March 13, 2018

CFSA Conference  

OHIO: Payday loan amendment rejected by Ohio attorney general

COLUMBUS, Ohio -- Ohio Attorney General Mike DeWine on Friday rejected petition language for a proposed constitutional amendment to cap payday loan interest rates.

DeWine's office is the first stop in a long process to put an issue on the statewide ballot in Ohio. At this stage, DeWine does not judge the merit of the proposal, only that supporters' summary of the measure, which will appear on petitions, accurately describes the proposed amendment.

DeWine found at least six instances where the summary did not match the proposed amendment.

"For these reasons, I am unable to certify the summary as a fair and truthful statement of the proposed amendment," DeWine stated in a letter to petitioners.

Citizen-backed initiatives are commonly rejected on their first try. Nate Coffman, a petitioner and executive director of the Ohio CDC Association, said supporters will quickly correct the errors, collect another 1,000 signatures and resubmit language to the attorney general.

"Our enthusiasm is not deterred at all," Coffman said.

The "Short-Term Loan Consumer Protection Amendment" would cap interest rates for short-term loans at 28 percent and allow lenders to charge a $5 fee for every $100 borrowed, up to $20. It would also extend the time to repay the loan without fees to 180 days. Read more at CLEVELAND.COM

Amazon's foray into banking could target key credit union demographics

If Amazon enters into financial services, as announced in a Wall Street Journal report earlier this week, the tech giant may steal two crucial customer demographics from credit unions: the underbanked and millennials.

Amazon is reportedly in talks with JP Morgan Chase and Capital One about creating a checking account-style product for customers, and while there are plenty of issues in play for larger financial institutions, those two demographics may be the biggest concerns for most credit unions.

This kind of deal would not be out of the ordinary for Amazon. Already this year, the company's founder Jeff Bezos joined forces with JP Morgan's chief executive Jamie Dimon and Berkshire Hathaway's Warren Buffet to create their own healthcare company for American workers.

"Amazon is the most dominate force in retail," explained Mark Sievewright, financial services consultant, founder and CEO of Sievewright and Associates. "It has all the attributes you would expect - except for a banking charter - to be a very dominant force in banking. But I think we are going to see partnership approaches rather than disruption in banking from Amazon."

While the deal could reduce transaction fees for Amazon, it may not bode well for credit unions of any size that are trying to serve the underbanked or younger customers.

ALABAMA: Payday Loan Reform Bill Passes AL Senate

A bill that passed the Alabama Senate yesterday would give payday loan customers longer to repay their loans.

The bill, sponsored by Senator Arthur Orr, would give borrowers 30 days to repay a loan, instead of as little as 10 days in some cases. Orr says that change would give people a much better chance at paying off the loan. He says the change drops the effective yearly interest rate of payday loans from 450 percent APR down to 220 percent.

With payday loans, borrowers currently pay a flat fee of up to $17.50 per $100 to borrow money for a period of 10 to 14 days. Critics argue the loans can quickly become a predatory lending trap when people borrow more money in order to pay off the first loan. Industry backers, though, say the loans provide a service to people who have few alternatives.

The bill now moves to the House of Representatives, which Orr says has been a "Bermuda Triangle" for past payday loan reform efforts. In 2016, a similar bill passed the Senate but failed to clear the House. Read more at ALABAMA PUBLIC RADIO

CFPB invites comments on "usefulness" of consumer complaint database, reports

The Consumer Financial Protection Bureau's consumer complaint database and the reports derived from it have long been a source of consternation for the financial services industry, ever since the bureau decided to make those complaints public over the objections of many industry observers.

But there's a new boss at the CFPB now, and he ain't the same as the old boss.

In the last few months, CFPB Acting Director Mick Mulvaney has firmly placed his stamp on the CFPB, even going far as to establish a new mission from the bureau that is far different from the CFPB's mission under former director Richard Cordray.

Last month, Mulvaney announced that he planned to seek public input on all functions of the CFPB in order to "provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities."

