AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

March 8, 2018

Insight.tm

Community bankers urge Senate to approve regulatory relief bill

The Independent Community Bankers of America (ICBA) strongly support the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155), which the Senate is expected to vote on this week.

The ICBA said the bill would provide regulatory relief for community banks, which, in turn, would stimulate local economic growth.

Specifically, the bill would exempt certain community bank loans from escrow requirements, simplify community bank capital requirements, create a short-form call report for use in the first and third quarters by some community banks, expand eligibility for the 18-month regulatory examination cycle to more community banks, and ease appraisal requirements to facilitate mortgage credit in local, rural communities.

Further, it would exempt most community banks from the Volcker Rule, expand access to the Federal Reserve's Small Bank Holding Company Policy Statement to help more community banks build capital, improve regulatory treatment of reciprocal deposits and certain municipal securities, include higher asset thresholds for systemically important financial institution designations, and ease stress testing requirements. Read more at FINANCIAL REGULATION NEWS


Amazon's move into banking could make online shopping possible for everyone

Amazon's potential move into online banking may be more about reaching new customers than disrupting the financial industry, according to one Wall Street firm.

The Wall Street Journal reported Monday that the e-commerce giant is in early talks with financial institutions to build a "checking-account-like" product for its customers.

Bank of America Merrill Lynch reiterated its buy rating on Amazon shares, saying a new banking offering will spur more e-commerce sales, particularly with younger shoppers and lower-income consumers who don't have traditional bank accounts.

"We think Amazon's aim with expanding its financial offering is less about disrupting the financials sector and more about increasing engagement on its own marketplace," analyst Justin Post wrote in a note to clients Monday. "While there may be some ability for Amazon to reduce the fees it pays to banks and payment processors by creating a closed-loop prepaid debit card type of product, we think that Amazon's primary motivation would be to attract younger and underbanked customers that otherwise would find it difficult to shop online." Read more at CNBC

CFSA Conference  

Senate bank rules bill gains bipartisan support
Senate inches closer to passing bill to ease bank safeguards

WASHINGTON (AP) -- The Senate advanced legislation Tuesday to roll back some of the safeguards Congress put in place to prevent a repeat of the financial crisis. Enough Democrats supported a procedural vote on the bipartisan bill to show it has a good chance of passage in the coming days.

The move to alter some key aspects of the Dodd-Frank law comes ten years after the financial crisis rocked the nation's economy. The bill has overwhelming Republican support and enough Democratic backing that it's expected to gain the 60 votes necessary to clear the Senate. That was reflected in the 67-32 vote Tuesday, with 16 Democrats and one independent voting to move ahead with consideration of the bill.

Several Democratic lawmakers facing tough re-election races this year have broken ranks with Minority Leader Chuck Schumer, D-N.Y. and Sen. Elizabeth Warren, D-Mass.

Sen. Jon Tester, D-Mont., said he was proud to support Dodd-Frank eight years ago, and for the most part, the legislation was successful, but the bill also had unintended consequences, which he said included consolidation in the banking industry and a decline in small business lending. He said local banks in Montana have suffered from regulations specifically designed to rein in risky behavior on Wall Street.

"As a result of complying with these regulations, many of our community bankers are hanging up their hats," Tester said.

Nonpartisan congressional analysts say the legislation would slightly increase the probability of a big bank failure - prompting a possible taxpayer bailout - or another financial meltdown. The probability of those events is deemed to be small under current law. The new assessment by the Congressional Budget Office estimates the bill would increase federal deficits by $671 million between 2018 and 2027 if it became law. Read more at ASSOCIATED PRESS


If the Payday Lending Rule Stays, Ability-to-Repay Does, Too. by Daniel Press

On its face, the Consumer Financial Protection Bureau's (CFPB) payday loan rule doesn't seem to be an issue for anyone but, well, payday lenders. The final rule, which was issued in October last year, carved out the three largest constituencies that would have opposed such a regulation: community banks, credit unions, and longer-term installment lenders.

As a result, there has been sparse industry resistance to the rule. Recognized financial institutions that hold great sway on Capitol Hill have barely raised a finger. Some simply don't want to defend payday industry, who are unfairly labeled as "predatory lenders." Others may even be opposed to the competition that payday lenders bring against their own business.

But many in the financial services industry simply seem to believe that because the rule doesn't impact them, it's not worth fighting. That is shortsighted. While the CFPB has excluded certain groups this time around, there is no reason to believe that the agency won't impose the same burdensome regulations on other institutions in the future. A Trump-appointed director may be able to prevent this now, but there's nothing stopping a new director down the road. Read more at CEI.ORG

SURECARE SERVICES
microbilt

The 5 ways the Senate plans to roll back regulations on Wall Street

The Senate is slated to pass sweeping legislation this week to roll back key components of financial regulations put in place after the global financial crisis.

