March 6, 2018


Mulvaney Says His CFPB Is Keeping Elizabeth Warren Up at Night

If Senator Elizabeth Warren is having sleepless nights worrying about the fate of financial regulation in Republican hands, she has only herself to blame, acting Consumer Financial Protection Bureau Director Mick Mulvaney said Tuesday.

Concerns raised by the Massachusetts Democrat about Republican control of the agency she's credited with conceiving and designing "doesn't bother me at all," Mulvaney said at the Credit Union National Association conference in Washington.

The former South Carolina congressman, who also heads the Office of Management and Budget, took over as acting CFPB chief in November. He has been trading blows with Warren via letters arguing over the agency's recent actions against payday lenders. Warren has criticized Mulvaney's decision to halt investigations, noting that he has received thousands of dollars in political donations from the payday industry.

Mulvaney received cheers from the crowd after his latest jab at Warren, who has become the banking industry's fiercest critic in Congress. He said that if she doesn't like what he's done at the CFPB, she should complain to the person who wrote the law -- herself. The powers granted to the bureau's director under the Dodd-Frank Act makes him one of the "most powerful" people in Washington, he said. Read more at BLOOMBERG

FLORIDA Senate backs changes in payday loans

Meeting in a rare Saturday session, the Florida Senate approved revamping regulations for payday loans and supported expanding workers' compensation insurance benefits for police and firefighters who suffer from post-traumatic stress disorder.

Senators voted 31-5 to pass a measure (SB 920) that would allow payday lenders to make larger loans for longer periods of time. The industry-backed proposal also has sailed through House committees, though it has drawn opposition from some consumer advocates.

The bill would allow the businesses to make "installment" loans up to $1,000, with repayment over 60 to 90 days. Current law limits the high-interest loans to $500 for periods of seven to 31 days.

Supporters say the proposal was prompted by potential changes in federal regulations that could affect the types of smaller-dollar, shorter-term loans made by payday lenders in Florida. Also, supporters contend that payday loans play a key role for many low-income people who don't have access to other types of credit.

During brief comments on the Senate floor Saturday, sponsor Rob Bradley, R-Fleming Island, alluded to those issues, saying the bill would ensure the "short-term credit market" would survive amid the potential federal changes. Read more at ORLANDO SENTINEL

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NEW MEXICO Issues New Rules For Payday Loans; But You Can Still Be Charged Up To 175% Interest

Commentary: ALBUQUERQUE, NM - This week, the New Mexico Financial Institutions Division (FID) released highly anticipated regulations on a law which imposed a 175% interest rate cap on small loans. In addition to capping small-dollar loan APR, the law (HB 347) which passed during the 2017 New Mexico legislative session, ensures that borrowers have the right to clear information about loan total costs, allows borrowers to develop credit history via payments made on small-dollar loans, and stipulates that all such loans have an initial maturity of 120 days and cannot be subject to a repayment plan smaller than four payments of loan principal and interest.

HB 347 and the proposed regulations signal progress for fair loan terms and a more inclusive economy for all New Mexicans by eliminating short term payday loans and enacting the first statutory rate cap on installment loans. But, while HB 347 is progress towards ensuring that all New Mexicans have access to fair credit, regardless of income level, the 175% APR cap required by HB 347 remains unfair, unnecessarily high, and will result in serious financial hardship to countless New Mexicans.

"The proposed regulations are a first step in giving all New Mexicans access to fair credit, but we still have a long way to go. In the past, storefront lending in the state was largely unregulated, and hardworking people were forced to borrow at interest rates as high as 1500% APR, forcing them into in a never-ending cycle of high-cost debt," said Christopher Sanchez, supervising attorney for Fair Lending at the New Mexico Center on Law and Poverty. "All New Mexicans deserve a chance to more fully participate in our state's economy. We hope to see additional regulations that would improve disclosures and language regarding loan renewals so that all borrowers can understand the terms of their loans." Read more at KRWG.ORG

U.S. Senate to consider bill easing bank rules

WASHINGTON, March 1 (Reuters) - The U.S. Senate will vote on a bill next week to ease bank rules, bringing Congress a step closer to passing the first rewrite of the Dodd-Frank reform law enacted after the 2007-2009 global financial crisis.

Senate Majority Leader Mitch McConnell told reporters on Thursday the chamber would consider legislation penned by Senate Banking Committee Chairman Mike Crapo, which would relax rules on small and mid-size lenders. McConnell later on Thursday scheduled a procedural vote for next week.

The move by McConnell to take the bill to the Senate floor will be cheered by small and mid-sized U.S. banks, which have long pushed for a rewrite of Dodd-Frank.

