NEWS: September 21

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CFPB Could Scale Back Payday Lending Rule To Get It Done

The Consumer Financial Protection Bureau is gearing up to scale back its rule on payday lending, giving the industry a potential break from oversight.

According to a report in the Wall Street Journal, citing industry lobbyists and consumer advocacy groups, the CFPB is moving to scale back a rule on small-dollar lending before President Trump's appointee takes over the watchdog agency. Richard Cordray, the director of the CFPB, has a term that lasts through July of 2018, but many think he will resign to run for governor of Ohio. Aiming to complete the rule, people familiar with the matter told the Wall Street Journal , the CFPB wants to reduce the reach of the proposed rule to get it completed. According to the paper, the rule will focus on payday loans that are due in two weeks or the next pay check and have annual interest rates that could be as high as 390 percent. In order to be excluded from the rule the loan has to last 45 days or more. "We are expecting the rule any time," said Dennis Shaul, chief executive of the Community Financial Services Association of America, the trade group for payday lenders told the Wall Street Journal. "They are very far along in their process." 
CFSA Annual Conference
Why little has been done to protect people from breaches like Equifax

The hacking of Atlanta-based credit reporting giant Equifax has revealed the patchwork nature of the nation's system of cybersecurity when it comes to protecting sensitive consumer data.

The breach, which exposed the Social Security numbers and other data of 143 million Americans, has also revealed how little protection and how few remedies consumers have in the wake of such a devastating attack.

Lobbying has much to do with the issue. The financial services industry and companies like Equifax wield tremendous power in Washington and in state houses around the nation.

Some consumer advocates want to see uniform protections across the country, which would require strong enforcement at the federal level.

Henry Turner, a Decatur attorney who has fought for consumers, said the Federal Trade Commission and the Consumer Finance Protection Bureau should be properly empowered to rein in credit reporting agencies.

"For years the credit bureaus, the oligopoly, have spent a fortune lobbying to prevent that from happening," he said.

Disputes among privacy experts, bankers, retailers and consumer protection groups have created an impasse on Capitol Hill that's left most comprehensive legislation on the back burner. In the meantime, rules for companies such as Equifax that make a business out of handling personal information have remained lax. Read more at ATLANTA JOURNAL CONSTITUTION
Dreher Tomkies LLP
When The Payday Lending Rule Drops, Opponents Are Ready To Attack

The new rules are coming for payday lenders, and opponents of those rules are readying themselves for what will likely be a fairly dizzying battle on the subject.

Payday and short-term lending is an approximately $6 billion-a-year industry, one that both critics and supporters of payday lending agree will take a major hit if the CFPB's proposed rules on payday lending go through.

"We are likely, on our part, to take the appropriate actions that we can to see this rule never becomes effective, and that includes a possible lawsuit," said Dennis Shaul, chief executive of the Community Financial Services Association of America (CFSA), a payday lending trade group.

The group complains that apart from adopting a set of regulations intended to kill a legal area of financial services, the CFPB willfully ignored borrower comments on the short-term loans (borrowers, statistically, are very satisfied with these products) and failed to process comment letters properly. Those objections could form the basis of litigation, if it ever even comes to that.

Republicans have made it quite clear they do not want to see this law go through, claiming that it goes too far and will harm consumers more than it will help them.

To make that block happen, Republicans in the House of Representatives added a "rider," or amendment, to a spending bill banning the CFPB from regulating the payday loan industry.

If that doesn't work (and it is widely expected not to), Republican legislators have already vowed to repeal the rule under the Congressional Review Act and bar the CFPB from ever drafting a similar regulation, according to aides and lobbyists.

But that strategy has risks - particularly going into an election year for the entirety of the House and a third of the Senate. Anti-CFPB zealots might be excited to publicly vote in favor of not regulating the payday lending industry, but moderates in both houses of Congress will have to deal with opposition ads that accuse them of loving debt traps, which no elected official wants.
Advance Financial
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With or without Democratic director, U.S. consumer watchdog to be weakened

WASHINGTON (Reuters) - Whether or not Richard Cordray stays as head of the Consumer Financial Protection Bureau (CFPB) until his term ends in July, the agency's ability to rein in Wall Street will be severely weakened, political insiders, lawyers and consumer advocates said.