Passage of the legislation would be the most significant step taken by the Senate to help fulfill President Trump's promise to loosen financial-industry regulations that the White House has said are holding back the economy. The bill, which has garnered bipartisan support, takes aim at 2010s Dodd-Frank Act and would free dozens of financial institutions from the strictest rules put in place by regulators after the financial crisis.

"This bipartisan legislation takes important steps to improve our nation's financial regulatory system," Tim Pawlenty, chief executive of the Financial Services Roundtable, said in a letter this week to Senate leadership.

The legislation, sponsored by Sen. Mike Crapo (R-Idaho), chairman of the Senate Banking Committee, faces a procedural vote as early as Tuesday. Should it pass that hurdle, many expect it to receive the 60 votes necessary to pass the full Senate with Democratic support. The House passed legislation last year that would repeal larger chunks of Dodd-Frank, so proponents' biggest remaining challenge may be to reconcile the House and Senate versions.

"Get ready, folks-the moment we've been waiting for is about to arrive," Camden Fine, head of the Independent Community Bankers Association, told members last week.

Payday lenders, watchdog agency exhibit cozier relationship

The former CEO of a payday lending company that had been under investigation by the Consumer Financial Protection Bureau has asked to be considered for the top job at the watchdog agency, The Associated Press has learned.

Such a request would have been extraordinary in the years when the agency was run by an Obama appointee and often targeted payday lenders. Along with recent actions taken by the CFPB, it suggests a cozier relationship between industry and regulator since the Trump administration took over in November.

Under Mick Mulvaney, Trump's budget director and acting director of the CFPB, the bureau has taken a decidedly friendlier approach to the financial industry including cutting down on enforcement and dropping investigations or lawsuits against payday lenders and other companies. It has also proposed to revise or rescind many rules put into place by Richard Cordray, the first permanent director of the agency, including some that would have put additional restrictions on payday lenders.

Under Cordray, the CFPB opened in investigation into lending practices at World Acceptance. On Jan. 22, the company said the investigation had been completed without enforcement action. It also said CEO Janet Matricciani had resigned after 2 ? years in that position.

Two days later, Matricciani sent an email to what appears to be Mulvaney's personal email address to pitch herself as a candidate to lead the CFPB. The email was shared exclusively with The Associated Press by Allied Progress, a left-leaning consumer advocacy group, which obtained the document as part of a Freedom of Information Act request. Read more at ABC NEWS

CFSA Conference _ Expo
CFSA Exhibitors
CFPB
CONSUMER FINANCIAL PROTECTION BUREAU ISSUES REQUEST FOR 
INFORMATION ON RULEMAKING PROCESSES

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) today issued a Request for Information (RFI) about the Bureau's rulemaking processes. The Bureau is seeking comments and information from interested parties to help assess the overall efficiency and effectiveness of its rulemaking processes. This is the seventh in a series of RFIs announced as part of Acting Director Mick Mulvaney's call for evidence to ensure the Bureau is fulfilling its proper and appropriate functions to best protect consumers. This RFI will provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities. The next RFI in the series will address the Bureau's adopted rules, and will be issued next week.

Former payday lender CEO now wants to run the CFPB

NEW YORK - The former CEO of a payday lending company that had been under investigation by the Consumer Financial Protection Bureau has asked to be considered for the top job at the watchdog agency, The Associated Press has learned.

Such a request would have been extraordinary in the years when the agency was run by an Obama appointee and often targeted payday lenders. Along with recent actions taken by the CFPB, it suggests a cozier relationship between industry and regulator since the Trump administration took over in November.

Under Mick Mulvaney, President Donald Trump's budget director and acting director of the CFPB, the bureau has taken a decidedly friendlier approach to the financial industry, including cutting down on enforcement and dropping investigations or lawsuits against payday lenders and other companies. It has also proposed to revise or rescind many rules put into place by Richard Cordray, the agency's first permanent director, including some that would have put additional restrictions on payday lenders.