The Republican leadership regards the bill as a priority and is looking to expedite its passage, making it unlikely big banks will secure last-minute changes, several people briefed on the matter told Reuters.

McConnell did not comment further on the Crapo bill.

The bill is widely expected to become law by the summer. Thirteen Democrats in the Senate, which has a slim Republican majority, have signed on as backers and nearly every Republican is expected to vote in favor. Read more at CNBC.COM


CFPB Acting Director Mick Mulvaney Says AGs Should Increase Enforcement Role

Mulvaney continues to stress new approaches to enforcement at the CFPB and its focus on cost-benefit analysis.

In a speech during an attorneys general conference Feb. 28, Consumer Financial Protection Bureau Acting Director Mick Mulvaney said the bureau "will let states more often take the lead on enforcing consumer protection laws," American Banker reports.

Mulvaney, echoing remarks from a speech earlier in the week, also said the CFPB "would no longer be "pushing the envelope" or "look to create law where there isn't" by using enforcement actions.

The acting director explained how the CFPB is already scaling back its enforcement actions and focusing on cost-benefit analysis. It will also dedicate more resources toward educating consumers on available financial protections instead of "targeting firms through enforcement," according to the article.

"I was shocked when I read through some of the factual allegations of some of the lawsuits that we had brought at the CFPB," Mulvaney said. "We are going to be looking to the state regulators and state attorneys general for a lot more leadership when it comes to enforcement."

"Why we think we know better or how to protect consumers in your state surprises me," he said. "I don't think we'll being do much of that anymore." Read more at ACA INTERNATIONAL

Financial illiteracy cost typical American nearly $1,200 last year. by Walt Wojciechowski

Financial literacy is independent of banking opportunity. In other words, just because someone has a savings or checking account doesn't mean he or she has a solid grip on what it takes to be savvy and measured when it comes to budgeting and expenses.

Case in point: Consider how much money Americans may have saved last year had they been a bit more adept in their financial prowess.

The average consumer spent nearly $1,200 in 2017 due to personal financial mismanagement, according to a recent poll conducted by the National Financial Educators Council. For nearly 18 percent of the 1,500 respondents in the survey, the average amount lost to financial illiteracy was in excess of $2,500. Forty percent said their monetary losses were closer to $500.

This means that of the 240 million adults in the U.S. - out of an overall population totaling 323 million, according to the most recent Census - $280 billion last year was unnecessarily frittered away due to insufficient financial comprehension.

Vince Shorb, NFEC CEO, stressed that the amount lost speaks not to Americans' limited understanding necessarily, but to how complex finances can be for families.

"Americans today have to negotiate a very complex financial and economic landscape, and given recent changes to the tax code and new digital currency options, that complexity is only going to increase," Shorb explained. "Improving people's ability to make informed financial decisions and increasing access to financial education programs is more important now than ever before."

OHIO: Payday Lending Reform Issue Takes One Step Closer To Ballot

Advocates pushing for a crackdown on payday lenders are one step closer to getting their reform proposal on the November ballot. The group says they're tired of waiting on lawmakers to act, so they're going straight to the voters.

Ohioans for Payday Loan Reform delivered their first batch of petitions to the attorney general's office. The proposed ballot issue would cap the interest rates of payday loans at 28%.

The group's Carl Ruby says, for example, that the first payment on a loan can be up to a third of someone's monthly income.

"So if you're falling behind on monthly expenses one month and take out a loan and then the next month a third of your income is going toward that first payment there's no way they're going to be able to make it," said Ruby.

Voters approved a similar measure 10 years ago but Ruby says this measure would close loopholes the industry has used to still raise interest rates.

Opponents from the payday loan industry say this undermines the free market and could wipe out their storefronts.

Ohioans for Payday Loan Reform had been pushing for a bipartisan bill, HB123, which has received just two committee hearings. The bill's language reflects most of what the ballot issue attempts to do. The measure also leaves room for lawmakers to still pass that bill. Read more at WVXU.ORG

CFPB Seeks Input on Town Halls, Field Hearings in Agency Review

The Consumer Financial Protection Bureau is asking for public feedback on its field hearings and other outreach events as part of a broad review of agency operations.

Field hearings and town-hall events have been used in the past by the CFPB to highlight rulemaking efforts in areas such as debt collection and small-dollar lending.

The notice Feb. 21 seeks input on all of the CFPB's public and private external engagements, including meetings of various advisory board and councils, such as the Consumer Advisory Board and the Community Bank Advisory Council.

