March 27, 2018

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CFPB ends probe of payday loan collector. 3/23/2018

The acting director of the Consumer Financial Protection Bureau (CFPB) dropped the agency's probe of a payday loan collector and is mulling ending cases against three high-interest lenders, Reuters reported Friday.

Acting CFPB Director Mick Mulvaney decided against suing Kansas-based National Credit Adjusters (NCA), a company that collects debt from high-interest loans issued on tribal land, according to Reuters.

Former CFPB Director Richard Cordray was reportedly set to sue the NCA, but Mulvaney dropped the case, Reuters reported.

Reuters also reported that Mulvaney was considering ending the CFPB's probes into Security Finance, Cash Express LLC and Triton Management Group, three lenders of high-interest, short-term "payday" loans.

The CFPB under Cordray found that the three lenders and their debt collectors pressured, misled and harassed consumers into dangerous cycles of debt, Reuters reported. Cordray reportedly planned to seek millions of dollars in damages and fines.

Mulvaney's decision to drop the NCA case and potentially end three others is the latest way that the former conservative congressman is pulling back on the CFPB's policing of financial markets.

Sen. Lindsey Graham unveils Senate measure to repeal CFPB payday loan rule. 3/26/2018

A new resolution introduced by Sen. Lindsey Graham would cancel the major new federal regulations on payday lending being rolled out by the Consumer Financial Protection Bureau.

The South Carolina Republican filed the resolution Friday, just under the deadline for potentially undoing the rule under the Congressional Review Act, which provides a mechanism for Congress to eliminate regulations with a simple majority vote in the House and Senate. A companion resolution was already filed in the House with some Democratic support.

The possibility of Congress canceling the rule through a CRA resolution is just one of the threats facing the payday rule, which was finalized in October under Obama-appointed Director Richard Cordray. Mick Mulvaney, the acting director of the bureau appointed by President Trump after Cordray stepped down, has also moved to rewrite the rule before it fully goes into effect next year.

"The harmful actions of the CFPB that were perpetrated during the prior administration must be corrected, and we applaud the Senate for doing their part to pass the CRA and stop his harmful rule," said Ed D'Alessio, executive director of the Financial Service Centers of America, an industry group.

Critics of the rule may struggle to find 51 votes in the Senate to cancel it. Republicans have 51 votes in the upper chamber, and it's far from clear that all of them would vote to eliminate the rule or that any Democrats would join them.

Yet Republicans have been highly successful at sending CRA resolutions to Trump's desk. In October, they surprised some observers by finding 50 votes to undo a new rule that would have allowed for more class-action lawsuits against financial companies. Vice President Mike Pence cast the deciding vote. Read more at WASHINGTON EXAMINER

3 Proposals to Temper the Federal Payday Loan Rule. 3/23/2018

When the Consumer Financial Protection Bureau finalized a rule regulating payday loans in October last year, I wrote that this could be the end of the road for millions of desperate customers who rely on these loans to get from paycheck to paycheck.

There aren't many options left for these marginal consumers, as the federal government has sought to regulate away valued financial products over the past decade. For example-while 76 percent of all checking accounts used to be free, only 38 percent remain so today thanks to the Dodd-Frank Act. And while banks and other traditional financial institutions used to offer more competitive kinds of short-term, small-dollar loans, the Obama-era financial regulators effectively prohibited them. Combine this with a sluggish economic recovery since 2008 and you have millions who rely on payday loans to get through the week.

This makes the CFPB's rule, in many ways, the last straw. If desperate consumers can no longer get a short-term loan from the only game in town, where would they go? It's not unreasonable to think that they would end up in the hands of black market lenders.
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Mulvaney's CFPB losing interest in payday lenders? 3/26/2018

Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk with more coverage to come on bigger issues.

The Consumer Financial Protection Bureau's acting director, Mick Mulvaney, has stopped the agency's pursuit to sue a payday lender and is mulling over dropping the cases against three more payday lenders, according to an exclusive report by Reuters' Patrick Rucker.

The cases, according to the report, are part of about a dozen that Richard Cordray, the bureau's former director, approved for litigation before his resignation in November.

Cordray was ready to sue Kansas-based National Credit Adjusters, which primarily collects debt for online lenders operating on tribal land, according to the article. Cordray's CFPB concluded that NCA had no right to collect on such online loans, no matter where they were made.

A lawyer for NCA, Sarah Auchterlonie, told Reuters this week that Mulvaney has dropped the matter and the case is "dead." The report also said she noted the agency appeared to be backing off issues involving tribal sovereignty.

Meanwhile, Mulvaney is also reviewing three cases against lenders based in southern states, where high-interest loans are permitted. He must eventually decide whether to sue the companies, settle with a fine or scrap the cases, according to the report. Read more at HOUSING WIRE


Bank mergers will 'absolutely' accelerate thanks to regulation rewrite. 3/16/2018

Expect smaller banks to get bigger now that changes are in the works for the Dodd-Frank financial regulations, Wells Fargo analyst Mike Mayo told CNBC on Friday.

