NEWS: August 2

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Trump's Fed Nominee Points To Regulatory Revamp

R egulatory rollbacks may be coming to Capitol Hill, as has been widely anticipated.

CNBC reported news that President Donald Trump's nominee to oversee banking regulations said in a hearing that some legislation in place that has been extant since the financial crisis should be scaled back or dismantled. Randal Quarles, who has been nominated to fill the long-vacant vice chair post for financial industry supervision through the Federal Reserve, said at his confirmation hearing before the Senate banking committee that "with the benefit of experience and reflection, some refinements will undoubtedly be in order."

Donald Trump's Fed nominee said he would look to implement the financial reforms that have been championed by a recent Treasury report, which includes revamping stress tests that examine bank capital buffers. Quarles also said that there should be more transparency in stress testing. The Treasury recommendations, as has been reported, do not require Congressional approval to change the regulatory landscape. And because the legislative process need not be involved, those regulation recommendations are widely seen as a way for Republicans to chip away at Dodd-Frank across alternative means.

Separately, of course, Brexit got some of the regulatory spotlight. Reuters reported that the House of Lords, through its financial affairs panel, is set to examine how Britain can maintain some access to the European markets in its banking and financial activities following the Brexit vote. Legislators on that committee said that they seek to preserve some sort of co-operation in order to maintain the U.K.'s status as a financial hub after March of 2019.

Within the halls of Congress, the U.S. House of Representatives voted last week to scuttle the CFPB rule that would let consumers join class action lawsuits rather than be bound to arbitration against financial services firms. The vote was lopsided, done across party lines, with 231-190 as the final tally. Republicans said, as The Star-Tribune reported, that data show trial lawyers are the winners when it comes to class action suits. Republicans serving on the House Financial Services Committee said in a statement that the CFPB ruling would force companies to "absorb both the additional costs of arbitration and the huge litigation costs of class actions, forcing companies to decline to take on the optional cost [of arbitration] and relegate all disputes to the judicial system." Read more at PYMNTS.COM
CFPB's New Arbitration Rule, A Boon to Plaintiff's Attorneys at Consumers' Expense, May Unite Congress in Its Efforts to Overturn the Rule

In July 2017, the Consumer Financial Protection Bureau (CFPB) published a rule aimed at strictly regulating arbitration clauses in consumer contracts. Among other things, the rule will prohibit covered providers from "relying in any way on a predispute arbitration agreement." After the effective date, the rule will also require the following language to be included in all agreements: "We agree that neither we nor anyone else will use this agreement to stop you from being part of a class action case in court. You may file a class action in court or you may be a member of a class action even if you do not file it." The effect of this rule will be a dramatic increase in class action lawsuits. The acting comptroller of the Office of the Comptroller of the Currency expressed concerns that this new rule will harm the safety and soundness of the federal banking system, and the CFPB drew criticism from industry commentators, saying that the CFPB put class action plaintiffs' attorneys ahead of consumers.
Prospects Dim for Senate Vote on CFPB Arbitration Rule This Month

The Senate looks unlikely to vote this month on a resolution to block implementation of the Consumer Financial Protection Bureau's recently finalized rule on mandatory arbitration clauses in financial consumer contracts.

Majority Leader Mitch McConnell (R-Ky.) on Tuesday did not mention the measure in a floor speech outlining the chamber's agenda for the next two weeks leading up to August recess. A Senate GOP aide said that supporters of the resolution do not have the votes needed to proceed on the floor, given the absence of Sen. John McCain (R-Ariz.), who has returned to Arizona to receive medical treatment for brain cancer.

A July 28 statement from McCain's office said he does not plan to return to Washington until Sept. 5, when the rest of the Senate is scheduled to reconvene after its August recess.

When asked if McConnell's remarks today mean the Senate will not bring up the measure this month, the Kentucky Republican's spokesman, David Popp, said in an email Tuesday that he didn't have "any specific guidance" related to the resolution. McConnell said the Senate will focus on legislation pertaining to the Department of Veterans Affairs and the Food and Drug Administration.
Incite Business
2017's Top Five Consumer Complaints to the CFPB (So Far)

Despite continued efforts in Congress to curtail the scope of the CFPB, the Bureau continues to move ahead with issuing new regulations, conducting investigations and initiating enforcement actions. As part of its efforts, the CFPB recently reviewed its complaint data from consumers in all 50 states and the District of Columbia and identified the top five types of complaints. The Bureau receives more than 20,000 complaints per month and has received 1,163,156 complaints since 2011.

