NEWS: August 8

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House Republicans push for contempt charges against CFPB director

WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives are pushing to hold Consumer Financial Protection Bureau Director Richard Cordray in contempt of Congress for refusing to respond sufficiently to congressional subpoenas.

A report released on Friday by Republican staff of the House Financial Services Committee argued there was "ample evidence" to hold Cordray in contempt because of his alleged failure to fully comply with subpoena requests. Republicans on the panel have been fiercely critical of the CFPB's regulatory work.

The report marked the most direct threat yet to pursue legal action against Cordray, who was appointed by Democratic former President Barack Obama after the agency was created under the 2010 Dodd-Frank financial reform law.

The subpoenas sought records tied to the CFPB's successful efforts to ban mandatory arbitration clauses from financial contracts, including communications between CFPB staff and meetings with outside groups.

The ban, hailed by consumer advocates, was finalized in July but Republicans in Congress are working to overturn it.

Republicans demanded the documents as part of a probe into rulemaking, and whether the rules regarding mandatory arbitration clauses were written in a proper fashion.

Mandatory arbitration clauses require consumers to resolve any disputes through arbitration instead of joining together in class-action lawsuits.

Republican staff on the House banking panel had suggested in June that Cordray could face contempt charges for insufficient responses to congressional queries, but Friday's report took the conflict to new heights.

A committee spokesman, Jeff Emerson, did not immediately respond to a request for comment on whether the panel would actually seek contempt charges.

In response to the report, CFPB spokeswoman Jen Howard said the agency had already produced "thousands of pages" in response to the requests and was endeavoring to do more.
Dreher Tomkies LLP
CFPB Regulations Threaten Credit Market Competition

The Consumer Financial Protection Bureau (CFPB), the agency tasked with protecting consumers from "unfair, deceptive, or abusive" financing practices, is now looking to require an ill-defined class of "lenders" to record and report the gender, ethnicity and race of credit applicants, something that our legislative tradition prohibits.

According to the CFPB information request: "The purpose of section 1071 provided in the statute is: (1) To facilitate enforcement of fair lending laws; and (2) to enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses." When did small businesses become a protected group that the CFPB must look after? When did the CFPB determine that discrimination is a problem in small business financing?

Lending discrimination has been a widely researched topic for decades and many government and private agencies have monitored this issue. Apparently the CFPB feels that lenders still discriminate and that it needs to collect data to measure "discrimination" against women and ethnic minorities and, for some reason, against "small businesses". Read more at FORBES
Lenders and borrowers finding way around Colorado payday loan reforms, research finds

Lenders found a way around state law with back-to-back same day loans.

Colorado passed groundbreaking reforms on payday lending in 2010 that were held up as a national model. But a group that opposes abusive lending tactics says borrowers and businesses that make the high-interest loans increasingly are maneuvering around the law.

Payday loans - characterized by high interest rates and fees and short payment periods - are disproportionately made to those living in low-income neighborhoods and communities of color, and military personnel living paycheck to paycheck, according to the Colorado attorney general's office. Many borrowers get trapped in cycles of debt when they keep borrowing to make ends meet.

A 2010 state law put strict rules on lending that limited the amount consumers could borrow, outlawed renewing a loan more than once and gave borrowers six months to repay. The law drastically reduced the amount of borrowing from payday lenders - dropping it from 1.5 million loans to 444,333 from 2010 to 2011 - and Colorado was hailed as a leader in regulation for an issue that had bipartisan support.

But since the regulations, lenders and borrowers found a way around them: Rather than renewing a loan, the borrower simply pays off the existing one and takes another out the same day. These back-to-back transactions accounted for almost 40 percent of payday loans in Colorado in 2015, according to the Colorado AG's office. Read more at THE DENVER POST

Proprietary, real-time alternative credit data to enable more complete analysis of its underwriting portfolio

ATLANTA - FactorTrust®, The Alternative Credit Bureau™, today announced the addition of Lobel Financial to its growing list of financial service companies implementing its alternative credit data into their credit decisioning process.

Lobel Financial, a consumer finance company specializing in purchasing and servicing automobile contracts from independent and franchised automobile dealers, is using FactorTrust data in a custom scorecard to augment other in house credit strategies.

The company selected FactorTrust to implement its alternative credit data to help them achieve more lift and better separation of good and poor performers.

"We looked closely at what FactorTrust could offer, and decided that its many attributes, delivered in real-time, would help us best reach our goal of establishing enhanced segmentation for the development of our new internal scorecard," said Lobel Financial President Harvey Lobel.

"Using alternative credit data is a proactive choice for industry leaders like Lobel Financial, who are faced with the challenge of effectively and intelligently managing risk on the underbanked market," said FactorTrust CEO Greg Rable. "The addition of FactorTrust's proprietary data opens up their options in determining the best performers for their business. It allows a complete picture of consumers, who are often considered credit invisible, but are really just credit inaccurate due to lack of data."

