AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

April 24, 2018


Wells Fargo's $1 Billion Pact Gives U.S. Power to Fire Managers

Wells Fargo & Co.'s $1 billion fine won't close the book on fallout from its consumer scandals.

The nation's third-largest bank submitted to an unprecedented order Friday that would give the Office of the Comptroller of the Currency the right to remove some of the lender's executives or board members. That comes on top of the penalties Wells Fargo will pay to settle U.S. probes into mistreatment of consumers, the largest sanction of a U.S. bank under President Donald Trump.

The OCC said it "reserves the right to take additional supervisory action, including imposing business restrictions and making changes to executive officers or members of the bank's board of directors." The agency could also veto potential executive candidates.

The bank will pay $500 million in penalties each to the OCC and the Consumer Financial Protection Bureau, according to a statement Friday. Wells Fargo warned shareholders last week it would soon face a fine of that size, which it will book retroactively in the first quarter. The bank remains under a Federal Reserve penalty that bans growth in total assets.

"CEOs who hoped the Trump administration would be universally lenient regulators missed the difference between a dislike for rules that stifle innovation and employment and a dislike for rules against wrongdoing," said Erik Gordon, a professor at the University of Michigan's Ross School of Business. Read more at BLOOMBERG

CFSA

OHIO: Payday lending bill advances out of Ohio legislative committee

COLUMBUS, Ohio - A House committee advanced a bill Wednesday morning that would cap fees and interest rates on payday loan businesses - after more than a year of the bill stalling and less than a week after the chamber's speaker, Cliff Rosenberger, resigned amid a reported FBI inquiry into his ties with the industry.

The House Government Accountability and Oversight Committee cleared House Bill 123 with a vote of 9 to 1.

The bill would allow loans of up to $500. Payments would be capped at 5 percent of a consumer's monthly income. Loans would have an interest rate cap of 28 percent, plus up to another $20 per month in fees.

Republican Rep. Bill Seitz of Cincinnati opposed the legislation, after he tried to get an amendment through that would ease the regulations on payday lenders.

Moments before the committee killed Seitz's amendment, committee Chair Rep. Louis Blessing said that a coalition pushing for payday lending changes had opposed Seitz's amendment and wanted the bill to march forward in its current form. Read more at CLEVELAND.COM

MICROBILT

The risks of loan stacking. by Philip Burgess

As more small-business owners launch companies - 25 million Americans have started one within the past two years, according to figures from Babson College - many are finding success, but at the same time discovering that keeping their doors open costs more than they originally anticipated. To rectify the cash-flow shortfall, some are taking out second loans, thereby defraying these operating expenses.

But with more lenders to choose from, some are borrowing from multiple providers, taking advantage of more affordable interest rates in the process. Some don't stop there, taking out additional loans, sometimes to pay for the originals.

The strategy is called loan stacking, and while the activity has surged in recent years, its fraught with risks and land mines that can backfire for lenders who engage in the practice, even when borrowers pass the underwriting process with flying colors.

What is loan stacking?
As its title implies, loan stacking is where a borrower - typically a small-business person - already has a loan that's in effect but goes to a different lender and takes out another. There are public records that lenders can examine to see if a loan already exists, but in their haste, they may decide not to do their due diligence for fear of losing out on the business to a competitor. Read more at MICROBILT

NEW
National Debt Holdings

Mick Mulvaney quietly changes the CFPB's name

Mick Mulvaney is making sweeping changes to the consumer agency he temporarily leads, including its name.

The symbolic tweak has been overlooked as Mulvaney has pursued numerous other, more concrete changes, such as delaying a major new federal regulation of payday lending.

Yet, it's an example of the Trump appointee's talent for pleasing Republicans and ticking off liberals every chance he gets.

From the time its doors opened in 2011, the agency was known as the Consumer Financial Protection Bureau. Usually, people just called it "the CFPB."

Yet those terms, which adorn the agency's headquarters, make up its website URL, and are used in its Twitter handle, aren't technically in the law that created the bureau, the 2010 Dodd-Frank reform law. And so Mulvaney changed them.

Late last month, the agency published a blog post announcing that it had devised a new seal for the agency. The seal is a neoclassical emblem similar to other federal agencies', featuring an eagle and the name of the agency: The Bureau of Consumer Financial Protection.
NEW
Employment Skip Tracing

Lenders are missing significant opportunities.

Uplift: Converting More Leads to Loans. by Noah Fitzgerald, CPP

Lenders are missing significant opportunities: There are good borrowers that are declined and there are approved applicants that never originate. Considerable time and money is spent on finding and buying leads that are not converted. Declining good business results in lost revenue and loss of a good client. Approximately 5 - 15% of all approvals never convert to an origination and 30-60% of all applicants are declined. These problems exist due to the lack of data available on the borrower. Traditional data on the borrower places them into a decline or a higher risk profile. Lenders' scoring and risk models put the borrower outside of approval guidelines. So, how can a lender convert more of the approved apps and safely approve more of the declines?

Finance companies need data to make decisions on approving a customer for credit and determining rate and term. They use data from multiple sources to ascertain an individual's ability, intent and willingness to repay before making those decisions. The applicants that are approved are made an offer based on their risk profile with specific terms and rates. Those that are declined, are told why and that's that. But that is not the end of the story, as in most companies 5% of approved applicants never originate and 70% of the declined applicants are getting approved elsewhere.

The key to maximizing a finance business is all about making the right decision and right offering for each applicant. The key to making the right decision is based on the quantity and quality of data available. Traditionally, lenders are getting data from credit bureaus and other alternative sources. Finance companies compile the data for each applicant and then build a model based on the appetite of risk they have. The problem is that the data they are utilizing does not tell the full story for each applicant. Read more at MERCHANTBOOST

Insight.tm

States Step Up Where CFPB Steps Back

Aiming to fill the void resulting from the Consumer Financial Protection Bureau's retreat from regulation, states are stepping up and going after big financial companies.

