NEWS: September 26

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How Can We Fix The CFPB? Shut It Down

Regulation: The Consumer Financial Protection Bureau's very name suggests its job is protecting you, the American consumer. Nothing could be farther from the truth. Now, a new study documents the agency's many problems and makes a modest proposal: Shut the CFPB down. We agree.

The CFPB arose from the 2010 Dodd-Frank reforms as a kind of super-regulator for all consumer finance. The Democrats who passed that bill used it to bludgeon Wall Street for its "greed" and to blame the banking industry for the 2007-08 financial crisis. But the CFPB has failed miserably at its job.

"The Consumer Financial Protection Bureau was set up under the Dodd-Frank Act of 2010 in violation of constitutional norms ostensibly to protect consumers from bad actors in the banking and financial services industry, but the agency is instead actively harming consumers, pressing ahead with regulations even when the benefit to consumers is likely to be outweighed by the costs," wrote Iain Murray, vice president for strategy at the Competitive Enterprise Institute, in a new study titled, "The Case against the Consumer Financial Protection Bureau: Unconstitutionally Structured and Harmful to Consumers.".

Murray cites as a recent example the "huge $185 million fine the Bureau levied on Wells Fargo Bank for the 'upselling' scandal," in which bank staffers misled customers to open new services accounts or simply opened credit accounts in their names without telling them.

CFPB was created to prevent such things. But it didn't even find out about it until the media reported the incident. Then, in a compensatory show of toughness, it slapped that big fine on Wells Fargo. But guess who really pays for that? Not Wells Fargo, but the very customers who were victimized by the behavior, "exactly the people the Bureau was supposed to protect," said the study.
FINAL Isn't Necessarily FINAL if CFPB Payday Rule Released
By Rob Tricchinelli

Consumer Financial Protection Bureau Director Richard Cordray could release a final small-dollar lending rule before departing for a possible run for governor in Ohio, although that won't guarantee it ever goes into effect.

Whomever President Donald Trump chooses to replace Cordray could delay its implementation, or lawmakers could block the rule using the Congressional Review Act.

The politics surrounding payday lending are more jumbled than on other rules released by the CFPB. The industry is seen as a less-than-attractive political bedfellow by some Republicans, according to Hill aides. There's also no natural strawman, as is the case with a rule banning mandatory arbitration clauses, which opponents decry as a giveaway to trial lawyers.

Industry groups are looking for help blocking the rule among Democrats who previously have defended payday loans as a source of much-needed credit of last resort for low-income consumers. Three of those Democrats-Reps. Alcee Hastings (Fla.), Henry Cuellar (Texas) and Collin Peterson (Minn.)-voted Sept. 14 in favor of an amendment to an appropriations bill that would have stripped the CFPB's payday-lending rule authority.

"The path of this rule will be the most complicated of any rule ever promulgated by any agency," Lisa McGreevy, president and chief executive officer of the Online Lenders Alliance, told Bloomberg BNA in an interview.

Payday loans, generally required to be repaid in a single payment on receipt of the borrower's next paycheck, have been on the CFPB's radar since at least 2013, when the bureau started accepting related consumer complaints. The CFPB proposed a rule in 2015 that would require the lenders to determine whether borrowers have the ability to repay loans and to limit the number of loans a borrower can take out in quick succession. Read more at BLOOMBERG
ACE Cash Express
ACE Cash Express Raises over $40,000 to Support Children Battling Chronic Pain.
ACE's Florida team presents the donation to The Coalition Against Pediatric Pain

How education benefits are reducing turnover

New financial wellness benefits have begun to spring up with various companies across the United States. Businesses such as PricewaterhouseCoopers are offering debt assistance benefits while companies like Geico, Walmart and Starbucks are offering college reimbursement benefits as a means of keeping employees with businesses longer.

Zoe Weintraub, head of business development at Guild Education, says her company partners with these businesses to offer tuition reimbursement benefits for frontline workers who may not have the opportunity rise through the ranks and need to be incentivized to remain with the company.

On top of offering tuition reimbursement, Weintraub said employees who work with the companies Guild partners with have the opportunity to receive college credits through the training they receive on the job.

"We have seen a 20% to 40% increase in retention with employees who are enrolled in an education benefit program versus their peers who are not," Weintraub said.

Lance Salsman, city leader at Taco Bell Corporation, partners with Weintraub and Guild Education to offer these benefits at his stores and said he noticed a 10% jump in retention between Q2 and Q3 of the business year.

