' financial worries often affects an organization's productivity, employers should take a deeper dive into providing financial benefits in 2018.

Doing so will be beneficial for both employees and employers: Employees experience a better financial well-being, while employers get workers who are more productive, engaged and empowered.

So what can we expect in 2018 with financial benefits? Here are five trends I foresee occurring in the new year.

More employers will add financial education benefits. Employees overwhelmingly say they will participate in financial education programs, but many employers haven't jumped on the bandwagon. In 2017, 48% of employers were offering some kind of counseling or instruction about money, according to reports from the Society for Human Resource Management and the International Foundation of Employee Benefit Plans. Look for that to increase in 2018 as further research in the past year confirms the impact employee financial stress has on a company's bottom line including lower productivity, higher absenteeism and more healthcare claims. Employers are realizing it's to everyone's benefit to provide some type of financial education offerings.

Equifax Most Complained About Financial Company In 2017

Equifax may be working to rebuild its reputation after a massive data breach exposed the information of millions of its customers, but the public still has a lot to say about the company. They're turned to the Consumer Financial Protection Bureau (CFPB) to complain in record numbers last year.

According to a research from LendEDU, Equifax accrued more consumer complaints at the CFPB than any other financial company in 2017. Through an analysis of the complaint database, LendEDU discovered that the CFPB received 235,094 complaints about financial services companies last year, with 30,576 having to do with Equifax alone. Excluding the state of North Dakota, complaints about Equifax ranked the highest among financial services companies in every state and Washington, D.C.

"It should not come as much of a surprise that Equifax was the most complained about financial institution in 2017. On Sept. 7, Equifax issued a press release that revealed it was a victim of a major cybersecurity hack that may have impacted at least 143 million consumers. In one LendEDU poll, 54 percent of Americans believed Equifax should have lost its ability to act as a credit bureau following the major hack," wrote LendEDU in the report analyzing the data. "It is quite ... safe to say that there are not many companies more excited than Equifax about the calendar turning to 2018." Read more at PYMNTS.COM
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Potential Nomination of McWatters to Head Up the CFPB Hits a Rough Patch

The potential nomination of National Credit Union Adminstration Chairman (NCUA) Mark McWatters to become the new director of the Consumer Financial Protection Bureau (CFPB) has encountered some unexpected difficulties.

McWatters appeared to be a lock for the job when earlier this month Rep. Jeb Hensarling (R-TX), chairman of the powerful House Financial Services Committee and a long-time critic of the CFPB and its former director, Richard Cordray, endorsed his law school classmate and former aide for the position, and encouraged President Trump to nominate him.

But last week McWatters' failure to recuse himself from a September vote to deregulate AIG, a company in which he owned a small amount of stock at the time, was reported by Politico, raising unresolved questions about whether that failure to recuse violated federal government ethics standards.

This week, public opposition to his nomination increased within the banking industry when Howard Headlee, president of the Utah Banking Association, vigorously objected to his nomination.
Seeks Public Input on Ways to Better Fulfill Statutory Obligations

WASHINGTON, D.C. - The Consumer Financial Protection Bureau today announced that it is issuing a call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers. In coming weeks, the Bureau will be publishing in the Federal Register a series of Requests for Information (RFIs) seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities. These RFIs will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.

"In this New Year, and under new leadership, it is natural for the Bureau to critically examine its policies and practices to ensure they align with the Bureau's statutory mandate. Moving forward, the Bureau will consistently seek out constructive feedback and welcome ideas for improvement," said Bureau Acting Director Mick Mulvaney. "Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process. I look forward to receiving public comments in response to this call for evidence and encourage all interested parties to participate." Consumer Financial Protection Bureau
A_S Management
Majority of banks, credit unions offer mobile banking services, survey finds

According to a new survey from the Federal Reserve, 89 percent of banks and credit unions already offer mobile banking services to their customers.
The report, the 2016 Mobile Financial Services Survey, also learned that 97 percent of financial institutions plan to offer mobile banking services by the end of this year.

Further, the survey, done by the Federal Reserve Bank of Boston, also revealed that more credit unions market mobile banking services to underbanked consumers than banks. Specifically, about one-third of credit unions market mobile banking services to underbanked consumers, with an additional 25 percent planning to market the services in the next two years. Only 22 percent of banks, however, currently market the services, with about the same amount planning to within two years.

The survey also found that 53 percent of credit unions offer mobile credit card account services compared to only 12 percent of banks.

Of the 706 institutions that participated in the survey, 186 were credit unions.

Among other findings, only 24 percent currently offer mobile payments, which allow the use of mobile phone to pay for goods. However, an additional 40 percent plan to offer mobile payments by 2018.

Finally, to protect consumers' information, more than 80 percent said their mobile banking platform has inactivity timeouts, multi-factor authentication, and mobile alerts.
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