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May 31, 2018

Mulvaney Vows to Enforce the Law Without Targeting Companies that Operate Legally

Bureau of Consumer Financial Protection Acting Director Mick Mulvaney on Tuesday told ACA International members that while the bureau is serious about enforcing the law and holding bad actors accountable, "we are not going after people who are not breaking the law."

Mulvaney served as keynote speaker for ACA International's annual Washington Insights Conference, which kicked off with a reception Monday, May 21, followed by an extensive program and Congressional visits on Capitol Hill. U.S. Reps. Blaine Luetkemeyer, R-Mo., and Leonard Lance, R-N.J., preceded Mulvaney in addressing the crowd of about 90 ACA members who gathered from around the country to take part in this important event.

Without question, the theme of the day was "getting involved in the process." Mulvaney and Luetkemeyer praised ACA members for visiting Washington and taking the time to share important information with members of Congress. Read more at ACA INTERNATIONAL
OHIO: Activists Can Now Collect Signatures For Payday Loan Reform Ballot Issue

Backers of a ballot proposal to cap Ohio's interest rates on payday loans and impose additional regulations on the industry have been cleared to begin signature-gathering.

The state Ballot Board advanced the "Short-Term Loan Consumer Protection Amendment" on Tuesday by certifying it as a single ballot issue. It aims to reduce some of the nation's highest interest rates on short-term loans by capping them at no more than 28 percent, as well as imposes new restrictions on fees, rules and disclosures.

Don Brey, the lawyer for the group behind the measure, says the language will look familiar to many.

"It's basically, with a couple of tweaks, the same as House Bill 123," Brey said.

That's the bill advocates were pushing for in the Ohio House, which would impose some of the same restrictions as the ballot issue. While it passed a House committe, legislators dragged their feet on bringing it to the floor. Now, the fight over a new Ohio House Speaker has delayed it further.

The Ohio Ballot Board's approval allows the Ohio CDC Association, which works to improve neighborhoods, to begin gathering roughly 306,000 signatures. The Ohio Attorney General's office certified a petition summary last week. Read more at WOSU.ORG
Dreher Tomkies LLP
New Payday Alternative Loan Would Give Federal Credit Unions Second Option

Federal credit unions would have a second payday alternative loan option under a proposed rule (Part 701) approved by the Board.

The proposed payday alternative loan option would not replace the current payday alternative loan program, created in 2010, but would be a distinct product. This product would have features to help federal credit unions meet specific needs of certain payday loan borrowers that are not met by the current program and provide those borrowers with a safer, less expensive alternative to traditional payday loans.

During the fourth quarter of 2017, 503 federal credit unions reported making payday alternative loans under the NCUA's current rules. At the end of the fourth quarter of 2017, federal credit unions held $38.6 million in payday alternative loans on their books.

The proposed PALs II program would include most of the features of current payday alternative loan program, with four changes:

Sets the maximum loan amount at $2,000 and eliminates the minimum loan amount.
Sets the maximum term of the loan at 12 months.
Does not require a minimum length of credit union membership.
Does not include time a restriction on the number of loans a federal credit union may make to the borrower in a six-month period, provided the borrower has only one outstanding loan at a time.
National Debt Holdings
OCC gives banks green light to offer short-term loans

The Office of the Comptroller of the Currency (OCC) on Wednesday pushed U.S. banks to offer short-term loans to customers with troubled credit histories, a practice shunned by the regulator five years ago.

The OCC announced a new policy on short-term, small-dollar loans Wednesday meant to encourage banks to compete in a space now dominated by storefront "payday" lenders with high-interest rates.

The new guidelines reverse a 2013 Obama administration policy that instructed banks to avoid such loans over concerns that customers would be unable to pay them back and land in severe debt.

Comptroller of the Currency Joseph Otting, appointed by President Trump last year, said Wednesday that banks can offer safer options for customers that won't land borrowers in cyclical debt.

"When banks offer products with reasonable pricing and repayment terms, consumers also benefit from other services that banks regularly provide, such as financial education and credit reporting," said Otting, a former bank president. Read more at THE HILL
Employment Skip Tracing

The Federal Reserve this week released a new report on the economic well-being of U.S. households in 2017. The report highlights that even with improved financial conditions over the past five years, 40 percent of Americans either could not cover or would struggle to cover an unexpected expense of $400. Additionally, the report found that more than one-fifth of adults are unable to pay their monthly bills in full, more than one-fourth of adults skipped necessary medical care due to financial reasons, and more than 13 million Americans are unbanked or underbanked.

