February 20, 2018

U.S. Bank hit with $613 million penalty related to Scott Tucker banking relationship

The wreckage of Scott Tucker's payday loan empire has now reached one of the largest North American banks with federal prosecutors announcing criminal charges against U.S. Bank for its handling of the Leawood, Kan., man's business accounts.

The U.S. Attorney's Office for the Southern District of New York announced that U.S. Bank will pay $613 million in penalties as punishment for the bank's lax anti-money laundering programs and regulatory compliance that facilitated Tucker's illegal payday lending operation.

U.S. Bank had signaled in regulatory filings reported by The Star in January that it expected to pay large penalties for violating the Bank Secrecy Act.

Tucker is in federal prison after his Oct. 13 conviction of charges related to his massive illegal payday lending operation. He was sentenced on Jan. 5 to 16 years and eight months in prison.

"U.S. Bank's (anti-money laundering) program was highly inadequate," said U.S. Attorney for the Southern District of New York Geoffrey Berman in a statement. "The Bank operated the program 'on the cheap' by restricting headcount and other compliance resources, and then imposed hard caps on the number of transactions subject to AML review in order to create the appearance that the program was operating properly." Read more at KANSAS CITY STAR


Banks Urged to Take On Payday Lenders With Small, Lower-Cost Loans

Those who find themselves pinched for cash often turn to high-cost payday lenders. But traditional banks and credit unions could serve that role for borrowers and do it at much lower rates, according to a new proposal from the Pew Charitable Trusts.

Right now, millions of consumers who need cash fast - say, to cover an unexpected car repair or to avoid having their utilities shut off - often end up borrowing a few hundred dollars from lenders who offer an advance or their paycheck or hold their car titles as collateral. Such businesses often charge high fees and punishing interest rates, dragging borrowers into a cycle of debt that's hard to break, said the report published by Pew Thursday.

"Borrowers need a better option," Alex Horowitz, senior research officer with Pew's consumer finance project, said in a call this week with reporters. Pew has done extensive research on "underbanked" consumers, who often turn to payday lenders. Read more at WRAL.COM


The Trump administration is trying to undermine the CFPB. It will fail. by Richard Cordray

Richard Cordray was director of the Consumer Financial Protection Bureau from 2012 to 2017. He is running for the Democratic gubernatorial nomination in Ohio.

President Trump talked a lot about "forgotten Americans" during the 2016 campaign. That led many people who are struggling in this country to believe he would have their backs in the White House. He has not.

When I stepped down as the first director of the Consumer Financial Protection Bureau in November, I knew there would be changes. But what I have seen since has troubled me deeply.

The CFPB was designed to serve as a tough and independent watchdog for consumers. Yet Trump and White House budget director Mick Mulvaney, the bureau's putative acting head, have bullied the CFPB and put their thumbs firmly on the scale in favor of the predators - the same lenders who for years had strong influence in Washington, powered by armies of lobbyists and a torrent of campaign contributions.

Over the past few weeks, the administration has dismissed enforcement actions, delayed the payday lending rule and halted the investigation of Equifax. Calling for the CFPB to act with more "humility," Mulvaney has taken up the cause of financial industry cheaters who have done - and continue to do - great harm to the American people. Read more at THE WASHINGTON POST

Dreher Tomkies LLP

NORTH CAROLINA:  Payday lending is illegal in NC. Some fear a new bill could allow it back in the state.

WASHINGTON - North Carolina's ban on payday lending could be upended by a bill being pushed by a powerful congressman from the state, consumer protection advocates warned before it passed the House on Wednesday.

But Rep. Patrick McHenry, a Republican member of House leadership from Denver, North Carolina, said the Protecting Consumers' Access to Credit Act is not what its critics contend and is designed to help Americans..

The bill requires that an interest rate remain unchanged even if the loan is sold.

It's a response to a 2015 decision by the 2nd U.S. Circuit Court of Appeals. The court held that when lenders that are not banks buy a loan, they - unlike a federally chartered bank - are subject to the interest limits in the borrower's state. A federally chartered bank can charge interest under the laws of its home state, a crucial distinction since all 50 states have different laws.

North Carolina is among 18 states, along with the District of Columbia, that have capped interest rates on short-term loans.

The Center for Responsible Lending contends the bill would open the door to "rent-a-bank" schemes, in which short-term lenders use a national bank's charter to circumvent state law. The center points out that similar methods are now used to get around state usury laws, according to several reports. Read more at THE NEWS & OBSERVER

CFSA Conference

It's time to audit the CFPB

In a government full of busy agencies, the Consumer Financial Protection Bureau (CFPB) may well be the busiest. But don't fret for its bureaucrats. In between bullying corporations and funneling vast sums of money to left-wing activist groups, the agency has also managed to undertake one of the federal government's most outrageous office decorating projects to the tune of more than $200 million of taxpayer funds.

If nothing else, one has to marvel at the agency's time management skills. The CFPB, the ill-conceived agency created under the Dodd Frank Act, was designed to be autonomous from congressional oversight and semi-autonomous from the executive branch, a nonsensical setup in our system of representative government based on a strict system checks and balances.