"We have prepped all of our district managers with this program and they are all fully aware that this program is available to our employees," Salsman said. "At the same time, our managers are also enrolling in classes to work side-by-side with every single person that is involved with [education benefits]." Read more at BENEFIT NEWS
A_ S Management
Amazon reaches out to underbanked with new program

In a bid to increase its customer base and make the shopping experience more convenient and user-friendly,
the world's largest e-commerce company is expanding the options buyers have to purchase various product offerings featured online.

For e-commerce shoppers in the U.K., Amazon recently introduced Top Up. The service is specifically geared toward the underbanked - those who don't have a bank account or access to traditional forms of credit - by giving cash-only customers the ability to stretch their currency further. As detailed at its website, Top Up provides barcodes that customers can print out or download to their devices. They can then take the codes to stores participating in the Top Up program, along with the cash they wish to apply to their accounts. Once implemented, the service works as a pre-paid card, deducting from the overall total with every purchase. However, unlike gift cards, the balance eventually expires should the amount go unused after 10 years.

Amazon Cash introduced in April
As noted by TechCrunch, the online retailer introduced a similar program for U.S. consumers earlier this year, called Amazon Cash. The service enables customers to apply up to $500 in bills to their accounts, all of which can be withdrawn in a single transaction if they so choose.

Although the advancement of technology has made alternative payments more convenient for Americans, cash remains king. In the last year, for instance, approximately 87 percent of consumers used cash in purchase-related transactions, according to Blackhawk Network. Although that's down from 2015 - when 93 percent used bills or coins - it remains well ahead of other payment options, such as checks (60 percent) and credit cards (69 percent). Read more at MICROBILT NEWS
Report: Unaccountable CFPB Regulators Do More Harm than Good for Consumers

Today the Competitive Enterprise Institute released a report documenting the harm inflicted on ordinary consumers of financial products by a federal agency that remains unaccountable to Congress, the President, and the courts: the Consumer Financial Protection Bureau (CFPB). The report urges Congress to make drastic reforms to the CFPB or even abolish it.

"The Consumer Financial Protection Bureau was set up under the Dodd-Frank act of 2010 in violation of constitutional norms ostensibly to protect consumers from bad actors in the banking and financial services industry, but the agency is instead actively harming consumers, pressing ahead with regulations even when the benefit to consumers is likely to be outweighed by the costs," said Iain Murray, vice president for strategy at CEI and author of the report, The Case against the Consumer Financial Protection Bureau: Unconstitutionally Structured and Harmful to Consumers. "The CFPB would be far less able to abuse its power and make bad decisions if it were held accountable. It's urgent that Congress take action to stop the CFPB and restore constitutional checks and balances aimed at protecting Americans from abuses of government power."

The report details specific problems with the agency ranging from the lack of congressional oversight over the agency's $650 million budget and operations, to its trampling on consumer privacy and First Amendment free speech rights, to its failure to protect consumers from harm.

What CFSA Members Need to Know About the CFPB's Final Arbitration Rule
Hosted by Ballard Spahr LLP

Please join CFSA and Ballard Spahr for a complimentary webinar series to be held
throughout 2017. During this third webinar in a four-part series, we will discuss the
CFPB's proposed arbitration rules.

In 2011, the U.S. Supreme Court upheld the use of class action waivers in consumer arbitration agreements. Nevertheless, the CFPB has issued proposed rules that would prohibit the use of such waivers. This is a watershed event in the history of consumer arbitration. Please join us for a discussion of what the CFPB is proposing and how it could affect CFSA members and others in the payday loan industry.

  • The background of the CFPB's arbitration rulemaking;
  • The CFPB's proposed rules on consumer arbitration agreements;
  • Whether CFSA members will be covered by the proposed rules;
  • When the proposed rules might become effective;
  • Whether existing arbitration agreements will be grandfathered;
  • Whether arbitration agreements should continue to be used for individual arbitrations;
  • Possible legal and political challenges to the rules;
  • What CFSA members can do now to maximize the utility of your class action waiver;
  • What CFSA members should do now if you don't have a class action waiver; and
  • Alternative methods of reducing class action exposure.
Tuesday, October 3, 2017 | 12:00PM - 1:00PM ET

Dennis Shaul , CEO CFSA
Kim Phan , Ballard Spahr
Alan S. Kaplinsky , Ballard Spahr
Mark J. Levin, Consumer Financial Services Litigation

This program is open to CFSA Members, Ballard Spahr clients, prospective clients,
and  members of the financial services industry
There is no cost to attend. 
This program is not eligible for CLE credits.