Doubts are growing that the Democratic director of America's top consumer watchdog will leave his post to run for Ohio governor, as had been widely speculated, after a lackluster Labor Day speech sparked anxiety over his campaign appeal, according to some party insiders.

Cordray, whose term at the CFPB ends in July 2018, is not expected to announce any decision to run until the regulator releases long-awaited rules restricting payday lenders, which are expected within weeks, according to multiple sources.

Cordray has evaded questions from the Republican chairman on the House of Representatives Financial Services committee, Jeb Hensarling, about his plans, writing in a recent letter: "At this time, I have no further insights to provide on that subject."

Even if Cordray stays, he will not enjoy a reprieve from Republican efforts to defang the agency which they believe is too powerful and restricts the flow of credit.

"He has been under constant attack in his position because of the threat he poses to the status quo on Wall Street," said Karl Frisch, executive director of Allied Progress, a consumer advocacy group which has called for Cordray to stay on.

"I would imagine that would continue regardless of how long he stays in the job."

Some Republicans, including Hensarling, have introduced legislation to weaken and even dismantle the agency which was created as part of the post-crisis Dodd Frank Act. Read more at REUTERS
House panel: CFPB left billions on table when settling with Wells Fargo

The Consumer Finance Protection Bureau has fashioned itself as champion of the little guy, but when it came to dealing with Wells Fargo (NYSE:WFC) over the account opening scandal, it gave particularly favorable treatment to the lender, according to a staff report from the House Financial Services Committee.

An internal CFPB memo shows its crusading director Richard Cordray rushed to settle and ended up fining Wells just $100M, when the bank could have been liable for more than $10B.

Committee Chairman Jeb Hensarling: "The CFPB's handling of this matter and its refusal to fully comply with the congressional subpoena are a slap in the face to millions of Americans who were harmed by Wells Fargo." Read at SEEKING ALPHA
A_S Management

I am a fairly neurotic parent. We all are. But occasionally, I bounce with glee when my kids actually listen to me. The other day, I watched my 18-year-old daughter pay for a shirt and the first thing the clerk asked was for her phone number and email address. My daughter gave my favorite response, "yeah, my Mom won't let me do that....."

You see, all you need is this thing called "money" to buy "things" so why are we all hapless lemmings giving away personal information? Hmmm?

Here is my point; we all bear some personal responsibility of preserving our own identity and privacy.


Here are some tips:
1. Use free services: Use credit cards that alert you for free! American Express® is my favorite credit card as they alert me when weird stuff happens and they have fun apps to track use and they block unauthorized purchases. More fun is that I did not have to pay extra for this service. Check out what is free with your cards.

2. Don't assume that progress is without a price: The "internet of everything" is fun and wildly convenient. But it is fun and wildly convenient for bad people too. Let's call them "hackers." Sure, we all don't like having to pay for credit monitoring but the higher-level monitoring is not free even though your annual credit report is. Many of these services are really worth the price. You can receive emails and texts with changes to your credit report and you can just about stop a thief in their tracks or at least stop them from buying that new phone you didn't order.

3. Keep forms and links on your desktop: Add these to your list of forms in an emergency:
The Best Way To Stress Less About Money. by Diane Harris

Money is the top cause of stress in the U.S., the American Psychological Association reports, and the leading driver of stress in the workplace, according to studies by the National Business Group on Health, Aon Hewitt, PwC and others. The most common cause of all that anxiety? The feeling that you're just one financial shock away from disaster.

Why Financial Shocks Are So Common

Financial shocks are shockingly common and, according to the federal Consumer Financial Protection Bureau, the capacity to absorb a financial shock is a key pillar of financial wellness.

Roughly two-thirds of U.S. households experience a cut in pay, a health crisis, a layoff or other life event that adversely affects their finances over a typical five-year period, a Pew survey found. Every year, six in 10 people get hit by one of these events or a substantial, unexpected expense such as a leaky roof that needs fixing or emergency car repairs. More than half the survey's respondents said the financial shock made it hard for them to make ends meet.

