NEWS: June 6

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House of Representatives

House to Vote on Financial CHOICE Act THIS Week - Legislation Ends Bank Bailouts, Promotes Economic Growth

Washington: The House will consider legislation THIS week to end bank bailouts, promote economic growth and provide desperately needed regulatory relief for community banks and credit unions.
The bill - H.R. 10, the Financial CHOICE Act - is the Republican alternative to the failed Dodd-Frank Act which has contributed to the slowest economic recovery since World War II.

"The Financial CHOICE Act offers economic opportunity for all and bank bailouts for none. The era of 'too big to fail' will end and we will replace Dodd-Frank's growth-strangling regulations on community banks and credit unions with reforms that expand access to capital so small businesses can create jobs and consumers have more choices and options when it comes to credit," said Financial Services Committee Chairman Jeb Hensarling (R-TX), the bill's sponsor. "With the Financial CHOICE Act, we will unleash America's economic potential and give Main Street job creators desperately needed help so more Americans can find work, have good careers and give their families a better life."

CHOICE, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, was approved by the Financial Services Committee last month by a vote of 34-26. The bill has received strong support from community banks and credit unions. Large financial institutions did not offer their support for the Financial CHOICE Act. Instead, Wall Street CEOs have publicly said they do not support repealing Dodd-Frank.

The Congressional Budget Office reports the Financial CHOICE Act would reduce the deficit by $24.1 billion over 10 years and that the bill's regulatory relief would benefit community banks and credit unions. The nation's largest banks would be unlikely to raise enough capital to meet the bill's requirement for substantial regulatory relief, the CBO reported.  

For an executive summary of the Financial CHOICE Act, CLICK HERE
For even more information about the bill, visit


ALABAMA Supreme Court Says Cash Advance Company Not a Debt Collector

The Supreme Court of Alabama has reversed a jury verdict awarding the plaintiff $200,000 in damages, ruling on appeal that the Fair Debt Collection Practices Act (FDCPA) did not apply to the pawn transaction at issue.

The case, Complete Cash Holdings, LLC v. Powell, arose from a forged title-pawn agreement. Ms. Powell's granddaughter stole title to Ms. Powell's truck, and then, with the assistance of a Complete Cash employee, entered into a forged agreement with Complete Cash to pawn the truck. The granddaughter received $2,352 in cash from Complete Cash, purported to give Complete Cash a security interest in the truck, and forged signatures so that her grandmother was obligated to repay the loan (plus a finance charge) the following month. All of this was done without Ms. Powell's knowledge. The title-pawn agreement was then extended several times for additional 30-day periods, and the granddaughter made several payments pursuant to the extensions. But the payments eventually stopped, and Ms. Powell's truck was therefore repossessed.

Ms. Powell later brought suit against Complete Cash. Among other claims, she brought claims under the Alabama Pawnshop Act (Ala. Code § 5-19A-1, et. seq.) and the FDCPA. The trial court dismissed various claims before trial but it did not dismiss the FDCPA claim, and thus the FDCPA claim and several others were eventually tried to a jury. The jury ruled in Ms. Powell's favor and awarded her $200,000 in damages.

On appeal, Complete Cash reiterated its argument that the FDCPA did not apply to the facts of this case because Complete Cash is not a "debt collector" as that term is defined under the FDCPA. Specifically, Complete Cash argued that it "is in the business of lending money to consumers by way of deferred presentment agreements and title pawns," and that it is a "creditor" (rather than a "debt collector") under the FDCPA.

The Alabama Supreme Court agreed with Complete Cash, noting that the company's business "is to extend credit to borrowers, which places these borrowers in debt," and that "Complete Cash is [therefore] Powell's creditor." Although Ms. Powell argued on appeal that a "creditor" may nonetheless become a "debt collector" when it seeks to enforce a security interest, the court rejected that argument. Instead, the court ruled that Complete Cash was merely collecting its own debt and enforcing its own security interest when it repossessed the truck. It was not collecting debts owed to others, and thus could not be a "debt collector" for purposes of the FDCPA.   Read more at LEXOLOGY


Column: Payday lenders have their way with OHIO House

Some people get better service than others at the Statehouse. In 1995, in just 65 days - whiplash-fast - Ohio's House and Senate legalized payday lending. And today, Ohio payday loans are the nation's costliest, "with a typical annual percentage rate (APR) of 591 percent," according to research by the Pew Charitable Trusts.

