May 22, 2018

Tougher payday loan rules to remain in place, for now

Tougher rules governing the payday lending industry, finalized during the last weeks of an Obama-era appointee who led the Consumer Financial Protection Bureau, will remain in place for now after Congress allowed a deadline to overrule them pass without action.

It's a rare victory for consumer groups in the era of President Donald Trump, but the win is expected to be short-lived. Despite the lack of Congressional action, the bureau, now under the control of Trump appointee Mick Mulvaney, has already announced plans to revisit the regulations, which mostly go into effect next year.

Under the Congressional Review Act, Congress had 60 legislative days to overrule the CFPB's new payday lending rules, which were implemented in the final weeks of Richard Cordray's tenure. The deadline expired Wednesday without a vote in either the House or Senate.

The cornerstone of the rules is a requirement that payday lenders must determine, before giving a loan, whether a borrower can afford to repay it in full, with interest, within 30 days. The rules would have also capped the number of loans a person could take out in a certain period of time.

If allowed to go into effect, the rule would have had a substantial negative impact on the payday lending industry, where annual interest rates on loans can exceed 300 percent.

Congress' failure to veto the CFPB's rule was a surprise since Congress has overruled other consumer protections put into place under President Obama, including rules that would have allowed consumers to join class-action lawsuits to sue their banks. Read more at ABC NEWS
Congress is about to loosen the reins on the banking industry. Here's why.

Congress will soon send a bill to President Trump to pare several restrictions that were part of the 2010 Dodd-Frank bill, imposed on U.S. banks and other institutions after the global financial crisis. The new bill has several controversial provisions. Among them: it would relax rules on regional and community banks; free some large banks from the reach of "too big to fail" regulations that placed especially large banks under tighter government supervision; and raise the threshold where banks need to report potentially risky mortgage-lending activity to regulators.

In the Senate, Republicans unanimously supported the measure, the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155); 16 Senate Democrats and Angus King (I-Maine) crossed the aisle to support the GOP push to deregulate. A related bill passed the House almost entirely along party lines, with no Democrats supporting the measure and only one Republican opposing it, and the House is expected to pass the Senate bill along similar lines on Tuesday.

Why is Congress unraveling crisis-era reforms so soon? Although the crisis ended less than a decade ago, rolling back tough rules after a crisis is par for the course, here and abroad.
Dreher Tomkies LLP
Mulvaney's CFPB Rebranding Influenced by Democrat, Emails Reveal

U.S. Senator Elizabeth Warren has accused Mick Mulvaney of waging war on consumers by transforming an aggressive financial regulator into an industry lapdog.

She's not wrong that he's been proactive. Since taking over the Consumer Financial Protection Bureau in November, Mulvaney has dropped investigations into payday lenders, pledged to soften rules and even unveiled a new eagle-emblazoned seal.

But in a surprising twist, it turns out the effort to overhaul the seal was actually initiated by Richard Corday, the Barack Obama-appointed CFPB director who has earned endless praise from Warren and scorn from Republicans. And the seal that Cordray had settled on before he resigned to run for governor of Ohio is very similar to Mulvaney's selection, according to internal CFPB emails obtained by Bloomberg News through a Freedom of Information Act request.
Trump signs repeal of auto-loan policy that targeted racial bias

President Trump has repealed auto-lending guidance from the Consumer Financial Protection Bureau (CFPB), revoking a rule that was put in place to protect minority customers from predatory practices.

Trump's signature on a congressional resolution erases the CFPB's 2013 guidance targeting "dealer markups," the additional interest that is added to a customer's third-party auto loan as compensation for the dealer.

The president signed the resolution in a private White House signing ceremony.

Auto dealers, banks and their allies in Congress said the CFPB policy was an unfair and unfounded attack on an essential and harmless financing tool.

The move caps off an unprecedented use of congressional power, as lawmakers had never before passed such a resolution to revoke informal guidance from a federal agency.

Republicans and a small group of Democrats voted to repeal the CFPB guidance under what is known as the Congressional Review Act (CRA). That law allows a simple majority of lawmakers in the House and Senate to vote to repeal a federal rule; it also bans the agency from replacing a rule with a similar measure in the future. Read more at THE HILL
Employment Skip Tracing
  • Small-dollar loans are available and highly regulated in 35 states
  • Approximately 12 million households use small-dollar loans each year
  • The average fee for a single payment small-dollar loan is $15 per $100 of the loan.
  • The monthly payment for an installment loan depends on the term of the loan.
  • 96% of borrowers find small-dollar loans useful
  • Only 1.5% of all consumer complaints submitted to the CFPB concern small-dollar loans - far below other financial products like mortgages, credit cards, and student loans
  • CFPB complaints about small-dollar loans consistently fell for 22 straight months
  • CFPB and Better Business Bureau (BBB) data indicates that a majority of complaints about small-dollar loans are likely related to scams, not regulated lenders
  • Nearly half of Americans cannot afford a $400 unanticipated expense
  • Community Financial Services Association of America
National Debt Holdings
NCUA Board to Consider Proposed Payday Loan Rules

The agency plans to propose rules modifying the minimum and maximum amount of the loans.