Under Cordray, for instance, the CFPB opened an investigation into lending practices at World Acceptance (WRLD). On Jan. 22, the company said the investigation had been completed without enforcement action. It also said CEO Janet Matricciani had resigned after 2 ½ years in that position. Read more at CBS NEWS

A_S Management
MerchantBoost

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Government Not Only Source of Regulation for Finance

One of the most misunderstood and underappreciated aspects of free market economics is the idea of private or "self" regulation. Up until recently, private enterprises largely self-regulated through forming partnerships or organizations that would privately enforce a set of standards or best practices. For banks, this included such things as lending standards and a firm's capital structure. Over time, however, government agencies increasingly took over these roles and supplanted private regulation. But even today, examples still exist.

Take the Australian financial technology (FinTech) sector's recent decision to self-regulate the disclosure requirements for small business lending. The decision comes in response to a report commissioned by the trade association, FinTech Australia, which recommended that start-ups improve disclosures that will allow small business customers to compare total costs, understand obligations and penalties, and improve dispute resolution. Under no legal obligation (but an obligation to satisfy their customers) the industry is actively improving its standards through enforcing codes of best practice.

The decision is a reminder that the government is not the only source of regulation in financial services, and that deregulation would not mean no regulation. Private companies look to implement best practices that address typical concerns of regulators, and they often do it in a more efficient and effective way. Because these agreed upon standards come from the bottom up, developed by the industry themselves to address concerns of its customers, they are often better suited than one-size-fits-all rules devised by bureaucrats in a nation's capital.
Dreher Tomkies LLP
CFSA Conference _ Expo

Alternative Credit Data and the Analytics Process: Further Examining Unbooked Consumers, Proxy Performance. by Dan Richard

As we outline the FactorTrust analytics process, our next step is to continue to look at unbooked consumers and dive deeper into the rationale behind inferencing their repayment performance, as well as look at proxy performance for validation purposes.

As I mentioned in my previous post, the performance of a consumer may be inferred when rejected or approved-not-booked performance statuses have significantly distinct characteristics from booked goods and/or bads.

Parceling: Statistical Inference

A common inferencing approach is a dual parceling and weighting technique. The approach proceeds as follows:
1. A good-versus-bad model is developed on the booked sample.
2. An approve-versus-decline model is developed on the entire sample. The incumbent score (if provided) can also be used to simulate the incumbent decision strategy.
3. The two models are matrixed, and the sample counts of the performance statuses and bad rates are populated throughout the matrix cells. The number of cells used is determined by the volume in the sample.
4. Bad rates of unbooked records are indexed to the booked bad rates in the cells. Typically, bad rates of rejected statuses are inflated above booked bad rates, and bad rates of approved-not-booked statuses are deflated below booked bad rates. The inflation or deflation is driven by an expert assumption of these consumers' comparative risk levels with respect to the booked population. Inferred performance of the unbooked records is randomly assigned to good or bad, with the percent randomly assigned to bad based on the inferred bad rate in each matrix cell.

OHIO: After a Long Delay, Ohio Lawmakers Plan to Announce a New Payday Lending Bill

A citizens group is trying to put an issue on the ballot that would cap the interest rates of payday loans at 28 percent without the loopholes in current law. The ballot measure is in reaction to lawmakers failing to move on a similar bill. But House leaders say they're ready to move forward.

Republican Rep. Kirk Schuring of Stark County says lawmakers are close to rolling out a revised bill, but it's unknown how closely it will resemble the current bill to cap interest rates, which have reportedly skyrocketed to 590 percent.

A loophole, according to payday lending reform advocates, is the use of car titles as leverage. But Schuring says that won't be addressed in the new language.

"As Rep. Koehler has said many times over, that's already in the revised code so we're going to stand by what he has said many, many times over," Schuring says.

Rep. Kyle Koehler is the Republican sponsor of the bill, and says current law on short-term lending outlaws title loans, but those offering those loans aren't operating under that section of the law.
AMSCOT
Amscot to Celebrate Miami Gardens Branch Family Fun Day on
Saturday, March 10th,  While Supporting Local Non-Profit Organization.
Once again, Amscot will be donating $3,000 to The Mayor's Annual Laptop Giveaway
as part of the Family Fun Day celebration.  AMSCOT

ADVANCE FINANCIAL
Advance Financial's Tina Hodges made a guest appearance with Jim Snell on 
'Today In Nashville'  to talk about Volunteer Tennessee and the  upcoming 
'Tennessee Conference on Volunteerism' .

AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION 
AFSPA helps our members grow their Alternative Financial Services business by providing them with the best information, research, data, support, relationships and by vetting and presenting the best available product and service providers for the Alternative Financial Services Industry. 

Alternative Financial Service Providers Association
757.737.4088

315 Tuscarora St., Lewiston, NY 14092
dan@afspassociation.com
www.afspassociation.com