The Senate passed a bill Wednesday that eases regulations on all but the largest banks. Its fate now rests with the House.

If those changes happen, "we absolutely expect bank consolidation to accelerate," Mayo said in an interview with "Closing Bell."

One of the main provisions would raise the threshold for banks to be considered so vital to the financial system that they must be subjected to extra oversight and submit to mandatory annual stress tests. The current asset level is $50 billion, and the bill would raise that to $250 billion.

"That would allow banks to get bigger without the risk of having all sorts of additional oversight," Mayo said.

In recent years, bank mergers have been rare as companies tried to avoid surpassing the asset-size threshold.

"You also have scale mattering more than ever in banking so there's a reason to get bigger," Mayo added. "And also you have extra capital." Read more at CNBC

National Debt Holdings

OHIO: House GOP rolls out payday-loan regs; critics say they protect bad industry. 3/23/2018

Looking for compromise payday-lending reforms, a top House policy leader laid out a host of concepts Thursday, but admitted that finding agreement on interest rates and fees would be a challenge.

Months ago, Speaker Cliff Rosenberger, R-Clarksville, handed the job of finding a deal on new payday-lending regulations to Rep. Kirk Schuring, R-Canton, the No. 2 House leader and regular go-to lawmaker for politically painful issues.

Payday-lending legislation already exists, aimed at reducing the annual interest rates on short-term loans that can top 500 percent in Ohio. But GOP leaders appear unwilling to move House Bill 123, a bill the politically active payday-lending industry opposes. Some Republicans say it's too prescriptive.

As an alternative, Schuring laid out a list of changes Thursday to an Ohio payday-lending law that, since its passage in 2008, has failed to regulate the short-term loan industry. Critics say Ohio lenders charge the highest rates in the nation.

"We need good, sensible guidelines that will protect the borrower," he said. "There is plenty of stuff in here that does that."

But payday critics say the proposal doesn't go far enough. Among Schuring's ideas:

Payday lending isn't necessarily predatory lending, but it can be necessary for the working poor. by Scott Beason

On my radio program last week, a regular contributor mentioned that a bill to eliminate payday lending had passed the Alabama Senate, and I was surprised.

Having dealt with the issue back when I was in office, I think payday lending gets a bum rap out in the mainstream media. These short term loans are an important part of the financial lending community and are often the only access to credit that some people have. I also wondered what special interest group is driving an agenda for which the general public nor the so called "poor" is clamoring.

The answer is the Southern Poverty Law Center (SPLC).
Republican supermajorities do not - or used to not - kowtow to the SPLC. If there is a more liberal group in the United States, this conservative is not aware of it. Maybe the legislators have bought into the SPLC propaganda that they are protecting the poor, but by eliminating the only means for credit the poor have? By eliminating the jobs of the 5,000 people in the state who work in the industry?

That doesn't make sense.

Helping the poor is a noble cause, in the generic sense of the words, but how does eliminating payday loans actually help the poor? How does making it more difficult for someone with limited means and 'horrible' credit to get the money they need to make it to the next paycheck help the poor?

This question is the one that made it difficult for me to legislatively pursue the total destruction of the payday lending industry. Read more at YELLOWHAMMER

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MerchantBoost Launches Bank Account Validation Service Suite

March 27, 2018 - MerchantBoost, the live data solution provider, has launched Bank Account Validation (BAV), a comprehensive service suite that addresses all aspects of verification associated with consumer bank accounts. This suite is designed to combat fraud, ensure compliance and improve lenders' overall business performance.

MerchantBoost's BAV solution is the only suite offered by a single vendor, that can impact the challenges that lenders face with consumer bank account information, ID, fraud and compliance. The innovative suite is made up of non-credentialed services that can be combined and configured according to the lender's needs, based on the following components: Ownership, Balance, Funds and Status. Together, these services can establish consumer account ownership, validate consumer risk, determine funds availability and the overall risk of the bank account.

The BAV suite is vital to the lending industry because it provides critical information on a consumer's bank account. If a bank account is not valid, does not belong to the person applying for a loan, or is known to have negative characteristics, then the lender's operations and overall business performance are impacted. This suite is one of many solutions MerchantBoost offers to help lender's make better decisions on their borrowers, providing them with the key information they need to know their prospective customer's.

"We've always been about providing innovative and game changing solutions at Merchant Boost. By putting the power of bank information into businesses, the BAV suite of services has the ability to be a groundbreaking technology for fintech and the lending industry," said MerchantBoost COO Jesse Berger.

MerchantBoost has long provided cutting-edge solutions integrating payments and data. BAV fuses data from multiple sources to provide the widest coverage of information on consumer bank accounts. The integrated advanced analytics and scoring technology of this solution, allows it to be used throughout the lead acquisition, marketing, underwriting and repayments processes. Furthermore, it can be utilized for payment processing issues, especially where a business is experiencing return rates beyond NACHA limits.

