AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

April 12, 2018

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CFSA FILES LAWSUIT AGAINST CFPB OVER SMALL-DOLLAR LOAN RULE

The Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas today filed a lawsuit in the U.S. District Court for the Western District of Texas, Austin Division, against the Consumer Financial Protection Bureau (CFPB or Bureau) seeking to invalidate the Bureau's final rule on "Payday, Vehicle Title, and Certain High-Cost Installment Loans." The lawsuit alleges that the rule violates the Administrative Procedure Act (APA) because it exceeds the Bureau's statutory authority and is arbitrary, capricious, and unsupported by substantial evidence. The lawsuit also argues that the CFPB's structure is unconstitutional under the Constitution's separation of powers because the agency's powers are concentrated in a single, unchecked Director who is improperly insulated from both presidential supervision and congressional appropriation, and hence unaccountable to the American people.

"The Final Rule rests on unfounded presumptions of harm and misperceptions about consumer behavior, and was motivated by a deeply paternalistic view that consumers cannot be trusted with the freedom to make their own financial decisions," the plaintiffs' Complaint states. "In fact, the Bureau ignored and attempted to discount the available research showing that short-term, small-dollar loans result in improved financial conditions, not harm, because in many cases they are better than the alternative options available to consumers."

In June 2016, the CFPB proposed a rule that would virtually eliminate small-dollar, short-term loans. These loans provide a financial lifeline for millions of consumers to weather unexpected financial hardships, with approximately twelve million Americans per year relying on small dollar loans. During the CFPB's public comment period, more than one million customers voiced their opposition to the rule through submissions that included hundreds of thousands of handwritten comments. In addition to consumer opposition, the Small Business Administration's Office of Advocacy expressed concerns about the rule's harmful impact on small businesses nationwide. Despite the overwhelming opposition, the Bureau finalized the rule on October 5, 2017, without taking these concerns into account. Read more at Community Financial Services Association of America (CFSA)

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In front of Congress Mick Mulvaney says CFPB's new priority is 'to recognize free markets and consumer choice'

Mick Mulvaney took his seat before a congressional committee Wednesday for the first time since his controversial appointment to be the nation's top consumer financial watchdog and boldly declared he didn't have to say a word.

"I believe it would be my statutory right to just sit here and twiddle my thumbs while you all ask questions," Mulvaney, acting director of the Consumer Financial Protection Bureau, told the House Financial Services Committee.

The 2010 Dodd-Frank law that created the bureau in the wake of the financial crisis only requires the bureau director to appear before Congress, but doesn't specifically mandate answering questions, said Mulvaney, a Republican and outspoken critic of the agency.

Still, he went on to answer questions, many of them confrontational ones by Democrats who told him they believed he had been unlawfully appointed to the job last fall by President Trump. But Mulvaney's assertion that he didn't have to - which Democrats contested - was part of a strategy since taking the job of trying to highlight his view that the independent bureau is a rogue agency that should be reined in by Congress.

"It's not accountable to you. It's not accountable to the public. It's not accountable to anybody but itself," Mulvaney said.

Republicans, most of whom have opposed the bureau since it was created by the 2010 Dodd-Frank Act in the wake of the financial crisis, praised Mulvaney for his actions since taking the job to reduce the bureau's activities. Read more at LOS ANGELES TIMES

Insight.tm

Do consumers have more trust in banks? by Walt Wojciechowski

Totaling 23 million, according to the most recent figures available from the Federal Deposit Insurance Corporation, the nation's unbanked have a variety of reasons for why they're bankless - whether that is a recent or a long-standing status. For most of them, they don't use traditional banking services - such as a checking or savings account - because they don't have enough earnings to necessitate it.

For around 10 percent, though, they're unbanked because they don't trust these financial institutions - perhaps influenced by the financial crisis that sent the U.S. economy into a fiscal tailspin.

Now that reforms are in place - implemented in part by the formation of oversight organizations like the Consumer Financial Protection Bureau, created through the Dodd-Frank Wall Street Reform and Consumer Protection Act - have Americans become any more trusting of banks? New data appears to indicate as much. At the same time, though, the data clearly suggests there's plenty of room for banks to improve to more fully gain their trust and assurance.

Roughly 33 percent of respondents in a Gallup poll conducted in June, said they have confidence in the nation's major financial institutions. That's a rather sharp increase from 2016, when 27 percent had similar sentiment and 28 percent in 2015.

Institutional confidence lagging since 1990s
Historically, however, Americans have never been altogether bullish about banks, or financial institutions as a whole, for that matter. For instance, in 2001 - one of the better years for the country's economy - 43 percent of consumers said they had good feelings about the country's major institutions, well south of a majority. And in the poll's history, which was first undertaken by Gallup in 1993, the long-term average has been at 37 percent. For the purposes of the survey, "institutions" include the U.S. Congress, public schools, U.S. military, small businesses, big businesses and banks, among others. Read more at MICROBILT NEWS

Employment Skip Tracing

A consumer watchdog reportedly wants to fine Wells Fargo a record $1 billion for its lending abuses

The U.S. consumer watchdog is seeking a record fine against Wells Fargo & Co for auto insurance and mortgage lending abuses that could exceed several hundred million dollars, according to three sources with knowledge of the plans.

The penalty would be the first issued by Mick Mulvaney, who U.S. President Donald Trump tapped in November to head the Consumer Financial Protection Bureau (CFPB). The fine would fulfill the president's vow to hit the country's third-largest lender hard.