Please register at least two days before the webinar. Login details will be sent to all approved registrants. For more information, contact Daniel Martin at
Equifax Will Likely Face Punishment From Yet Another Federal Agency

The U.S. consumer finance watchdog agency is expected to punish Equifax for its cyber breach with the wide-ranging powers it has used with Wall Street, former agency officials and lawyers said this week. The credit-reporting company is subject to five federal laws governing listed companies, the use of public data and the fair treatment of customers, and the Federal Trade Commission and the Department of Justice are examining the hacking theft of personal information on up to 143 million people.

But because Equifax is not strictly a financial company, questions arose whether the Consumer Financial Protection Bureau, the agency created after the 2008 financial crisis, has the power to penalize the firm for the breach.

Legal experts said the CFPB is likely to weigh in using powers it wields under the 2010 Dodd-Frank Act.

"Its Dodd-Frank mandate gives the CFPB authority to investigate Equifax even without cyber security rules," said Quyen Truong, a partner at law firm Stroock & Stroock & Lavan who was the assistant director and deputy general counsel for the CFPB until early 2016.

Equifax is one of the country's three major credit bureaus which, along with TransUnion and Experian PLC, gather data on consumer spending habits which is then purchased by banks to determine a customer's creditworthiness.

The CFPB and legal experts said the regulator could pursue Equifax under an aspect of the Dodd-Frank Act banning unfair, deceptive and abusive acts and practices (UDAAP).
GOP protects payday lenders

WASHINGTON-It's a measure of Congress' ruling Republicans' hatred for workers and consumers who could still be victims of finagling financiers that when Rep. Keith Ellison, DFL-Minn., tried to defend them on the U.S. House floor, he went 0-for-3.

And he even struck out on his move to let the federal Consumer Financial Protection Bureau (CFPB) continue to regulate the shadiest shysters of them all, so-called payday lenders.

Ellison offered three amendments to the financial services section of a comprehensive money bill to keep the government going-a measure that, by itself, is going nowhere-during mid-September debate.

Part of it may eventually be folded into a giant money bill to keep the government going beyond Dec. 8. But the votes are, nevertheless, useful for showing where the two parties stand on consumer issues.

One amendment keeps the bureau, a key agency Congress established through the Dodd-Frank financial regulation law/crackdown, independent of the always-political congressional appropriations process.

A second would let the CFPB regulate loans made to people to buy manufactured housing-mobile homes-who often can't get loans for conventional houses or can't afford those houses' high prices. He wanted to give mobile homeowners the same protections the government now offers traditional homeowners. An association representing 17 million owners of manufactured homes supported Ellison.

And the other would hit the payday lenders, who fleece some of the nation's most-vulnerable consumers with loans with short repayment schemes and rollovers with triple-digit annual interest charges. Labor-backed Americans for Financial Reform (AFR) said the typical payday lender charges 391 percent annual interest-and the industry's charges overall take $8 billion from consumers. Read more at PEOPLES WORLD
Dreher Tomkies LLP
GOP says the CFPB went easy on Wells Fargo

NEW YORK - The Consumer Financial Protection Bureau could have fined Wells Fargo (WFC) in excess of $10 billion for its illegal sales practices but instead settled for $100 million, according to the agency's internal documents released by Congressional Republicans this week.

The CFPB also had evidence that the bank's sales problems went back to at least 2006 -- far earlier than the 2011 to 2016 timetable that Wells Fargo originally admitted to, the documents show.

"The bank knew since at least 2006 that its employees were gaming its incentive compensation program, yet failed to take actions sufficient to stop it," CFPB employees wrote in a 2016 confidential memo.

The documents were released as part of a politically charged report by the staff of House Financial Services Committee Chairman, Rep. Jeb Hensarling of Texas. Hensarling is a critic of the CFPB. Along with other House Republicans, he has called for the firing of its director, Richard Cordray, an appointee of President Barack Obama, as well as for new laws to curtail the bureau's authority over the financial services industry.

Using the CFPB's handling of the Wells Fargo case against Cordray, who is also in President Donald Trump's crosshairs, is significant given that the director can only be fired for cause before the scheduled end of his term in July 2018.

It took months for Wells Fargo to acknowledge publicly that its sales practices problems, in which employees trying to reach unrealistic sales goals opened accounts without customers' permission, dated earlier than 2011. At first, then-Wells Fargo CEO John Stumpf agreed to expand its internal investigation to 2009. But when testifying in front of the Senate Banking Committee in late September 2016, he was reluctant to go back further than that. Read more at CBS NEWS
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