A first try at reform, in 2008, was checkmated by a loophole. Now there's a second attempt at payday loan reform underway, but it's stuck in an Ohio House committee. Although it has been roughly three months since Reps. Kyle Koehler, a Springfield Republican, and Michael Ashford, a Toledo Democrat, introduced their House Bill 123, it hasn't gotten a committee hearing.

Koehler and Ashford's proposal caps, at 28 percent per annum, the interest rate on payday loans; limits monthly fees to 5 percent (and permits fees only on the first $400 borrowed, i.e., a maximum of $20 per month); and bans monthly payments greater than 5 percent of a borrower's monthly gross income. The Pew trusts support the bill and estimate it could save Ohio borrowers $75 million a year.

Interest per annum isn't the same as the annual percentage rate. Under HB 123, if an Ohioan with a $30,000 income took out a $400 payday loan, repaying that loan over five months would cost him or her $528. That's a 121 percent APR, and that's steep, but nowhere near as steep as current Ohio payday loans.

Those numbers suggest HB 123 would let payday lenders keep making sweet profits in Ohio. And that undercuts payday loan lobby claims that HB 123 would run payday lenders out of Ohio, drying up credit options for lower-income Ohioans. A somewhat similar Colorado law is said to work well there.

A committee hearing is the first step every bill in the Ohio General Assembly must take before it can come to a vote in the legislature. And the legislature's clock is ticking; by July, legislators will likely have heaved themselves out of their Statehouse La-Z-Boys and head back home. Read more at THE COLUMBUS DISPATCH


Fourth Circuit Affirms Finding That Arbitration Agreement In Payday Loan Obtained Over The Internet Is Unenforceable

Plaintiff electronically signed a contract which contained: (1) terms governing the loan; (2) an agreement to submit disputes to arbitration; and (3) a choice of law provision which required the application of Otoe-Missouria tribal law and disclaimed the application of state or federal law. The arbitration clause itself provided that "any dispute ... will be resolved by arbitration in accordance with the law of the Otoe-Missouria Tribe of Indians." The same disclosure about the application of Otoe-Missouria tribal law was included on the signature page.

Relying on the Circuit Court's prior decision in Hayes v. Delbert Services Corp., 811 F.3d 666 (4th Cir. 2016), the district court concluded the contract denied the applicability of all federal and state law, holding the arbitration agreement unenforceable.

The Circuit Court reviewed, tasked with examining whether, as a matter of law, the "choice-of-forum and choice-of-law clause operate in tandem as a prospective waiver of a party's right to pursue statutory remedies." As the language took the "plainly forbidden" step of prospectively waiving federal substantive rights, the choice of law provision was unenforceable as a matter of law and not severable from the rest of the arbitration agreement, because the choice of law provision went to the "essence" of the contract. JD SUPRA

Dreher Tomkies LLP
Rent-A-Center Raises $114,000 For North TEXAS Food Bank

PLANO, Texas--(BUSINESS WIRE)-- Rent-A-Center, Inc. (NASDAQ/NGS:RCII), a leader in the rent-to-own industry, donated $114,000 last week to the North Texas Food Bank at a closing ceremony in its corporate headquarters.

The check donation was the culmination of a month-long coworker giving campaign whose theme was the 1950s inspired "RAC Around the Clock to Stop Hunger" and included a hula hoop contest along with other fundraising activities like raffle items, a Ping-Pong tournament and Creole cuisine. Coworkers raised a combined $64,000 with Rent-A-Center, Inc. matching up to $50,000.

Rent-A-Center coworkers have been donating to the food bank since 2003. This year's donation brings the total to more than $1 million over the course of 14 years.

