January 30, 2018

Congress must use its tools to block CFPB's payday loan rule

Big things are happening at the Consumer Financial Protection Bureau, a recently-created but unusually powerful government agency. Now temporarily headed by Trump's Director of the Office of Management and Budget Mick Mulvaney, the Bureau suddenly announced last week it would reopen the Obama-era rule that effectively blocks access to small dollar loans for millions of consumers.

But how much can Mulvaney achieve by revisiting the rule? It's true that left intact, the rule will deprive too many people of a loan, right at the moment they need it most. It's one of the most detrimental regulations the Bureau has issued. But the rule cannot be easily or quickly undone. A new rulemaking is governed by the Administrative Procedure Act, which requires the Bureau to go through a similar process as it did the first time around. The original rule took the Bureau five years to finalize.

There's a simpler, more effective way of stopping the current rule. Congress can vote it down, but a big deadline is looming. The Congressional Review Act gives lawmakers 60 legislative days to overturn major regulations, and a simple majority vote by both chambers is all that is required. If successful, that vote would block the agency from doing a repeat without congressional authorization. A resolution of this kind was recently introduced by Rep. Dennis Ross' (R-Fla.), with 3 Democrats and 2 Republicans co-sponsoring it. The CRA, however, must be used by early March. Read more at THE HILL
OHIO: Ohioans could vote to rein in payday lenders -- again

COLUMBUS, Ohio -- Ohio consumer advocates fed up with the legislature's inaction on payday loan reforms say they're going to take the issue to voters in November.

Ohio voters in 2008 overwhelmingly approved capping interest rates on the short-term cash loan businesses. But lenders avoided the caps by registering under a different state law, and Ohio has the highest annual percentage rate on payday loans in the country, according to the Pew Charitable Trusts.

A bill to lower interest rates has stalled for 10 months in the Ohio House.

A coalition of advocates calling themselves Ohioans for Payday Loan Reform announced Thursday they plan to put a short-term loan consumer protection constitutional amendment on the November 2018 ballot. Details of the proposed amendment were not available Thursday afternoon.
Regions Bank Fined $7.5 Million For Overdraft Abuse

This week, the Consumer Financial Protection Bureau ("CFPB") fined Regions Bank $7.5 million for unlawful overdraft practices. In addition to the fine, Regions Bank has refunded approximately $49 million of fees to customers. Regions Bank is based in Alabama and has more than $119 billion in assets, making it one of the largest banks in the country.

Regions Bank was fined because it failed to receive the necessary opt-in from consumers, delayed fixing the problem for a year and mis-represented certain fees to its consumers. The CFPB has been looking closely at the overdraft practices of banks. Director Cordray has made it clear that he is not a fan of the way banks treat overdrafts, and bigger reforms are expected later this year. In the interim, we can expect more fines of banks that are violating existing rules and guidelines.

Regions Bank earned $218 million during the first three months of 2015. The CFPB fine does not represent a significant portion of the bank's earnings. Read more at MAGNIFY MONEY
FLORIDA: Florida lawmakers advance new loan type sought by payday-loan industry

TALLAHASSEE - Florida lawmakers have started moving forward with a proposal to revamp rules for the payday-loan industry, allowing customers to borrow larger amounts of money over longer periods of time.

The House Insurance & Banking Subcommittee unanimously approved the changes Wednesday, a day after a Senate committee backed the Senate version. The proposal, in part, would allow a new type of "installment" loan that could reach $1,000 and be repaid over 60 to 90 days.

Supporters say the changes are needed, at least in part, because of federal regulations slated to take effect in 2019 on the types of smaller-dollar, shorter-term loans made by payday lenders in Florida - though a federal agency said this week it will reconsider the regulations. Consumer groups such as AARP and Florida Legal Services, however, oppose the proposed legislation.

The House bill drew lengthy debate Wednesday, with lawmakers saying payday loans play an important role for many low-income people who might not have good credit and get hit with unexpected expenses.

"These products are necessary in some of our districts, and these products help people get from payday to payday," Rep. Sean Shaw, a Democrat who said he represents the most economically depressed area of Tampa. "Yes, it's not ideal. There are people whose budget requires this sort of product." Read more at PALM BEACH POST
Dreher Tomkies LLP
CFPB Likely to Focus on Debt Collection Rather Than Payday Loans

CFPB Acting Director Mick Mulvaney has signaled the agency is likely to spend more time on issues related to debt collection and less time on prepaid cards and payday lending.