About MerchantBoost
MerchantBoost is the live data solution provider, we equip financial service companies with solutions that fill the gap between historical, real-time and live data information to improve their marketing, underwriting, and collections.

Contact: Tara Kumar, MerchantBoost      -     754-209-2507   -

Dreher Tomkies LLP

Guide young employees in 'game of life'. 3/25/2018

Employers looking for loyalty from millennials and younger generations might want to consider how they can help them meet financial goals.

Owning a home is a leading indicator of an employee's future financial success and highly correlated with reducing turnover and improving both work and life satisfaction, according to Financial Finesse, a provider of workplace financial wellness programs.

Having children is a strain on employees' finances. But family planning can defray most of that strain, according to key findings in a February report shared this month.

Other findings include:

* Employees who own a home and have a partner to share the costs of home ownership and children exhibit lower levels of financial stress, with 19 percent reporting high or overwhelming levels of financial stress compared to 44 percent for employees that don't have a partner or own a home.

* Ninety-two percent of married homeowner parents report paying bills on time each month, compared with only 66 percent of parents who are single and do not own a home.

The report was based primarily on the analysis of about 42,345 financial wellness assessments completed in 2016. Results had a margin of error of plus or minus 1 percentage point, Financial Finesse said. Read more at JOURNAL GAZETTE


Are payday advance services worth it? 3/21/2018

Several companies have rolled out new services that let workers access their paycheck early.

At a time when the economy is booming and yet, 46% of U.S. adults still say they can't cover a $400 emergency, it's clear many Americans are living paycheck to paycheck. In the past, when money was tight and credit cards were maxed out, people could turn to payday lenders and pawn shops for quick access to cash, often paying exorbitant fees in the process.

Now, several companies have rolled out new services that let workers access their paycheck early through mobile banking apps in order to make ends meet. These services can provide much-needed relief to cash-strapped workers. But we wanted to take a closer look at what they have to offer and whether or not they're the best option for fast cash.

In late 2017, Walmart announced a new partnership with two Silicon Valley start-ups aimed at giving 1.4 million workers access to financial planning tools.

The first app Walmart workers can access for now is called Even, which, similar to apps like Instant and Earnin, allows users to be paid early for hours they've worked.

With Instant, you connect the app with a card given to you by your employer. Once verified you can recieve your daily tips and wages, deposited straight to your Instant account, which you can use to check your balance, use ATMs, review wages, and even transfer money to another bank account. The only fee is an easy-to-avoid, 90-day inactivity fee. Read more at KTVB

A_S Management

FLORIDA allows 60 - 90 day payday loan. by Buckley Sandler LLP. 3/23/2018

On March 19, the Florida governor signed legislation, SB 920, which authorizes the lending of an additional type of payday loan (referred to as, "deferred presentment installment transaction"). The legislation now allows loans under $1,000 that have a repayment term between 60 and 90 days with maximum fees of 8 percent of the outstanding transaction balance charged on a biweekly basis. Fees must be calculated using a simple interest calculation. Previously, Florida only authorized small-dollar loans under $500 that had repayment terms between seven and 30 days (referred to as, "deferred presentment transaction[s]").

The expansion of the allowable small-dollar loans, appears to be in response to the CFPB's final rule addressing payday loans, vehicle titles loans, and certain other extensions of credit (previously covered in a Buckley Sandler Special Alert), which covers most transactions with repayment terms of less than 45 days. While the CFPB's rule became effective on January 16, compliance for most of the rule's provisions is not required until August 2019. Moreover, in January, the CFPB announced its plan to reconsider the final rule (covered by InfoBytes here). Read more at LEXOLOGY


Consumers' Expectations about their Financial Situations Continued to Improve in February. 3/12/2018

NEW YORK- The Federal Reserve Bank of New York's Center for Microeconomic Data released the February 2018 Survey of Consumer Expectations, which shows a slight increase in short- and medium- term inflation expectations. Consumers' expectations about their personal financial situations continued to improve. Expectations about changes in taxes declined to a new series' low, while expectations about growth in government debt increased sharply.

The main findings from the February 2018 Survey are:

  • Median inflation expectations increased by 0.1 percentage points at both the one-year and three-year horizons in February, to 2.8% and 2.9%, respectively. The increase was driven largely by higher educated respondents (with a college degree or more).
  • Median inflation uncertainty-or the uncertainty expressed by respondents regarding future inflation outcomes-declined to series' lows at both horizons.
  • Median home price change expectations declined from 3.5% in January to 3.3% in February, remaining slightly higher than its 2017 average of 3.2%. Home price change uncertainty also declined.
  • The median one-year ahead expected gasoline price change and food price change remained flat in February. Expectations for a change in the cost of college education declined from 7.8% to 6.0%. Read the report at Federal Reserve Bank of New York
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