Debt collection - 27% of complaints. The CFPB report specifically identified problems with attempts to collect a debt the consumer did not owe.

Mortgages - 23% of complaints. The "common issue" identified by the Bureau is problems consumers have when they are unable to make a regular monthly payment.

Credit reporting - 17% of complaints. The top issue identified for credit reporting complaints was incorrect information appearing on credit reports.

Credit card - 10% of complaints. More than 19,000 complaints received by the CFPB related to billing disputes with credit card companies.

Bank account or service - 10% of complaints. The majority of complaints deal with account management or services, such as over draft fees.
Increasing processing precision for same-day ACH payments. by Philip Burgess

With the reality of the upcoming same-date Automated Clearing House (ACH) debits taking effect in September, financial institutions, payment providers and businesses will need policies and processes in place to handle this major payment evolution. However, even though this transition is looming on the horizon, many organizations are not ready for what's in store.

When is same-day ACH coming?
While most ACH payments are currently settled within 1-2 business days, the National Automated Clearing House Association (NACHA) adopted a new rule to enable same-day processing of virtually any ACH debit payment.

To allow for businesses and financial institutions that utilize ACH payments to adequately prepare for this transition to same-day payments, NACHA is implementing the change over the course of three different phrases. While the same-day ACH credits went into effect in September 2016, the new functionality for same-day ACH debits will go into effect September 15, 2017.

Although high-volume transactions above $25,000 are not eligible, these only represent about 1 percent of current ACH Network volume. With approximately 99 percent of transactions falling under the new same-day ACH rules, it's imperative that businesses ensure they'll be ready when the time comes. Read more at MICROBILT

Now Even Bureaucrats Are Targeting Cordray

Federal agencies typically don't air their disagreements in public.

But then again, there's nothing typical about the CFPB - or its director, Richard Cordray.
The agency, created by the Dodd-Frank Act, has attracted its share of detractors on Capitol Hill, and now, in the White House.

Republicans don't like Cordray, the former Democratic Ohio Attorney General, and they aren't shy about telling him that.
House Republicans want to eliminate many of the agency's powers, restrict its ability to issue final rules and make the CFPB subject to the annual appropriations process.

But, regulatory agencies have also targeted the agency.

NCUA board members have publicly asked the agency to change its policies on at least three occasions.

More recently, the OCC has done it. And of course, the Treasury Department has proposed neutering the agency altogether.
And those are the public disagreements, not the ones waged in private emails.

First, there's the NCUA. Read more at CREDIT UNION TIMES
Dreher Tomkies LLP
CFPB Warns Companies Against Tricking Consumers Into Pay-By-Phone Fees

The Consumer Financial Protection Bureau (CFPB) is warning companies about tricking consumers into expensive pay-by-phone fees.

The Bureau is concerned about companies potentially misleading consumers about the purpose and amount of certain pay-by-phone fees or keeping them in the dark about much cheaper payment options. The bulletin also reviews guidelines to help consumer financial companies comply with the law.

"The Bureau is warning companies about tricking consumers into more expensive fees when they pay bills by phone," said CFPB Director Richard Cordray. "We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options."        The bulletin is available HERE
CFSA Annual Conference

Determining Trends of Credit-Challenged Consumers Buying, Financing Vehicles Provides Non-Prime Auto Financing Companies New Opportunities

ATLANTA-FactorTrust®, The Alternative Credit Bureau™, today released the most recent research findings in its series of underbanked indices-the Underbanked Index - Auto version, providing insights into the earning and living trends of credit-challenged consumers seeking a vehicle.

"This Index, specific to the auto industry, analyzes the proprietary performance and behavioral data we have on non-prime consumers that auto financing companies can't get from the Big 3 bureaus," said FactorTrust CEO Greg Rable. "By pairing this data with traditional data, these companies can see the complete credit profile and creditworthiness of consumers."

Such insights assist auto financing companies to better know their customers and make better informed decisions on extending credit.

The Underbanked Index - Auto version identifies at least five key insights of credit-challenged consumers buying and financing a car, including:           Read the entire report here

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