"The Federal Reserve's report proves what we have long known: millions of hard working Americans live paycheck-to-paycheck and struggle to bridge financial gaps or pay for unexpected expenses. Despite these facts, the CFPB proceeded with its misguided small-dollar loan rule under former Director Richard Cordray, which will cut off a vital source of credit for millions of Americans," said Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA).

"Demand for small-dollar credit will continue to exist even if small-dollar loans are no longer available. Removing consumers' access to small-dollar loans provided through legal, licensed lenders will only exacerbate the financial struggles that millions of Americans face and will force them to turn to unregulated, illegal lenders operating in the shadows," Shaul added. "This is why CFSA recently filed a lawsuit to obtain relief for American consumers and small businesses who will be hurt by the regulatory overreach of the CFPB under former Director Richard Cordray's highly partisan tenure." Read more at CFSA
Segment of Population Using Alternative Loans May Perform Well on Traditional Credit Products.        TransUnion's newest study reveals trends in the alternative loan market

Two-thirds of consumers active in the alternative loan market fall in the subprime risk category, the riskiest of all credit tiers. Yet, a new TransUnion (NYSE: TRU) study found that many of these consumers perform well when opening traditional credit products such as credit cards, auto and personal loans.

Alternative loans are one of the largest categories of credit obligations not reflected in the traditional credit file. These often include short-term loans, short-term installment loans, virtual rent-to-own (or point-of-sale finance) and auto title loans. The risk distribution of this segment is much different from the overall population: approximately 66% of the population found in TransUnion's alternative lending database is in the subprime risk group (those consumers with a VantageScore 3.0 credit score of 300 to 600) whereas the overall population stands at 25%.

"Alternative loans are often utilized by consumers who need money fast or have no other avenues to secure a loan. The majority of these consumers are among the riskiest, from a traditional credit score perspective, but those who maintain satisfactory payment status on alternative loans can in fact present acceptable risks on traditional credit products," said Matt Komos, TransUnion's vice president of research and consulting. Read more at TRANSUNION
A_S Management
Your neighborhood bank may now offer short-term, small dollar loans

Consumers who rely on payday loans to fill their budget gaps may have a new option to turn to: traditional banks.

National banks just received the go-ahead to serve that market from their regulator, the Office of the Comptroller of the Currency.

On Wednesday, Comptroller of the Currency Joseph Otting called for national banks and federal savings associations to step into the short-term, small-dollar installment loan market.

These loans typically range from $300 to $5,000, and that adds up to about $90 billion in loans taken out every year by millions of U.S. consumers.

"Consumers should have more choices that are safe and affordable, and banks should be part of that solution," Otting said in a statement.

Letting banks offer these kinds of loans will give more choice to consumers, who often turn to payday loans to make up for personal money shortages. Read more at CNBC
Employers warming up to to financial wellness programs

But data sharing is employees' biggest barrier to participation in financial wellness programs.

Here's more confirmation of how employers feel about financial wellness programs. Prudential's Workplace Solutions Group survey, Benefits and Beyond: Employer Perspectives on Financial Wellness, finds that the percentage of employers offering financial wellness programs rose to 83 percent, up from 20 percent in the survey two years ago.

And if that's not enough, another 14 percent say they plan to offer these programs in the next one or two years.

They also say that big data could help measure results, customize programs and fill remaining gaps-although that's not likely to be all that popular with employees concerned over privacy issues.

In fact, 61 percent of large employers say that data sharing is employees' biggest barrier to participation in financial wellness programs, citing "privacy concerns" and "putting together all the data and information." Read more at BENEFITS PRO
Financially stressed workers likely to draw on retirement plans

Financial stress is taking its toll on employees, causing them to partake in rather risky money behavior: tapping into their 401(k) or other retirement savings in an attempt to get back on track.

More than half of workers (54%) who identify as being financially stressed say they will likely use their retirement funds for expenses other than retirement, according to PwC's 2018 Employee Financial Wellness Survey, out this week. That's compared to 33% of their colleagues who say they're not stressed about finances.

"Our survey indicates that the main reason people invade their retirement plans is due to an unexpected expense, emergency and/or to defray medical expenses," Kent Allison, a partner and national leader, employee financial education and wellness practice at PwC, tells EBN. "Not having enough set aside for an unexpected expense has been the No. 1 cause of financial stress since we started our survey." Read more at Employee Benefit News
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Alternative Financial Service Providers Association

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