"In 2016, almost a third of the complaints into this office related to debt collection," he said, in a memo to bureau employees. "Only 0.9% related to prepaid cards and 2% to payday lending. Data like that should, and will, guide our actions."

The CFPB has issued controversial rules on payday lending-regulations that Mulvaney has indicated the agency will revisit.

To the degree that the payday rule exempted financial institutions making loans modeled after the NCUA's Payday Alternative Loan program, credit unions have supported the CFPB rule.

The agency also has said that it intends to issue a final rule amending its 2016 rule governing prepaid accounts. The agency said that based on comments received, the bureau expects to further extend the effective date of the 2016 rule to allow additional time for its implementation.

Credit union trade groups had sought the delay.

While Mulvaney's comments indicated an emphasis on debt collection, the agency recently withdrew a plan to conduct a survey on debt collection practices.

In his memo, Mulvaney said that the agency will be relying more on quantitative analysis rather than qualitative analysis. Read more at CREDIT UNION TIMES
CFSA Conference
3 ways to approach employees about financial well-being

January is widely regarded as the time of year for personal and professional reflection - when we consider what we accomplished and where we fell a little short. It's also when we focus on goals for the year ahead in all facets of our lives, from physical health (probably the most common) to our emotional and financial health.

And that's the topic I want focus on. Because, when it comes to employer well-being programs, financial well-being was one of the hottest - and most important - topics in 2017. And it likely will remain a timely topic or even accelerate in 2018.

Why? For starters, employers are increasingly looking at employee health from a holistic view, recognizing its physical, social, emotional, environmental and financial dimensions.
A_S Management
The CFPB's New Mission

In a memo, the agency's director outlines his vision for a regulator that's kinder and gentler to the financial industry.

Since the day in late November when he showed up at the Consumer Financial Protection Bureau, doughnuts in hand, Mick Mulvaney has said that things were going to change. For almost two months, the acting director appointed by Trump has implemented seemingly small, but important, shifts that indicate what the bureau will look like in the years ahead. In a memo to bureau staff made public by ProPublica, Mulvaney finally laid out his vision for the agency: a government entity that doesn't "push the envelope."

In an email to the bureau's staff, Mulvaney said that he had been struggling to come up with a central thesis for how exactly the agency would change. Mulvaney wrote that the philosophy of the previous director, Richard Cordray, was "to aggressively 'push the envelope' in pursuit of the 'mission;' that we were the 'good guys' and the 'new sheriff in town,' out to fight the 'bad guys.'" The acting director then declared, "That is what is going to be different."

Mulvaney went on to say the "entire governing philosophy of pushing the envelope frightens me a little ... it's not appropriate for any government entity to 'push the envelope.'" The acting director described concerns that the bureau would overstep and create long-lasting damage to individuals, reputations, and businesses. What will this new philosophy look like in practice? Mulvaney vowed to only pursue lawsuits if evidence of "quantifiable and unavoidable harm" is found. And the agency will rely more heavily on its rulemaking efforts as the engine of change, instead of enforcement, meaning that the bureau won't focus on fines or lawsuits to cull bad behavior. Instead, the CFPB will primarily look to the creation and implementation of new rules, in hopes of changing dangerous practices-a process that is less punitive and more time-consuming. Read more at THE ATLANTIC
CFPB Finalizes Changes to Prepaid Accounts Rule
Changes Provide More Flexibility and Extend Effective Date to April 2019

Washington, D.C. - The Consumer Financial Protection Bureau (Bureau) announced today that it has finalized updates to its 2016 prepaid rule. The Bureau's 2016 prepaid rule put in place requirements for treatment of funds on lost or stolen cards, error resolution and investigation, upfront fee disclosures, access to account information, and overdraft features if offered in conjunction with prepaid accounts. The changes announced today adjust requirements for resolving errors on unregistered accounts, provide greater flexibility for credit cards linked to digital wallets, and extend the effective date of the rule by one year to April 2019.

