April 19, 2018

U.S. Senate repeals CFPB's auto-loan guidance in precedent-shattering vote

The Senate on Tuesday repealed a controversial Consumer Financial Protection Bureau (CFPB) decree on auto-loan financing in a vote that could set a precedent for Republicans to repeal a broad range of regulations.

Senators generally fell along party lines in the 51-47 vote to repeal 2013 guidance from the CFPB on "dealer markups" - the interest a dealer adds to a customer's third-party loan as extra compensation.

Assuming the House passes the measure, the CFPB auto-lending guidance will likely be the first informal regulation to be repealed by Congress through the Congressional Review Act.

While Congress has used the Congressional Review Act more than a dozen times since 2017 to repeal formal rules issued under former President Obama, it has never before used the law to repeal guidance. Republicans are now looking to do so, and could go after a range of regulatory actions that had been considered off-limits.

Efforts to repeal rules under the Congressional Review Act cannot be filibustered, giving Republicans a powerful tool to slash regulations with only a majority vote in each chamber. The act also bans agencies from issuing rules similar to those overturned under the law.

Sen. Joe Manchin (W.Va.) was the only Democrat to vote in favor of repealing the CFPB guidance, while Sens. John McCain (R-Ariz.) and Tammy Duckworth (D-Ill.) missed the vote.

The resolution is expected to easily pass the House, and the White House announced Tuesday that aides to President Trump would recommend that he sign it. Read more at THE HILL
Dreher Tomkies LLP

A good consumer agency is a weak consumer agency, says Trump's consumer watchdog

If the stakes weren't so high, it would be incredibly fun watching financial firms and their Republican allies repeatedly make the case that the Consumer Financial Protection Bureau is a rogue agency determined to undermine capitalism, democracy and the American way of life.

My absolute favorite such attack came last September when the U.S. Chamber of Commerce, the Financial Services Roundtable and other business groups expressed shock and outrage that the CFPB had decided consumers should have a right to sue businesses, rather than be forced to arbitrate.

The business groups, arguing that arbitration is way better than litigation, sued the agency.

That's a tough act to follow. But Mick Mulvaney gave it a good go.

He's serving as interim director of the CFPB while simultaneously working full time as President Trump's budget director. Thus, he's the White House official most responsible for a spending plan the Congressional Budget Office says will result in a deficit of $1 trillion by 2020 and a national debt of $33 trillion by 2028. Read more at LOS ANGELES TIMES


Commentary: The Mick Mulvaney Proposal That Could Change the CFPB for the Better

The political equivalent of a Halley's Comet sighting occurred during a House hearing last week: Consumer Financial Protection Bureau acting director Mick Mulvaney asked Congress to dilute his power by turning the CFPB into a bipartisan commission. Even stranger, congressional leaders of both parties seem uninterested.

Mulvaney argued that a bipartisan, multi-member structure would prevent "wild swings" in regulations. Indeed, his proposal would move the CFPB's structure closer to that of multi-member agencies like the SEC, FTC, and FCC, which have long been considered effective. In this view, these agencies are populated by technocratic experts and benefit from a multi-member structure that promotes deliberation.

Yet congressional Democrats are leery. They argue that agencies without a single leader at the top can become rudderless and ripe for capture by regulated entities.

Neither view is accurate. Changes in the culture and composition of multi-member agencies in recent decades indicate that a revamped CFPB would look nothing like the nonpartisan, deliberative ideal agency of yore. But neither would it be the industry lapdog that Democrats fear.
National Debt Holdings

OHIO: House committee votes to limit payday lending rates, fees

After months of behind-the-scenes talks with the payday lending industry, an Ohio House committee today scrapped efforts to reach a compromise with the short-term lenders and moved a bill that would impose significant limits on their rates and fees.

For months, House GOP leaders, including former Speaker Cliff Rosenberger, have said the chamber would not pass House Bill 123 as written, arguing it was too prescriptive and could put the payday industry out of business in Ohio - something bill supporters disputed.

But Rep. Kirk Schuring, R-Canton is now the acting speaker after Rosenberger resigned last week in the midst of an FBI probe of a trip he and GOP leaders from other states took to England last year along with lobbyists from the payday lending industry. Schuring also happened to be the main lawmaker involved in trying to negotiate a compromise payday bill.

Schuring had made two attempts to reach a compromise - the first was widely criticized by Rep. Kyle Koehler, R-Springfield, the bill sponsor, and the coalition pushing for a payday lending ballot measure.

Koehler was happier with Schuring's second attempt at a compromise, but when he tried to get the House committee to amend his bill last week, the committee refused.

Employment Skip Tracing

How are Americans doing financially? by Walt Wojciechowski

Whether banked, unbanked or underbanked, the ideal borrower is one who makes payments on time and is in a position to do so by virtue of his or her financial situation. And based on a wealth of data, Americans are better off today than they have been in several years.