And now, the CFPB is asking for public comments on its consumer complaint gathering and reporting, including the controversial complaint database. Read more at HOUSING WIRE

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FLORIDA: Bill to let payday lenders make bigger, longer loans heads to governor

With little discussion, the Florida House late Wednesday passed measures to revamp regulations for the payday-loan industry and to expand the state's resign-to-run election law, sending the issues to Gov. Rick Scott.

The votes came amid a batch of bills that were quickly approved by the House at the end of a marathon floor session dominated by a debate on school-safety legislation.

House members voted 106-9 to approve the payday loan bill (SB 920), which also easily cleared the Senate on Saturday. The industry-backed measure would allow payday lenders to make larger loans for longer periods of time. Read more at PALM BEACH POST

US Chamber of Commerce Backs New Bill to Help Main Street Businesses

The US Chamber of Commerce sent a "key vote" letter to the Senate in support of S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act. The bill looks to provide community banks with regulatory relief after the blanket implementation of financial regulations following the 2008 financial crisis.

US Chamber of Commerce Backs Dodd-Frank Relief for Small Banks

The letter highlights the difficulties faced by mains street businesses in the wake of regulations like the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

"Main Street businesses depend on community and regional banks for the financing necessary to get started, sustain operations, manage cash, make payroll, and create well-paying jobs. The 'one-size-fits-all' approach to regulation implemented in the wake of the 2008 financial crisis has severely constrained these banks' ability to serve consumers and small businesses in their communities," the letter explained. Read more at SMALL BIZ TRENDS
Dreher Tomkies LLP

Republicans are about to deregulate banks - with Democratic support

12 Senate Democrats are backing a Republican bill to weaken parts of Dodd-Frank.

In the next week, the Senate is expected to pass the Economic Growth, Regulatory Relief, and Consumer Protection Act, a bill that rolls back some of Dodd-Frank's financial regulations and widens existing loopholes.

Republicans drafted the bill. But it has 12 Democratic co-sponsors, giving it a filibuster-proof majority.

The legislation exempts banks with less than $10 billion in assets from the Volcker Rule (which bars commercial banks from some speculative trades) and various mortgage requirements; allows banks with between $50 billion and $250 billion in assets to operate with less regulatory scrutiny; and directs the Federal Reserve to tailor regulations to the specific balance sheets of the bigger banks, rather than enforcing rules equally across the board.

Most Democrats don't like the bill. But in my conversations, they don't see it as an enormously consequential rollback of their Wall Street reforms either.

"I would vote against this bill," says former Rep. Barney Frank, a Democrat who helped spearhead the namesake Dodd-Frank Act. "But I understand the pressure to vote for it, and I don't think the bill makes a serious dent in what we did." Read more at VOX

New Survey Shows 70% Increase in Employee Savings Thanks to FinFit Financial Wellness Benefit

VIRGINIA BEACH, Va.-- FinFit, a leader in providing voluntary financial fitness benefits, announced today the results of their annual Employee Financial Wellness survey. "From the companies surveyed, we saw an 85% increase in mid-to-large businesses actively offering financial wellness,"1 said Jennifer Creech, SVP of Strategic Partnerships. "This shows how important financial wellness is to today's workers, and our new survey clearly demonstrates its positive impact on both employees and the companies they work for."

This survey included a broad cross-section of industries, and assessed workers taking part in the FinFit Financial Wellness Program. It reveals marked improvements in just about every area of their finances: over 69% of those surveyed indicated that their financial stress decreased by using the tools and resources available to them as part of the program. Moreover, before enrolling in the program, most employees were unable to save any significant amount of money for emergencies or retirement on a regular basis. However, after taking part in the program almost 70% of employees were able to begin saving on a regular basis, some as much as $400 per month.

This is significant, as 56% of workers struggle with day-to-day financial issues, such as medical, home, or car repair expenses, insufficient savings, credit card or student loan debt, or any number of other financial challenges. And that can cause stress that leads to lack of workplace focus, illness, absenteeism, and lost productivity. Employers lose an estimated $7,000 per employee when this occurs. Read more at BUSINESS WIRE

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TEXAS: Some payday, title lenders not complying with Denton ordinance

A fresh look at the city's 5-year-old ordinance that governs payday and title lenders found just five businesses in compliance with the rules, according to a recent city staff report.