That lack of accountability has led, predictably, to a series of scandals within the CFPB. With no one in Congress able to hold the agency accountable, is it any wonder that the CFPB has abused its power and misused hundreds of millions of dollars, to name only a few of its scandalous deeds? From 2014 to 2017, the CFPB spent $11 million each year to rent office space in a building owned by an Obama fundraiser. Yes, you read that correctly: The rent was nearly $1 million per month.
One of the most alarming aspects of the CFPB's authority comes straight from the Dodd Frank Act itself. The law specifies that the CFPB may designate a trustee for the funds it collects from businesses as civil penalties. Because there is no effective congressional oversight, that means that CFPB bureaucrats can pick and choose the recipients of their largesse without needing any kind of permission from Congress. Read more at THE HILL

A_S Management

FTC Returns Money to Consumers Harmed in Alleged Payday Loan Scheme

The Federal Trade Commission is mailing 72,836 checks totaling more than $2.9 million to people who lost money to an alleged scheme that trapped them into payday loans they never authorized or whose terms were deceptive.

According to the FTC, CWB Services, LLC and related defendants used consumer information from online lead generators and data brokers to create fake payday loan agreements. After depositing money into people's accounts without their permission, they withdrew recurring "finance" charges every two weeks without applying any of the payments to the supposed loan. In some instances, consumers applied for payday loans, but the defendants charged them more than they said they would. Under settlements with the FTC, the defendants are banned from the consumer lending business.

The average refund amount is $40.61. Recipients should deposit or cash checks within 60 days. The FTC never requires people to pay money or provide account information to cash a refund check. If recipients have questions about the case, they should contact the FTC's refund administrator, Epiq Systems, Inc., at 888-521-5208. Read more at Federal Trade Commission


New Research Links Financial Well-being with Community Involvement

SPRINGFIELD, Mass., Feb. 15, 2018 /PRNewswire/ -- A new nationwide poll released today by Massachusetts Mutual Life Insurance Company (MassMutual) concludes that Americans who are involved in various communities not only find it personally gratifying, but financially rewarding as well. Forty-eight percent agree that community participation improves their finances, and nearly seven in 10 (69 percent) say community involvement is important to their overall well-being.

This new body of research - You Get What You Give: The MassMutual 2018 Financial Wellness and Community Involvement Study - examines the intersection of community participation and financial well-being and strongly demonstrates that community involvement strengthens confidence in financial security.

"MassMutual began out of a concern for community in 1851, when our founders first started offering coverage to help their neighbors secure their future and protect the ones they love," said Roger Crandall, MassMutual chairman, president and chief executive officer. "More than a century and a half later, we are still driven by that same purpose, and this study shows it is more relevant than ever. Our research clearly indicates that by Living Mutual - coming together and relying on each other - we can make our communities stronger and our lives more secure and fulfilling."
FactorTrust - TransUnion
1. Approximately 25 million U.S. households, composed of about 51 million adults and 16 million children, were underbanked in 2015. FDIC

2. The average loan amount for 30-39 year old's is $521.

3. There are more than 4,800 credit unions/federal credit unions in FactorTrust's proprietary database, representing about 78% of all U.S. credit unions.

4. More than 90 percent of underbanked loan applicants have a direct deposit.

5. Underbanked is defined as "may have current checking account and/or current savings account if individual made one or more non-bank financial transactions in the past 30 days." CFSI.

Trump Administration's Latest Strike On CFPB: Budget Cuts

The Trump administration is proposing to dramatically cut funding for the Consumer Financial Protection Bureau, a move critics say is an ongoing assault on the 7-year-old agency.

The bureau was championed by Elizabeth Warren and other Democrats and created in the wake of the financial crisis to protect Americans from getting ripped off by financial firms.

The White House proposal would chop funding for the CFPB by about $150 million - or a quarter of its budget. Such cuts would mean "massive layoffs and disruptions," says Mike Calhoun, the president of the Center for Responsible Lending. That would "make it hard for it to do its job - a job that it's been doing incredibly well," he says.

Financial watchdog groups such as Calhoun's say the agency has been paying for itself many times over. Part of its mission is to go after companies that swindle consumers to get people their money back, "so far returning over $12 billion in relief to consumers who were treated illegally by financial companies," Calhoun says. So in that sense, the CFPB is returning far more money to taxpayers than it's costing them. Read more at NATIONAL PUBLIC RADIO

Advance Financial will accept applications now through March 30 for its
advancing education scholarship program.

Scholarships are available to seniors at accredited Tennessee schools who live in a county such as Wilson County served by Advance Financial. The students must have a minimum 2.5 grade-point average and plan to attend a two- to four-year institution in the U.S. as an undergraduate.

Standard of living sentiment reaches record high. by Walt Wojciechowski

With job gains amassing and take-home pay slowly but surely rising, Americans are feeling as good about how things are going than they have in years, an encouraging indicator for lenders coming to decisions on financing requests from applicants.

In Gallup's most recent Standard of Living Index - which tracks how consumers are faring economically on an ascending point scale - the measure reached an average of plus-54 in 2017. That's well above the plus-50 index average for all of 2016, which, at the time, was the index's highest score in the trending measure's 10-year history.

Gallup's Jim Norman indicated the notable lift in the index appears attributable to respondents' economic attitudes, with people having more disposable income available.

"This year's rise in the overall index is driven by an increase in Americans' outlook for their standard of living," Norman explained. "The percentage of Americans saying their standard of living is getting better has risen from 62 percent in 2016 to 64 percent so far this year, with a corresponding drop in the percentage saying it is getting worse, from 22 percent to 19 percent."

The most recent Standard of Living Index analysis was conducted in 2017, with responses recorded during the first two-thirds of the year. Read more at MICROBILT

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