NEWS: December 5

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Court sides with Trump in CFPB leadership dispute

A U.S. District Court judge in Washington handed a big victory to President Donald Trump, ruling in favor of the administration in its bid to install White House Budget Director Mick Mulvaney as acting director of the Consumer Financial Protection Bureau.

Judge Timothy Kelly denied a request by Leandra English, who was named last week as acting director by outgoing CFPB chief Richard Cordray, for a temporary restraining order to block Mulvaney from taking the post.

Kelly said there was not a substantial likelihood that the case would succeed on its merits.

"The administration applauds the Court's decision," White House Deputy Press Secretary Raj Shah said in a statement. "It's time for the Democrats to stop enabling this brazen political stunt by a rogue employee and allow Acting Director Mulvaney to continue the Bureau's smooth transition into an agency that truly serves to help consumers."

While this ruling cannot be challenged, Deepak Gupta, English's lawyer, told reporters that he would have to consult with his client about the next steps. These would either involve seeking a preliminary injunction or requesting a ruling on a permanent injunction, either of which could be appealed to a higher court.

"This court is not the final stop," Gupta said. "This judge does not have the final word on what happens in this controversy, and I think he understands that." He praised the court for acting expeditiously but criticized the government for proposing a litigation schedule that would continue into next year. Read more at POLITICO
House lawmakers move to repeal new CFPB payday lending rules

A bipartisan group of House lawmakers on Friday introduced legislation to repeal the first broad nationwide regulations on payday and other short-term loans, arguing the rules from the Consumer Financial Protection Bureau would effectively ban millions of Americans from accessing credit.

The move is the latest in a Republican-led fight against the agency, an Obama-era creation that was the center of controversy this week in a legal dispute over who should serve as acting director.

The House members hope to duplicate the successful effort this year to use the Congressional Review Act, a formerly little-used mechanism, to repeal a new consumer bureau rule that would have allowed Americans to file class-action suits against banks instead of being forced in many cases into private arbitration.

"I and my colleagues in Congress cannot stand by while an unaccountable federal agency deprives our constituents of a lifeline in times of need, all while usurping state authority," said Rep. Dennis Ross (R-Fla.), the sponsor of the resolution to repeal the payday loan rules.

The regulations were unveiled in October by bureau director Richard Cordray, whose resignation last week set off the succession battle.

President Trump installed Mick Mulvaney, the White House budget director, in the job. Cordray had appointed Leandra English to be deputy director, and she filed suit saying she was lawfully entitled to the position.

A federal judge ruled in Mulvaney's favor on Tuesday in the first of what's expected to be a lengthy legal fight.

The centerpiece of the new payday rules, which are not scheduled to take effect until mid-2019, is a full-payment test that lenders would be required to conduct to make sure the borrower could afford to pay off the loan and still meet basic living expenses and major financial obligations.

The rules also would limit the number of payday and auto-title loans that could be made in quick succession to an individual borrower to three. There are no caps on interest rates. Read more at Los Angeles Times
New House bill would kill consumer watchdog payday loan rule

Congress has it in for consumer protections enacted by the Consumer Financial Protection Bureau.

A congressional resolution introduced Friday in the House would kill the CFPB's new rule aimed at making sure borrowers of so-called payday loans can afford to repay their debt. The House measure's cosponsors (three Democrats and three Republicans) and the rule's critics say it will block consumers' access to payday loans, which are short-term, small-cash loans consumers often use when they are coming up short until their next paycheck.

"The rule would leave millions of Americans in a real bind at exactly the time need a fast loan to cover an urgent expense," said Daniel Press, a policy analyst with the Competitive Enterprise Institute, in a statement after the bill's introduction.

The payday loan rule, not scheduled to take effect until mid-2019, would require lenders to make sure the borrower can afford to pay off the loan and still meet their daily expenses and obligations. It also would limit the number of such loans that could be made back-to-back to three per borrower.

Supporters of the rule are hoping the congressional resolution is dead in its tracks.