According to a report in the Financial Times, more than a dozen attorneys general in states around the country in December expressed alarm about the appointment of Mick Mulvaney as the acting director of the CFPB, pointing out he once called the government watchdog a "joke...in a sick, sad kind of way." Under his charge, the CFPB has halted all new actions and started to walk back some of the stricter rules and enforcement against the financial services industry.

As a result, states around the country have stepped in - including the AGs in New Jersey and Pennsylvania who have announced plans to enhance the resources focused on protecting consumers from financial scams and deceptions. Maryland's General Assembly has created a new commission that's focused in the same area. Other states are stepping up enforcement, with West Virginia joining Massachusetts to sue Equifax, the credit scoring agency that was hacked, revealing the information of 145 million consumers. Read more at PYMNTS.COM

MerchantBoost

Congress should act quickly to fix Dodd-Frank's 'overcorrections'

With all of Washington's chaos and partisanship, it's easy to miss some bipartisan developments on the Hill that could make life much easier for consumers. A number of bills moving through Congress have the potential to ease barriers to credit that have been in place for the past decade.

In the wake of the 2008 financial crisis, Congress sought to reform Wall Street by passing the Dodd-Frank regulatory overhaul, which had sweeping effects on the financial services industry and its regulators.

However, the good intentions behind Dodd-Frank's attempt to usher in a new era of accountability and enforcement came with a price. The new regulatory environment has left some consumers unable to find credit. Community banks have also struggled under the weight of regulations tailored to larger financial institutions.

There are promising signs that Congress is finally waking up to these realities. On April 13, for example, it took the first step in repealing a regulation known as the Volcker Rule, which places heavy restrictions on the types of investing banks can engage in, and is overseen by five regulatory agencies. Read more at CNBC

Dreher Tomkies LLP

Tax Season is an Opportunity for a Financial Rebirth for Consumers

For consumers living paycheck to paycheck, tax season offers and opportunity for a financial rebirth. Millions of Americans representing 78% of adults** have little to no opportunity to save money each month and instead need to spend all they earn in order to keep their family fed, clothed and sheltered. For these Americans, tax season can represent their only opportunity to "get ahead" financially.

A large percentage of Americans that live this paycheck-to-paycheck lifestyle may fall behind on their bills at different times of the year, and their tax return can represent an opportunity for a financial rebirth, giving them a lump sum of cash that they can use to negotiate their past due or charged-off accounts and help put them on the path to financial recovery.

Putting Money to Work for You
The old adage is that "the rich get richer", but few stop to ask why. The rich get richer because they have opportunities that are not available to everyone. When they go to purchase a new car, they are offered 0% financing to buy a new vehicle. On the opposite side of the spectrum those with credit trouble need to pay interest rates of 20% or more just to purchase a used car at a buy-here-pay-here lot. The difference is easy to see, those with good credit get better opportunities.
A_S Management

Bureau of Consumer Financial Protection (CFPB) Announces Settlement With Wells Fargo For Auto-Loan Administration and Mortgage Practices

WASHINGTON, D.C. - Today the Bureau of Consumer Financial Protection (Bureau) announced a settlement with Wells Fargo Bank, N.A. in a coordinated action with the Office of the Comptroller of the Currency (OCC). As described in the consent order, the Bureau found that Wells Fargo violated the Consumer Financial Protection Act (CFPA) in the way it administered a mandatory insurance program related to its auto loans. The Bureau also found that Wells Fargo violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions. Under the terms of the consent orders, Wells Fargo will remediate harmed consumers and undertake certain activities related to its risk management and compliance management. The Bureau assessed a $1 billion penalty against the bank and credited the $500 million penalty collected by the OCC toward the satisfaction of its fine.

"I am especially pleased that we were able to work closely and effectively with our colleagues at the OCC, and I appreciate the key role they played in the negotiations," said Bureau Acting Director Mick Mulvaney. "As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here." Read more at CFPB

ACE CASH EXPRESS
ACE Cash Express CEO Jay Shipowitz presents donation  to
National Breast Cancer Foundation

April 23, 2018- ACE Cash Express and Netspend are pleased to  announce
a $553,366 donation to the National Breast Cancer Foundation, Inc.


Mulvaney on the CFPB: "we need to be a regulator, not somebody's child"

The Consumer Financial Protection Bureau has issued its first penalty under the leadership of Mick Mulvaney, the director of the Office of Management and Budget. Wells Fargo will pay a total of $1 billion to the CFPB and the Office of the Comptroller of the Currency as part of a settlement over charges tied to the company's mortgage and auto lending business.

Mulvaney, who currently serves as acting director of the CFPB in addition to his director role at the Office of Management and Budget, has long been a critic of the bureau's authority. He spoke with host Kai Ryssdal about the agency's decision to fine Wells Fargo and how long he plans on wearing two hats. Below is an edited transcript of their full conversation:

Kai Ryssdal: I can't be the only guy who read the headlines when this thing leaked last night and said "wait, this is the CFPB be doing this fine." How did this come to pass?

Mick Mulvaney: We had concurrent jurisdiction over this with the OCC, the Office the Comptroller of the Currency, and decided in the last several months to actually work together with them on an enforcement action, something that has been legal for a long time, hasn't been done in a long time, at least not this level. So we had jurisdiction over some of the claims, the OCC had some over others, and just we just decided to do it together. Read more at MARKETPLACE.ORG

AFSPA
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
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