The NCUA board will consider whether to make changes to the rules governing its Payday Alternative Loan Program at its May 24 meeting.

The announcement is not a surprise since the board announced that it intended to make changes to the loan program when it recently released its Spring regulatory update.

The agency plans to propose rules "modifying the minimum and maximum amount of the loans, eliminating the minimum membership requirement, and increasing the maximum maturity for these loans," according to its Spring regulatory agenda.

The board made it clear in its announcement that the new program would not replace the current PAL program but would supplement it. The board also announced at the time that the board will consider whether to create a third loan option, which would include different "fee structures, loan features, maturities, and loan amounts." Read more at CREDIT UNION TIMES
OHIO: House leadership fight could stall payday bill, Senate ready to go

As Republican infighting leaves the Ohio House in limbo, some wonder whether a bill seeking to rein in the payday-lending industry will get derailed by the power struggle.

But the House is not the only chamber interested in dealing with the high-cost, short-term loans that some say are the costliest in the nation. Senate President Larry Obhof, R-Medina, indicated this week that if the House fails to act, his chamber is ready.

"We have a number of people working on it anyway," Obhof said Wednesday, the same day the House canceled a session because Republicans were unable to agree on a new speaker. "If they don't (send us a bill), we'll probably just go ahead and proceed and have someone ... put pen to paper on it."

Obhof has not commented on whether he likes the bill pending in the House. Sen. Matt Huffman, R-Lima, who has been working on the issue, said last month that he wants to replace the two-week payday loans with installment loans that can't be abused by lenders.

Rep. Kyle Koehler, R-Springfield, the sponsor of House Bill 123, said he has spent a lot of time clearing up misinformation about his bill, which a House committee passed in April in the same form it was introduced 14 months ago. Read more at CANTONREP.COM
A_S Management
Debt Collection Rulemaking Now Pushed to 2019 by CFPB

The Bureau of Consumer Financial Protection (BCFP, or CFPB) has issued its spring rulemaking update. Once again, debt collection remains on the docket, but is pushed down the road. A process that began with an Advanced Notice of Proposed Rulemaking (ANPR) in 2013, is now scheduled to produce a Notice of Proposed Rulemaking (NPR) in March 2019. And that's still not the end of it.

As the latest notice reads,

"The Bureau has been engaged in research and pre-rulemaking activities regarding debt-collection practices. Debt collection continues to be a top source of complaints to the Bureau. The Bureau has also received encouragement from industry to engage in rulemaking to resolve conflicts in case law and address issues of concern under the Fair Debt Collection Practices Act (FDCPA), such as the application of the FDCPA to modern communication technologies under the 40-year-old statute. The Bureau released an outline of proposals under consideration in July 2016, concerning practices by companies that are debt collectors under the FDCPA, in advance of convening a panel in August 2016, under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration's Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. The Bureau is preparing a proposed rule focused on FDCPA collectors that may address such issues as communication practices and consumer disclosures." Read more at insideARM
NEVADA: A look at payday loan options and possible alternatives in Las Vegas

You're strapped for cash and need a payday loan. What are some of the better-rated options in the Las Vegas valley?

According to the Better Business Bureau, Check City Nevada gets an A+ rating and is a BBB Accredited Business. Select businesses earn accreditation by undergoing a thorough evaluation and upholding the BBB Code of Business Practices.

Check City Nevada has 29 locations in Las Vegas, Henderson and North Las Vegas, along with three in the Reno area.

Other payday lenders are not BBB Accredited but get high marks from the Better Business Bureau.

Multiple locations of Moneytree and Ace Cash Express got an A+ as did, First Choice Payday Loan, USA Money Today and Star Loan Centers. Read more at 13 ACTION NEWS
Advance Financial
Employees from the Nashville-based financial services company, 
Advance Financialvolunteered for non-profits across the state last week.
The unique statewide program on May 8 was an outgrowth of the company's 
long-standing commitment to being deeply involved in the communities it serves.
8 in 10 Employees Live Paycheck to Paycheck -- How You Can Help Them Break the Cycle

Financial struggles for employees also create problems for employers.

Counting down to payday is a stressful, but all too common practice. Unfortunately, an August 2017 CareerBuilder survey found that the vast majority (78 percent) of the 3,462 full-time U.S. workers polled said they live paycheck to paycheck.

This isn't just the employees' problem. Financial stress hurts everything from productivity and performance to morale and satisfaction at work, making it an employers' problem, too.

For these reasons, more employers are opting to provide financial wellness assistance to their employees.

Free financial education
To improve where they stand financially, employees need to first focus on becoming more financially literate. Interestingly, employees at BambooHR, an HR software company based in Lindon, Utah, actually get paid to complete a class on financial savviness. Read more at ENTREPRENEUR
AFSPA helps our members grow their Alternative Financial Services business by providing them with the best information, research, data, support, relationships and by vetting and presenting the best available product and service providers for the Alternative Financial Services Industry. 

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