"Payday lenders put cash-strapped Americans in a crippling cycle of 300 percent-interest loan debt," Yana Miles, senior legislative counsel at the Center for Responsible Lending, said in a statement.

The Consumer Financial Protection Bureau issued the rule in October under then-director Richard Cordray, who resigned from the agency in late November.

Although Cordray appointed an interim head from within the bureau - his former chief of staff, Leandra English - President Trump shortly thereafter announced that his budget director, Mick Mulvaney, will serve as acting director. Several days later, a U.S. district court judge rejected English's request for a temporary restraining order to prevent Mulvaney from taking over.

The rule repeal effort comes amid repeated attacks from critics about the embattled consumer bureau, which they say is overreaching and unaccountable. Consumer advocates, meanwhile, point to the nearly $12 billion the bureau has returned to more than 29 million people wronged by financial institutions and related businesses.

The congressional resolution also comes about a month after Republican lawmakers eked out a narrow victory in repealing a separate CFPB rule that would have banned financial firms from requiring customers to settle disagreements through arbitration.

Both the resolution introduced today and the one that passed in October use the authority of the Congressional Review Act, which gives lawmakers 60 legislative days to overturn a rule once it's published in the Federal Register. The payday loan rule appeared there on Nov. 17    Read more at CNBC
By settling lawsuits challenging its existence, CFPB can begin to quietly turn off the lights

The political stunt that former Consumer Financial Protection Bureau (CFPB) Director Richard Cordray tried to pull recently in a failed attempt to name his successor was the culmination of a five-year reign at a rogue agency marked by incompetence and malfeasance.

I and many other CFPB critics believe that newly appointing Acting Director Mick Mulvaney - who retains his job as director of the Office of Management and Budget - is the right person, in the interim, to head the CFBP.

However, the only way we are going to completely undo the years of pain and punishment the CFPB has inflected on consumers, businesses and our economy is to simply shut the place down.

While putting the CFPB out of business is certainly much easier said than done, one way the bureau could pursue this avenue is to settle lawsuits calling into question the constitutionality of it own existence.

In the five years that Cordray directed the CFPB, the agency has been the worst nightmare for community banks and small businesses across the country. Through a constant churn of punitive regulations, the CFPB has put the financial squeeze on Americans as well as Main Street small business owners.

Even worse, the CFPB has become a partisan political operation to help left-wing supporters of the Democratic Party and advance Cordray's political ambitions back in his home state of Ohio.

Although the CFPB was created to protect consumers from financial abuses, Cordray molded the organization into a partisan agency - aided in large part by the fact that its unaccountable structure protects it from oversight by Congress and the president. 
CFSA Sponsor
Under New Leadership, What is the Future of the CFPB's Payday Loan Rule?

In the current uncertainty surrounding the future of the Consumer Financial Protection Bureau (CFPB), several issues require urgent attention. While the most pressing may be who exactly is to lead the agency, another is what will be the future of the small dollar loan rule, a controversial new regulation published by the CFPB on November 17.

The CFPB's rule, covering payday, vehicle title, and certain high-cost installment loans, is one of the most pernicious regulations issued by the Bureau. Payday loans are a short-term, small dollar loan used by about 12 million people each year who find themselves in a financial emergency, perhaps to pay an unexpected medical bill, fix a broken car, or just to keep the lights on at home. While they may not be an ideal form of finance, they provide a reliable and essential service to millions of people each year who have no better financial options.

Despite this, the CFPB has set out to all but eliminate the product. Industry studies estimate that the new regulation will render up to 80 percent of all payday loan shops unprofitable, eliminating almost $11 billion of consumer credit.

To defend vulnerable consumers who desperately need access to credit, the rule needs to go. In this regard, Richard Cordray's recent exit as head of the CFPB provides two possible opportunities.