Scott McDonald, the city's new director of development services, provided a written report to the Denton City Council earlier this month. The report listed 26 stores that provide consumer loans in Denton. Five businesses have kept their registrations current; another six have not. The city staff are investigating 15 other businesses that claim the city's rules don't apply to them.

"The goal is to get everyone in compliance," McDonald said.

Payday and title lenders offer short-term, high-interest loans for borrowers who need small amounts of money to pay a bill or handle an emergency. Lenders say they are responding to a consumer need. Critics say the loans are predatory and can push borrowers into a cycle of debt they cannot repay.

Dallas was the first Texas city to write rules addressing loopholes in state law for short-term lenders. Denton followed suit in 2013 after a Denton Record-Chronicle investigation found payday and title lending businesses proliferating near the city's poorest neighborhoods. At the time, some Denton social service groups said predatory lending was affecting community resources meant to help people in need. Read more at DENTON RECORD-CHRONICLE

Infographic: Benefits of Serving the Underbanked

According to the Federal Deposit Insurance Corporation (FDIC),the underbanked are households with a checking or saving account but are credit invisible.

They rely on alternative financial services such as: Money Orders, Check Cashing Services, Payday/Refund Anticipation, Pawn Shop/Auto Title Loans, Rent-to-own Services.

At more than 20% of U.S. households, the underbanked are an important demographic to the financial industry. Serving them can prove beneficial for both the customer and the organizations that extend credit.

Here's how working with the underbanked can benefit a business:

Serving the underbanked can mean offering new credit options, including in-house credit card programs and lease-to-own options. This enables businesses to service an untapped lending market. VIEW THE INFOGRAPHIC

A_S Management

Orrin Hatch: The road to responsible financial reform

Nearly a decade has passed since Dodd-Frank became law. This controversial bill - which was jammed through Congress with almost no weigh-in from Republican lawmakers - was designed to increase oversight of America's largest banks. In theory, the law would strengthen our financial system; in practice, it has been an unmitigated disaster, especially for small and mid-sized banks, which have borne the brunt of the regulatory burden.

America's largest banks have the resources to comply with the 83 million paperwork-hours and $39 billion in costs imposed by Dodd-Frank. But small and mid-sized banks do not. Indeed, the law has all but regulated smaller banks into oblivion. To conform with the estimated 22,000 pages of regulations introduced by Dodd-Frank, community banks have been forced to divert precious resources to shore up their compliance staff. And when small financial institutions are unable to front the costs of regulation, they have no choice but to reduce the scope of their business or close shop completely.

The fallout from Dodd-Frank has been acutely felt right here in Utah. Since 2010, the number of FDIC-insured commercial banks in our state has dropped from 53 to 42. During a similar time span, the number of NCUA-insured credit unions fell from 94 to 66. Fewer community financial institutions leads to less competition, making it more expensive for Utahns to purchase a home or start a business. Read more at DESERET NEWS

OHIO: Ohio payday lending reform should come from the legislature - but a constitutional amendment looms if Ohio lawmakers don't act: editorial

Ten years ago, Ohio voters thought they'd fixed the problem of usurious payday lending -- only to see short-term lenders slither through loopholes galore while Ohio lawmakers, amply rewarded by campaign donations from the payday lending industry, largely sat on their hands.

Well, the time of reckoning may have arrived.

If the General Assembly keeps dawdling, Ohio voters are likely soon to get the chance, through a statewide constitutional amendment on the ballot, to cap at 28 percent the annual interest rates charged on payday loans.

Given Ohioans' overwhelming 63 percent vote in 2008 to curb payday lending abuses, such a constitutional amendment seems likely to sail through.

But larding up the state constitution with more amendments for something that should be adopted legislatively is far from the ideal solution. A payday lending law enacted after hearings is likely to have more nuance and wider buy-in, and also can be more easily amended if payday lenders find more loopholes. Read more at CLEVELAND.COM

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