FactorTrust has long-provided alternative credit data, analytics and risk scoring information that lenders need to make informed decisions about consumers. It is differentiated from the Big 3 bureaus by its more than 250 million unique, behavioral and transactional data points untapped by these traditional sources. Read more at FACTORTRUST
CFSA Conference  
New CFPB Study Shows Opted-In Frequent Overdrafters Typically Pay Almost $450 More in Fees

Washington, D.C. - The Consumer Financial Protection Bureau (CFPB) today unveiled new Know Before You Owe overdraft disclosure prototypes designed to improve the model form that banks and credit unions already provide to consumers weighing overdraft coverage. The Bureau is currently testing four prototypes that each have a simple, one-page design aimed at making the costs and risks of opting in to overdraft coverage easier to understand and evaluate. People who frequently attempt to overdraw their checking accounts typically pay almost $450 more in fees if they opted in to debit card and ATM overdraft coverage, according to a new CFPB study published today. The study found that most of these frequent overdrafters are financially vulnerable, with lower daily balances and lower credit scores than people who do not overdraft as often.
Trade Groups Thank CFPB for Eased Rule (Then Ask for More)

Credit Union trade organizations praised the CFPB for its proposal to ease up on Home Mortgage Disclosure Act reporting for home equity lines of credit - then they urged the agency to go further.

In letters sent to the Consumer Finance Protection Bureau in the last week, CUNA and NAFCU said they would prefer the reporting requirement be dropped in its entirety, but if that is not possible, the CFPB should exempt more credit unions.

On July 10, Consumer Financial Protection Bureau Director Richard Cordray proposed raising the home equity line of credit (HELOC) reporting threshold under HMDA, which is designed to prevent discrimination in lending.

The current rule requires credit unions to report data from home equity lines of credit to the CFPB starting in 2018. It now exempts credit unions only if they grant fewer than 100 HELOCs per year. But CUNA and other industry groups had been pushing for a higher threshold and a later start.

Citing concerns voiced by small banks and credit unions about the regulatory burden, Cordray proposed exempting institutions that originate fewer than 500 HELOCs in either of the previous two calendar years from reporting in 2018 and 2019. The bureau would then have time to decide where the level should be set starting in 2020, he said.

Cordray's proposal would provide regulatory relief to about 480 credit unions with $299.2 billion in assets and 24.7 million of the nation's 108 million members, based on NCUA data for credit unions granting 100 to 499 open-end real estate lines of credit in 2016. Read more at CREDIT UNION TIMES
Incite Business
Americans paid $15 billion in overdraft fees last year, CFPB says

Americans have racked up billions -- yes, billions -- of dollars worth of overdraft charges.

In 2016, U.S. consumers paid a total of $15 billion in fees for bouncing checks or overdrafting -- which is when a customer tries to make a purchase without enough money in their account to cover the transaction -- according to new data released by the Consumer Financial Protection Bureau.

All banks with assets over $1 billion must report how much money it brought in via bounced check and overdraft fees, according to CFPB. And this year the industry rang up at $11.41 billion. That's up 2.2% from 2015, which was the first year banks began reporting total overdraft and bounced check fees to the CFPB

Adding in its best guess for what smaller banks and credit unions charged, and CFPB says $15 billion is roughly the grand total.

These fees are particularly troublesome for cash-strapped Americans, CFPB Director Richard Cordray said on a press call Thursday.

"Consumers living on the edge can find themselves racking up numerous overdraft charges," Cordray said. "Despite recent regulatory and industry changes, consumers with low account balances and little margin for error continue to pay significant overdraft fees." Read more at CNN MONEY
Community Involvement
Rent A Center
Rent-A-Center to Raise Money for Food Bank Network

Rent-to-own powerhouse Rent-A-Center (NASDAQ: RCII) is partnering with the largest domestic hunger-relief organization, Feeding America, to raise $150,000 during September, which has been designated as Hunger Action Relief month.

The new fundraising campaign, called "Fill the Fridge," will benefit Feeding America's nationwide network of food banks. It will take place in all of Rent-A-Center's core U.S. stores, its AcceptanceNOW kiosk locations in third party retailers, Rent-A-Center Franchising, Inc., and Home Choice and Get It Now! stores in Wisconsin.

"That means that our stores nationwide will raise money that will stay local and benefit local communities," said Gina Hethcock, senior public and community relations manager for Rent-A-Center. "Hard working people are still struggling to make ends meet. Each dollar we raise helps to secure 11 meals for people in need. So when we meet our goal, we will have provided 1.65 million meals."  

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