First, a new CFPB director has the authority to reconsider and potentially withdraw the rule. This can be executed simply due to a change in administration and policy direction, as provided for under the Supreme Court case FCC v. Fox. A new director would also have the authority to reconsider the rule due to a new interpretation of the intentions of Congress. 
Trump should fill CFPB vacancy with Export-Import chief

Following Richard Cordray's resignation at the Consumer Financial Protection Bureau, a surreal fight over leadership occurred for about 24 hours between the Trump administration and liberal activists led by Sen. Elizabeth Warren (D-Mass.). Ultimately the courts sided with the Trump administration, at least through the first round of legal challenges.

Their ruling allows Mick Mulvaney to serve as interim CFPB director while simultaneously running the Office of Management and Budget. It's now up to the Trump administration to appoint a long-term successor to lead the agency.

Here's an idea that solves two problems for the administration at once.

President Trump can move his existing choice to run the Export-Import (Ex-Im) Bank, former Congressman Scott Garrett (R-N.J.), instead nominating him to take over for Cordray at CFPB. This idea is gaining steam in conservative circles, as influential radio host Hugh Hewitt suggested the idea recently.

The political reality is that Garrett has a very rocky road ahead in the Senate to lead the Ex-Im Bank, with Democrats unanimously opposed and various Republicans unnerved by his opposition to the bank's very existence, including Sens. Tim Scott (R-S.C.), Mike Rounds (R-S.D.), and maybe even more.

By moving Garrett to CFPB, Trump could achieve for conservatives what many on the right hoped Garrett's Ex-Im nomination would do.

The president needs to act fast, as OMB is a much more consequential agency, and one that can't have its leader away for long given current budget fights on Capitol Hill. Read more at THE HILL
A_S Management
What does an identity verification service do and who needs it? by Philip Burgess

The consequences of doing business with a fraudster or identity thief can be disastrous. At best, your company becomes the victim of embezzlement. At worse, you violate several regulations and could be subjected to heavy fines or jail time. As such, you want to avoid hiring or working with such individuals, but the resources and knowledge necessary to do so may be beyond what your internal systems are capable of.

The solution? Use comprehensive identity verification and authentication tools as part of your fraud risk assessment strategy. These solutions sort through countless records and use knowledge-based questions to confirm applicants - both potential employees and customers - are who they claim to be.

Who needs an identity verification service?
Employers, lenders and businesses each must adhere to certain federal regulations to remain compliant with the Federal Patriot Act. These rules require organizations to screen applicants against a number of anti-terrorism, anti-money laundering, sanction, foreign government and most wanted lists databases, lest they be subject to fines and possible jail time. Navigating these databases in-house requires a tremendous amount of legal knowledge and resources, making an identity verification service an ideal option. Additionally, identity verification falls in line with the Red Flags Rule and know-your-customer guidelines.

Moreover, identity verification and fraud risk assessment tools help protect companies from internal losses and keep them from becoming accomplices in criminal activity. In essence, almost any company that does business with individuals or organizations needs some form of identity verification process and fraud risk assessment. Read more at MicroBilt
Dreher Tomkies LLP
Liz Weston: Would a bank payday loan be any safer?

A "safer" payday loan sounds like an oxymoron. Critics have branded these notoriously high-cost loans as debt traps that cause borrowers to go ever deeper in the hole.

Thanks to a recent regulatory change, it now may be possible for banks to offer small, short-term loans that could be a lot less dangerous for borrowers. Whether banks will actually do so remains to be seen.

The right moves could save low- and moderate-income Americans billions of dollars a year. The wrong moves could create yet another sinkhole for those who are already struggling.


Payday loans are advertised as a way for people to meet a short-term cash crunch in a hurry. People borrow relatively small amounts, typically $300 to $400, and pay a fee of $45 to $60 for a loan that's supposed to last a few days until their next paycheck. Such loans have an effective annual interest rate north of 300 percent.

The problem is that despite the high cost to borrowers, lenders can't make much profit, if any, on small loans if they have to do expensive underwriting such as credit reviews and income verification. But loans made without regard to someone's ability to repay can be dangerous, since people wind up extending the loans and paying a fortune in fees. The average payday loan customer paid $520 in fees annually to repeatedly borrow $375, according to The Pew Charitable Trusts. Read more at ABC NEWS
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