'Feedback Loop'
The CFPB has been undergoing a top-to-bottom review since acting Director Mick Mulvaney was appointed by President Donald Trump in November. In recent weeks, the bureau has asked for public comment on its supervisory examinations, enforcement procedures, civil investigative demands, and administrative adjudications. Read more at BLOOMBERG

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Rethinking The Reputation Of The Merchant Cash Advance

Of all the loan options available to small businesses today, the merchant cash advance (MCA) may not be a borrower's first choice. Like the payday loan, the MCA has a reputation for high fees, and is sometimes the only option for borrowers with pqqr credit histories.

"The merchant cash industry first started as a product for unbankable clients," said Andrew Mallinger, COO of PIRS Capital, in a recent interview with PYMNTS. "It was for restaurants that didn't have collateral or the credit score to apply for a bank loan."

The rise of alternative lending and familiarity of growing names like OnDeck is beginning to shift public perception of the merchant cash advance, however.

"The lending world has evolved," Mallinger explained, adding that today, MCAs don't necessarily mean sky-high interest rates and fees. There are scenarios, too, in which a merchant cash advance may actually be the best financial option for a business in need of working capital.

"We see a lot of clients who already have a long-term equipment loan, or an SBA loan, or a loan from a traditional bank or a factoring line, and they're looking to unlock short-term liquidity from their business," he said. "When you take out an SBA loan or equipment loan, you have to have some type of collateral to pledge, and that money can dry up quickly. We come in un-collateralized."

FTC Releases Annual Summary of Complaints Reported by Consumers

While the number of complaints about fraud from consumers dropped in 2017, consumers reported losing more money than they did in 2016, according to the Federal Trade Commission's 2017 Consumer Sentinel Network Data Book.

The data book includes complaints from 2.68 million consumers, a decrease from 2016 when 2.98 million consumers submitted reports about fraud, identity theft and other types of consumer concerns. Despite this, consumers reported losing a total of $905 million to fraud in 2017 -- $63 million more than in 2016.

Although reports about debt collection declined between 2016 and 2017, it remained the top consumer complaint category, making up about 23 percent of all complaints. The high number of debt collection reports was due in part to reports submitted by a data contributor who collects complaints via a mobile app.

Identity theft was the second biggest category, making up nearly 14 percent of all the consumer complaints. Credit card fraud was the most common type of identity theft reported by consumers. Tax fraud was the second most common type of identity theft reported by consumers despite falling by 46 percent from 2016.

"While we received fewer overall complaints in 2017, consumers reported losing more money to fraud than they did the year before, "said Tom Pahl, Acting Director of the FTC's Bureau of Consumer Protection. "This underscores the importance of the FTC's work in educating consumers and cracking down on the scammers who try to take their money." Read more at Federal Trade Commission

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Education Department Wants To Protect Student Loan Debt Collectors

Student loan debt collectors have been accused of deceiving and abusing student borrowers and have been sued by attorneys general in a handful of states. Now, they may be getting some relief.

The debt collectors, that is. Not their customers.

In an internal document obtained by NPR, the U.S. Department of Education, under Secretary Betsy DeVos, argues that the nation's loan servicers should be protected from state rules that may be far tougher than federal law.

"Congress created and expanded the Direct Loan Program with the goal of simplifying the delivery of student loans to borrowers, eliminating borrower confusion, avoiding unnecessary costs to taxpayers, and creating a more streamlined student loan program," the memo reads. "Recently, several States have enacted regulatory regimes or applied existing State consumer protection statutes that undermine these goals."

The memo, which was first reported by Bloomberg, has not been officially released; it marks the latest move by the Trump administration to align itself with debt collectors over the nation's 44 million student loan borrowers. Read more at nprEd HOW LEARNING HAPPENS

Social services help more people access banks

Many who don't use banks turn to payday lenders, pawn shops or check cash services

SARASOTA - Nearly one in four Florida residents maintain little or no relationship with their neighborhood bank, leaving many to turn to more costly providers of financial services.

For some, it's a matter of believing they don't have enough money to afford a bank account or they don't trust banks and want to maintain their privacy.

"Whenever you go into a bank, it's very intimidating and you don't really know much," said Joanna Lopez, a north Sarasota community member who says many of her friends are reluctant to go to banks or credit unions.

About 100 social services providers, employers, government officials and others attended a "Financial Inclusion Summit" Wednesday sponsored by United Way Suncoast as part of its Bank On Initiative, which seeks to connect the unbanked and underbanked to affordable banking services and products. United Way Suncoast was chosen as one of five national Bank On fellowship cities by the Cities for Financial Empowerment Fund.

Unbanked refers to those with no accounts. Underbanked consumers may have a checking account but still use services outside the banking system.

Local officials from banks and credit unions talked about efforts to educate and reach out to residents about the services they offer. Some lenders participating in the Bank On program offer low-fee accounts. Read more at HERALD TRIBUNE

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