The examples are legion, but the evidence has been particularly apparent in terms of gainful employment. According to the Department of Labor, the unemployment picture in the U.S. as a whole has been at or below 5 percent for 25 consecutive months, staying steady at 4.1 percent since October 2017. Generally speaking, any jobless rate 5 percent or lower is considered full employment. In a recent poll of economists conducted by The Wall Street Journal, only 9 percent of economists said the U.S. hadn't yet achieved this status.

Not only are more people working again, they're making more in terms of earning. In February - the most recent month for which data is available - personal income levels rose more than $67 billion, according to the Bureau of Economic Analysis, an arm of the Department of Commerce. An uptick of 0.4 percent from January, discretionary income also experienced growth, totaling $53.9 billion.

Higher pay in low unemployment cities
While a half-percent increase may not seem altogether significant, the degree to which salaries have risen is a bit more noticeable in cities where unemployment is lowest. This is rather notable, given wage growth has been stuck in neutral for more than 15 years and low unemployment isn't necessarily a forerunner of wages rising - or at least that hasn't been the case in recent years.

Some Los Angeles Businesses Go Cashless

Several SoCal businesses now only allow digital forms of payment.

A growing number of SoCal businesses no longer accept cash -- a trend that business owners say can speed up lines and cut costs, but critics worry might exclude certain customers.

Earlier this year, Tender Greens announced its cashless transition. All 28 locations nationwide now only accept cards or other forms of digital payment (except for its new Boston location, where state law requires businesses to accept cash).

Tender Greens president Denyelle Bruno said many customers weren't paying in cash to begin with.

"When we made this decision, less than seven percent of our customers were paying in cash," she said.

Having to accommodate cash-paying customers can be costly. Businesses like Tender Greens have to pay someone to count out the register, to put the cash in the safe and transport it to the bank securely.

Jackson Mueller, an associate director at the Milken Institute's Center for Financial Markets, says small to medium-sized U.S. companies are paying tens of billions of dollars each year on expenses related to handling cash. For businesses that don't bring in much cash to begin with, card transaction fees are much more reasonable. Read more at NBC LOS ANGELES


Employees: How to Maximize Your Tax Breaks in 2018 and Beyond

The Tax Cuts and Jobs Act preserved or even beefed up many tax breaks available through workplace benefits programs. Here's how to make the most of those benefits.

A key component of building wealth is minimizing taxes, so it's worthwhile to review the different valuable tax breaks often available through workplace benefit programs.

1. Discover how tax changes can enhance Roth 401(k) contributions
Most readers of this column likely know to take advantage of the tax breaks available through investing pre-tax contributions in a traditional 401(k). But there's a different savings vehicle worth considering, as well: A Roth 401(k), if you have access to one, or a Roth IRA if you don't, can benefit your situation and lower your overall tax burden in the future.

First, tax rates were lowered by the Tax Cuts and Jobs Act, starting in 2018. With a Roth 401(k) or Roth IRA contribution, you pay the tax upfront (unlike with a traditional IRA), which means many savers will benefit from a reduced tax rate under the new tax law.

One thing to be mindful of is that the new tax law also sunsets these lower tax rates starting in 2026. At that point, tax rates are set to rise automatically to earlier levels. Of course, there is also the possibility that the federal deficit could grow larger, and therefore lawmakers may decide to further increase taxes at some point. Read more at KIPLINGER

A_S Management

Trump team continues to roll back the regulatory state

In President Donald Trump's war on burdensome, unnecessary government regulations, two members of his team stand out: Scott Pruitt, administrator of the Environmental Protection Agency (EPA), and Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau (CFPB).

In his role at the EPA, Pruitt is working to balance protecting the environment with fostering job growth and economic recovery.

Pruitt is guiding the agency back to its proper role of safeguarding human health and the environment while also working to implement Trump's agenda on job growth - and he's doing so by cutting onerous regulations.

The New York Times reported last year that in Pruitt's first four months as EPA administrator, he cut, delayed or blocked over 30 environmental regulations, which the paper called "a regulatory rollback larger in scope than any other over so short a time in the agency's 47-year history."

Pruitt recently proposed changing an Obama-era regulation on the disposal of coal ash - a toxic byproduct of burning coal - to give states flexibility in to determining the best way to dispose of the material. The EPA said the proposal could save electric utilities up to $100 million a year in compliance costs. Read more at THE HILL


80,000 more retail stores could close by 2025

Tens of thousands of retail stores might have to close over the next few years to keep up with the pace of shoppers shifting from brick-and-mortar retailers to online, according to a new report from UBS.

UBS analysts examined the supply of brick-and-mortar retail locations that would be necessary to align with the demand to shop in those physical locations. What they found paints a bleak picture for the future for retail stores.

"We [estimate] for each 100 bps increase in [e-commerce] penetration (currently 16%), an additional [9,000] stores would need to close," the UBS analysts write. "To put this in perspective, it would be the equivalent of 7 Toys 'R' US chains."

What's more, UBS estimates that anywhere from 30,000 to 80,000 stores would need to close to maintain low-single digit sales/store growth should the e-commerce penetration reach 25% of retails sales by 2025. The 80,000 figure assumes that there's 2% total retail sales growth, while the 30,000 figure assumes there's 3% sales growth.    Read more at YAHOO FINANCE

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