Prepaid accounts are among the fastest growing consumer financial products in the United States, usually purchased at retail outlets or online. Prepaid accounts may be loaded with funds by a consumer or by a third party, such as an employer. Consumers generally can use these accounts to make payments, store funds, withdraw cash at ATMs, receive direct deposits, or send money to others. According to industry analysts, the amount consumers put on "general purpose reloadable" prepaid cards grew from less than $1 billion in 2003 to nearly $65 billion in 2012. The total dollar value loaded onto these prepaid cards is expected to nearly double to $116 billion by 2020.
Secure Check Cashing Systems
How Mick Mulvaney is dismantling a federal agency

From the moment Congress created the Consumer Financial Protection Bureau, Republicans attacked it as a "rogue agency," "unaccountable," "malicious" and run by an out-of-control "dictator" who desperately needs more oversight.

Mick Mulvaney has apparently set out to prove them right.

In November, in a move that set off a power struggle still tied up in the courts, President Trump appointed Mulvaney acting director of the CFPB. He's running the bureau part time, in addition to his Cabinet-level post as director of the Office of Management and Budget.

Because, hey, not like there's been a lot going on budget-wise these days.

Miraculously, Mulvaney has found time to show how malicious, rogue and out-of-control an unchecked CFPB director can be. He has perverted the agency's mandate from protecting the public from scammers and cheats to letting the worst, scammiest, cheatingest companies run roughshod over the public.

Most emblematic of this was changing the CFPB's mission statement to emphasize its commitment to deregulation.

CFSA Conference
7 Congressional Efforts the President Should Urge Members to Support

President Trump will soon have (almost) all of Congress as his audience during his State of the Union address next Tuesday evening. Given that platform, there are many bills and efforts before Congress the President should highlight to spur action on the part of the legislative branch. The following is a list of 7 efforts, bills, and reforms that CEI experts have identified as key to a more free and fair society, and are policy fixes that only Congress can accomplish.

1. Congress should disapprove the Consumer Financial Protection Bureau's (CFPB) harmful small dollar or payday loan rule by taking up the bipartisan HJ Res 122. This Joint Resolution introduced in December 2017 would reverse the rule. Even though the CFPB has announced it will reconsider the rule, Congress should provide important oversight for this unaccountable agency by disapproving this ill-conceived regulation that would eliminate 75% of small dollar loans for those who need them most.

2. Congress should make it a priority to pass a number of important regulatory reform bills, including the recently introduced Guidance Out Of Darkness (GOOD) Act in the Senate and House, the House-passed Regulatory Accountability Act, the House-passed Regulatory Integrity Act, the House-passed Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act, and the House-passed Regulations from the Executive in Need of Scrutiny (REINS) Act. These bills would bring transparency to regulatory guidance documents, restore proper congressional oversight of federal agencies, and require that agencies review the impact of regulations for their effectiveness, among other key reforms. Congress should do all it can to reassert and reclaim its constitutional Article I authority.
O_Keefe _ O_Malley
Instead of 'pushing the envelope,' Mulvaney is mailing it in at CFPB

As the lawsuit over the leadership of the Consumer Financial Protection Bureau (CFPB) heads to the Washington, D.C. Circuit Court of Appeals, President Trump's acting director, Mick Mulvaney, issued a mission statement to all staff outlining his vision for the agency.

Given his past vocal opposition to the CFPB and his recent request for a zero budget for second quarter of 2018 (spending reserves instead), many are concerned that the acting director will gut or neuter the agency. His mission statement seems to confirm the worst fears.

He began by cherry-picking a quote from the previous director, Richard Cordray, about "pushing the envelope" to protect consumers from financial predators, which Mulvaney found frightening.

He then ignored the CFPB's statutory mandate and mission, disregarded the history of blatant predatory conduct that necessitated the creation of the CFPB and didn't even mention the CFPB's stellar track record of returning more than $12 billion to almost 29 million ripped off Americans.

But, let's skip all of that and just follow the logic of what he sees as the CFPB's new mission. He began by stating that everyone at the CFPB is a government employee who works not just for the government, but for the people.

More specifically, he said that they work for "those who use credit cards, and those who provide those cards; those who take loans, and those who make them; those who buy cars, and those who sell them." Read more at THE HILL

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