Why Financial Shocks Are So Painful

The main reason financial shocks can be so devastating is because relatively few people have enough cash tucked away. A Bankrate survey last year found that 63% of Americans don't have enough in savings to comfortably handle a $500 car repair or a $1,000 emergency room bill - including nearly half of those who earn $75,000 or more.

Without enough cash to foot the bill, people often turn to credit cards or tap retirement accounts. In a 2017 PwC survey, one in five boomers said they'd had to withdraw money from their plans before retirement and a third anticipated having to do so in the future, most commonly to help manage an unexpected expense. Read more at FORBES

What CFSA Members Need to Know About the CFPB's Final Arbitration Rule
Hosted by Ballard Spahr LLP

Please join CFSA and Ballard Spahr for a complimentary webinar series to be held
throughout 2017. During this third webinar in a four-part series, we will discuss the
CFPB's proposed arbitration rules.


In 2011, the U.S. Supreme Court upheld the use of class action waivers in consumer arbitration agreements. Nevertheless, the CFPB has issued proposed rules that would prohibit the use of such waivers. This is a watershed event in the history of consumer arbitration. Please join us for a discussion of what the CFPB is proposing and how it could affect CFSA members and others in the payday loan industry.

  • The background of the CFPB's arbitration rulemaking;
  • The CFPB's proposed rules on consumer arbitration agreements;
  • Whether CFSA members will be covered by the proposed rules;
  • When the proposed rules might become effective;
  • Whether existing arbitration agreements will be grandfathered;
  • Whether arbitration agreements should continue to be used for individual arbitrations;
  • Possible legal and political challenges to the rules;
  • What CFSA members can do now to maximize the utility of your class action waiver;
  • What CFSA members should do now if you don't have a class action waiver; and
  • Alternative methods of reducing class action exposure.

Tuesday, October 3, 2017 | 12:00PM - 1:00PM ET

Dennis Shaul, CEO CFSA
Kim Phan, Ballard Spahr

Alan S. Kaplinsky, Ballard Spahr
Mark J. Levin, Consumer Financial Services Litigation

This program is open to CFSA Members, Ballard Spahr clients, prospective clients,
and  members of the financial services industry
There is no cost to attend. 
This program is not eligible for CLE credits.

Please register at least two days before the webinar. Login details will be sent to all approved registrants. For more information, contact Daniel Martin at

Ballard Spahr LLP, an Am Law 100 law firm with more than 500 lawyers in 13 offices in the United States, provides a range of services in litigation, business and finance, real estate, intellectual property, and public finance. Our clients include Fortune 500 companies, financial institutions, life sciences and technology companies, health systems, investors and developers, government agencies and sponsored enterprises, educational institutions, and nonprofit organizations. The firm combines a national scope of practice with strong regional market knowledge. For more information,
Debit Cards Fee Limits Have Big Impact on Payday Loans and Overdraft Charges

A new report by the economic research firm, Moebs Services, sheds some light on the continued damage that the Durbin Amendment has wreaked on banks and consumers. The amendment, a last-minute provision of the 2010 Dodd-Frank Act, capped the fees that merchants pay to a bank when a consumer use a bank's debit card at their store.

At the time, my colleagues Iain Murray and John Berlau predicated that this boon for merchants would be at the expense of banks and consumers. So far, they have been proven right. The largest merchants increased their profits, and banks reduced services and raised fees for consumers. But as Moebs recently found, there are some further adjustments to the industry:

Last year, for the first time, credit card interchange fees surpassed overdraft revenue as the top money-maker [for banks], bringing in $33.8 billion compared to $33.3 billion collected in overdraft charges... The shift is a predictable result of the Dodd-Frank Act's Durbin Amendment, which lowered for many banks the amount they could charge in debit card interchange fees.

Regulating debit card interchange fees deprived banks of previous revenue streams. Now, it appears, banks have looked to make up this lost revenue by promoting the use of credit cards, which have higher interchange fees, and raising the overdraft fees on bank accounts linked to debit cards. While this is further proof that the Durbin Amendment has failed to lower costs for consumers, it is interesting to examine why this approach has been more successful for credit card fees than overdraft fees.

The main reason for the difference in revenue levels is the increased competition that other sources of small-dollar financing have brought against overdraft fees - predominately from payday lenders. As the Moebs report found: Read more at CEI.ORG

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