NEWS: November 22

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Nullifying the Payday Lending Rule

Richard Cordray, the first official director of the Consumer Financial Protection Bureau (CFPB), will step down at the end of November. That's great news because now the Trump administration can insert its own director and implement its own policy agenda.

But reversing course at the Bureau will be a difficult task. For starters, it takes a long time to undo any formal federal rules. Perhaps more importantly, the CFPB is run by "entrenched left-wing managers" and "staffed with Democrats, top to bottom."

Cordray helped create this built-in "resistance" at the CFPB, and he also made sure the Bureau finalized two controversial rules before his departure: the Arbitration Rule and the Payday Lending Rule.

Congress nullified the Arbitration Rule a few weeks ago, using the Congressional Review Act (CRA) to protect consumers from the CFPB. Now, Congress can help the Trump administration reset the agency by using the CRA to kill the payday rule.

Nullifying the arbitration rule was a relatively easy lift, because the CFPB had failed to meet statutory requirements. The Bureau based its final rule on a flawed study that simply did not support banning pre-dispute arbitration agreements, even though the Dodd-Frank Act specifically directed the CFPB to limit or prohibit arbitration clauses only after a study provided evidence to support such actions.         Read more at FORBES
CFSA Conference
Trump likely to pick ex-lawmaker (and restaurant franchisee) to head consumer agency

President Trump is widely expected to name Mick Mulvaney, who currently serves as head of the White House Office of Management and Budget, as interim director of the Consumer Financial Protection Bureau.

If so, Trump would be picking someone with no background whatsoever in consumer protection, unless running a franchised Mexican restaurant in North Carolina is your idea of sticking up for the little guy.

"You're going to see a lower level of protection, I don't think there's any doubt about that," Mike Calhoun, president of the Center for Responsible Lending, told me.

Trump could still change his mind. Other names that have been floated as potential CFPB director include Mark Calabria, Vice President Mike Pence's chief economist, and Todd Zywicki, a law professor at George Mason University who has criticized the bureau in the past.

But Mulvaney looks like the front-runner.      Read more at LOS ANGELES TIMES
Richard Cordray's departure should end the campaign against payday loans

Richard Cordray is stepping down from the Consumer Financial Protection Bureau and the public should breathe a sigh of relief. His opposition to small-dollar or payday loans - a life saver for vulnerable communities - is an example of Washington elitism at its worst. The next step must be to stop his legacy payday regulations from cutting Americans off from this alternative cash source.

New federal regulations aim to dry up this industry, a move that will hurt middle- and low-income communities which rely on these financial lifelines to help them meet expenses. The CFPB passed a rule that effectively restricts short-term, small-dollar loans by requiring lenders to assess a customer's ability to repay within two weeks.

Proponents of the regulation claim this will stop predatory practices and protect customers, particularly low-income communities and African-American households which are more than twice as likely as other races to use a payday loan.

But this paternalism overlooks why people end up seeking short-term loans in the first place. Poor and working-class Americans know what their other options are and are smart enough to do the math for themselves. They know that in many cases these loans, even with high interest rates, are cheaper than incurring daily fees for overdrawing their accounts. 
Surecare Services
Democrats May Deny It, But This Bill Is A Handout To Payday Lenders
Gwen Moore is pushing legislation to undermine state consumer protection laws.

Rep. Gwen Moore (D-Wis.) has a payday lending problem.

On Tuesday, HuffPost published an article highlighting an obscure piece of legislation moving through Congress that would help payday lenders and other shady operators skirt predatory lending laws passed by state governments. It's the sort of bill Republicans sponsor all the time. Every now and then, Democrats quietly join them, hoping that a minor bill circling through the House Financial Services Committee will be overlooked in the grand legislative debates over taxes, health care and foreign policy.

The bill was introduced by Moore and archconservative Rep. Patrick McHenry (R-N.C.), and it exploits a weakness in national banking law to provide convoluted but very real aid to predatory lenders.

Thanks to a 1978 Supreme Court decision, national banks don't have to pay attention to usury laws, which regulate the interest rates they can charge on loans, outside their home state. A national bank headquartered in a state with weak usury laws, say, Delaware, doesn't have to abide by the more stringent standards in Colorado when it makes a loan to a family in Denver.

Consumer advocates don't like this situation. But in 2015, they got some help from a federal judge, who ruled that debt collectors and other opportunists who purchase debts from national banks couldn't enjoy the same freedom from state rules that national banks do.
Dreher Tomkies LLP
A_S Management
Richard Cordray Won't Be Around To See The Court Decision That Would Have Gotten Him Fired

Richard Cordray's sudden departure as head of the Consumer Financial Protection Bureau likely will have no impact on a decision of the U.S. Court of Appeals for the District of Columbia Circuit regarding the bureau's structure, says a consumer finance attorney.

Richard J. Andreano Jr. is the practice leader of Ballard Spahr LLP's Mortgage Banking Group. He has practiced financial services, mortgage banking and consumer finance law for 30 years.

Andreano said the D.C. Circuit's pending decision in PHH Corporation v. CFPB likely will strongly influence how other courts address the CFPB structure issue.

"Note that, should the CFPB lose on the constitutional issue, the departure of Cordray likely will not affect whether the CFPB attempts to seek Supreme Court review," he told Legal Newsline.

"While the CFPB can try cases on its own authority up to the appellate courts, it can go to the Supreme Court only with the assistance of the Justice Department. Even with Cordray still in place, the belief in the industry was that the Justice Department would not agree to seek Supreme Court review of the CFPB structure issue if the CFPB lost on that issue at the Court of Appeals." Read more at FORBES

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