"The North Texas Food Bank says one dollar buys three meals," said Gina Hethcock, Senior Manager of Public and Community Relations at Rent-A-Center. "If you do the math, we just provided every person in a town, like say Frisco, not one, but two meals today."

According to the North Texas Food Bank, there are more than 835,000 food insecure people across its 13-county service area - including one in every four children.

"Year after year, the entire team at Rent-A-Center showcases such enthusiasm and passion for the mission of the North Texas Food Bank," said Simon Powell, Interim President and CEO of the North Texas Food Bank. "As we embark on the hungriest season, we know that there will be many children and families that will face tightened budgets. We know these generous funds from Rent- A-Center employees will help us in the important mission of putting food on the table for people in need."

The North Texas Food Bank (NTFB) is a top-ranked nonprofit hunger-relief organization with its primary distribution center in Southwest Dallas, and administrative headquarters located in the Dallas Farmers Market. NTFB provides access to more than 190,000 meals for hungry children, seniors, and families through a network of more than 1,000 programs and more than 200 Partner Agencies.

A rent-to-own industry leader, Plano, Texas-based, Rent-A-Center, Inc. is focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable products such as consumer electronics, appliances, computers, furniture and accessories, under flexible rental purchase agreements with no long-term obligation. BUSINESS WIRE

INCITE Business

Column: Buried deep within GOP bill: a 'free pass' for payday and car-title lenders

You have to wade all the way to Page 403 of the 589-page Financial Choice Act to find a one-sentence provision that obliterates current efforts to bring fairness and responsibility to payday lenders and similar merchants of never-ending debt.

Section 733 of the bill, which could come up for a vote by the full House of Representatives as soon as this week, declares that federal authorities "may not exercise any rulemaking, enforcement or other authority with respect to payday loans, vehicle title loans or other similar loans."

With that one line, Republican lawmakers have declared their willingness to allow people facing financial difficulties to be at the mercy of predatory lending practices that typically involve annual interest rates approaching 400 percent.

"They're trying to sneak in that provision," Diane Standaert, executive vice president of the Center for Responsible Lending, told me. "It seems like they hoped no one would notice."

She called the provision "a free pass for payday and title lenders to not be subject to efforts to rein in their abusive practices."

Payday loans are intended to serve as short-term fixes for financial troubles. In practice, however, borrowers frequently are unable to repay the original loan and become trapped in ongoing cycles of debt.

The Consumer Financial Protection Bureau has found that over 19 million U.S. households resort to payday loans. Of that number, almost 70% of borrowers have to take out a second loan to cover the first, and 20% end up saddled with 10 or more loans, one after the other.

Title loans are similar except the borrower's vehicle is put up as collateral. Not only do title loans come with crazy-high interest rates, but if you fall behind on payments, you can lose your wheels.

Payday and title loan companies have been in a tizzy since the Consumer Financial Protection Bureau proposed rules last year aimed at making the industry more trustworthy and consumer-friendly.

The rules would require lenders to determine in advance that a borrower will be capable of making payments while still meeting basic living expenses. The rules also would make it harder for lenders to keep issuing new loans to the same people. Read more at THE CHICAGO TRIBUNE

CFPB CommentWatch

NEVADA: Bill Would Create Database To Track Payday, Other High-Interest Loans

May 30, 2017 by KNPR News Staff - Nevada officials have proposed a way to track the payday loan industry in the state.

Assembly Bill 515 would create a confidential database of payday, high-interest and title loans done in Nevada. The bill would create the data without the names of the people receiving the loans.

AB 515 was introduced by Assemblywoman Heidi Swank and Assembly Speaker Jason Frierson, and was heard Monday in the Assembly Government Affairs Committee, but took no action on the bill.

The payday loan industry is frequently criticized for high-interest lending practices. The Las Vegas Review-Journal reports Swank wanted to make clear the bill does not hinder the industry. Lobbyists for the lending industry and title loan industry testified against the bill, saying that title loans are already recorded with the Department of Motor Vehicles KNPR.ORG


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