Mulvaney is eyeing a penalty that would dwarf the $100 million the CFPB fined Wells Fargo in September 2016 to settle its phony accounts scandal, said two sources familiar with the talks. That 2016 fine had been the CFPB's largest ever.

Settlement terms have not been finalized but Mulvaney is pushing for a figure as high as $1 billion, said two people with knowledge of the discussions.

The Office of the Comptroller of the Currency and Wells Fargo declined to comment. A spokesman for the CFPB did not respond to a request for comment. Read more at REUTERS

Dreher Tomkies LLP

U.S. senate panel plans to repeal auto lending rules: Toomey

WASHINGTON (Reuters) - U.S. Senate Banking Committee Republican Pat Toomey said on Tuesday the panel plans to repeal the Consumer Financial Protection Bureau's indirect auto lending and leveraged lending rules in the coming weeks.

The agency conceived to stamp out predatory lending must pull back from "unfair" oversight of the finance sector, he added.
"We need to kill this thing all together," the Pennsylvania lawmaker said of the CFPB, faulting the agency and its former director for layering on too much bureaucracy.
"Cordray is gone. What an enormous improvement," Toomey said of Richard Cordray, who led the CFPB under President Barack Obama and resigned in November.

Mick Mulvaney, President Donald Trump's budget director, is leading the CFPB until a permanent director is chosen.

Drivers who use indirect auto loans are financed through a dealership. Those dealers are backed by banks.  In March 2013, the CFPB limited loan markups and compensation for dealers on auto loans - specifically on the basis of race, national origin, or credit score.
Toomey said the senate banking committee would scrap that rule.

In October, the Government Accountability Office endorsed Toomey's view that Congress has the power to revoke rules for auto loans and leverage lending, a type of risky credit that can be backed by several banks. Read more at REUTERS

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MerchantBoost Launches Bank Account Validation Service Suite

MerchantBoost, the live data solution provider, has launched Bank Account Validation
(BAV), a comprehensive service suite that addresses all aspects of verification associated with consumer bank accounts. This suite is designed to combat fraud, ensure compliance and improve lenders' overall business performance.

MerchantBoost's BAV solution is the only suite offered by a single vendor, that can impact the challenges that lenders face with consumer bank account information, ID, fraud and compliance. The innovative suite is made up of non-credentialed services that can be combined and configured according to the lender's needs, based on the following components: Ownership, Balance, Funds and Status. Together, these services can establish consumer account ownership, validate consumer risk, determine funds availability and the overall risk of the bank account.

The BAV suite is vital to the lending industry because it provides critical information on a consumer's
bank account. If a bank account is not valid, does not belong to the person applying for a loan, or is
known to have negative characteristics, then the lender's operations and overall business performance are impacted. This suite is one of many solutions MerchantBoost offers to help lender's make better decisions on their borrowers, providing them with the key information they need to know their prospective customer's. Read more at MERCHANT BOOST

National Debt Holdings

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         Read more at NATIONAL DEBT HOLDINGS

A_S Management

Oregon Amendment Clarifies New Debt Collection Requirement Only Applies to Purchased Debts

The recent amendment resolves uncertainty about who is required to provide certain information to the consumer.

Last summer, Oregon Gov. Kate Brown signed H.B. 2356 into law. The legislation, enacted per the request of the state's attorney general, required debt buyers to obtain a license from the Oregon Department of Consumer and Business Services (DCBS). This legislation also included procedural requirements for collection actions taken by debt buyers and debt collectors working on the debt buyer's behalf. However, a small section of the statute (Oregon Revised Statute 646.639(2)(t)) caused some confusion as its wording appeared to indicate that all third-party debt collectors, as well as debt buyers and the debt collectors working for them, must supply the consumer with certain information within 30-days of a consumer's request

On April 3, Oregon's governor signed S.B. 1553, which clarifies the intended scope of this requirement by amending Oregon Revised Statute 646.639 to read:

(2) A debt collector engages in an unlawful collection practice if the debt collector, while collecting or attempting to collect a debt, does any of the following: Read more at ACA INTERNATIONAL

CFSA Conference _ Expo Compliance School

HEAD MICK MULVANEY WILL PUSH FOR LEGISLATIVE CHANGES TO HAMPER THE AGENCY HE RUNS

CONSUMER FINANCIAL PROTECTION Bureau acting head Mick Mulvaney plans to push for legislative changes to the structure of the agency he helms, all with an eye toward hemming in its authority, according to a draft CFPB document reviewed by The Intercept.

Mulvaney will be asking Congress to approve four changes, all of which appear to be aimed at reducing the bureau's independence and increasing its reliance on Congress. The changes would be made by altering the Dodd-Frank Wall Street Reform and Consumer Protection Act.

First, Mulvaney will ask Congress to fund the bureau through congressional appropriations. The CFPB currently is funded by the Federal Reserve. This change would make it easier for Congress to cut funding for the agency, or to bar it from spending money to enforce certain rules.

Then he will ask that Congress be required to affirmatively approve major rules. It is unclear what would count as a major rule, but given the inability of Congress over the past decade to do much in the way of consumer protection, the change would have a clear bias in favor of industry.

Third, he will ask for a legislative change that guarantees that the director answers to the president. (This appears to be in response to a controversy last year over whether President Trump could unilaterally install Mulvaney as acting head of the CFPB without going through Senate confirmation.).

Finally, he is asking for the creation of an independent inspector general for the CFPB.
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