NEWS: November 21

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Richard Cordray is stepping down as head of Consumer Financial Protection Bureau

Richard Cordray, one of the few remaining Obama-era banking regulators, said on Wednesday that he plans to step down as head of the Consumer Financial Protection Bureau by the end of the month, clearing the way for President Trump to remake a watchdog agency loathed by Republicans and Wall Street.

Cordray's turbulent six-year tenure at the 1,600-person agency was marked by aggressive efforts to rein in banks, payday lenders and debt collectors that often drew protests from the business community. His frequent clashes with conservatives turned Cordray, an otherwise ordinary Washington bureaucrat from Ohio, into a favorite of Democrats and consumer groups and a villain to Republicans and the financial industry. A federal judge once said that Cordray had "more unilateral authority than any other officer in any of the three branches of the U.S. government, other than the president."

"It has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here," Cordray said in a message to employees. "I trust that new leadership will see that value also and work to preserve it - perhaps in different ways than before, but desiring, as I have done, to serve in ways that benefit and strengthen our economy and our country." Read more at WASHINGTON POST
Trump Considers Naming Mulvaney Interim CFPB Director

Mick Mulvaney once called the Consumer Financial Protection Bureau "a sad, sick joke." Now, he may get to oversee Elizabeth Warren's favorite regulator.

Mulvaney, President Donald Trump's Office of Management and Budget director, is being considered for a temporary role as interim director of the consumer watchdog after Richard Cordray steps down later this month, according to two people familiar with the matter. Mulvaney would be expected to name someone else or a team of people to run the CFPB on a day-to-day-basis so he could keep his focus on OMB, said one of the people.

The goal is to hit the ground running in overhauling an agency that some Republicans have called corrupt and that GOP lawmakers widely blame for burdening lenders with unnecessary red tape. It could be months before Trump nominates a permanent CFPB director and the Senate confirms his selection.

Under a federal vacancies law, Trump can replace an outgoing director temporarily with someone from another agency who has already won Senate approval. Treasury Secretary Steven Mnuchin has also been considered to run the CFPB on a temporary basis, said one of the people who asked not to be named because the deliberations are private.

A call to OMB's press office wasn't returned.

Lengthy Deliberations
Cordray, who was appointed by former President Barack Obama, announced his resignation Wednesday.

In anticipation of Cordray's departure, the White House has been working on a plan to revamp the CFPB for months, including compiling a list of possible candidates to succeed him, people familiar with the matter said. Mulvaney, a former Republican congressman from South Carolina, has been heavily involved in the Trump administration's discussions, the people said.

Candidates the White House has considered as a permanent CFPB head include Todd Zwyicki from George Mason University's Mercatus Center, ex-congressman Randy Neugebauer and Brian Brooks, Fannie Mae's former general counsel, as well as acting head of the Office Comptroller of the Currency Keith Noreika. 
CFPB final payday/auto title/high-rate installment loan rule published in Federal Register

The CFPB's final payday loan rule was published in today's Federal Register. Lenders covered by the rule include nonbank entities as well as banks and credit unions. In addition to payday loans, the rule covers auto title loans, deposit advance products, and certain high-rate installment and open-end loans. For a summary of the rule, see our legal alert.

Since the rule's effective and compliance dates are tied to the Federal Register publication date, those dates have now been set. The regulation is effective January 16, 2018. The compliance date for the rule's substantive requirements and limits (Sections 1041.2 through 1041.10), compliance program/documentation requirements (Section 1041.12), and prohibition against evasion (Section 1041.13) is August 19, 2019. The deadline to submit an application for preliminary approval to be a registered information system is April 16, 2018.

We expect the rule's publication to trigger the filing of an industry lawsuit challenging the rule within a matter of weeks. In addition, the rule could become the subject of a resolution of disapproval under the Congressional Review Act (CRA), the vehicle used by Congress to overturn the CFPB's arbitration rule.

Under the CRA, the receipt of a final rule by Congress begins a period of 60 days during which a member of either chamber can introduce a joint resolution of disapproval. In calculating the 60 days, every calendar day is counted, including weekends and holiday, with the count paused only for periods when either chamber (or both) is gone for more than three days (i.e. pursuant to an adjournment resolution).

For purposes of the CRA, a rule is considered to have been "received by Congress" on the later of the date it is received in the Office of the Speaker of the House and the date of its referral to the appropriate Senate committee. The payday loan rule was received by the Speaker of the House on November 13 and referred to the Senate Banking Committee on November 15.      Read more at NATIONAL LAW REVIEW
Dreher Tomkies LLP
Americans need access to small loans for their financial security

Millions of Americans rely on short-term, small-dollar loans to get by in a pinch, cover unplanned medical bills, cover recurring expenses just outside their means, and even put food on the table. In the most comprehensive analysis on the subject yet, Pew Research found that payday loan borrowers spend $7.4 billion annually at 20,000 storefronts, hundreds of websites, and an increasing but small number of banks. That's big business and demonstrates a real, if unfortunate, need. Rather than make it harder for lenders to satisfy this need, as the recent rule from the Consumer Financial Bureau Protection did, regulators need to seek more constructive solutions that allow consumers to satisfy this need safely and fairly, until the underlying reason for such lending disappears.

Today, rather than protect consumers, laws and regulations regarding payday lending have evolved in ways that push people into increasingly darker corners of our financial system, making them more susceptible to abuse. At the same time, by creating a stigma regarding payday lending and making payday lenders and borrowers pariahs, regulations and laws at state and federal levels prop up prices by discouraging competition from more mainstream lenders. The results are often loan terms that are unfair to consumers, debt traps, and three-digit annual percentage rates. The annual rates soar as high as a whopping 591 percent in Ohio, the highest rate for payday lending in the country. Read more at THE HILL
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Surecare Services
Now that Richard Cordray is gone, it's time to undo his work

Consumer Financial Protection Bureau Director Richard Cordray announced his resignation last week. This is a victory for consumers and businesses, as he will no longer be able to wreak regulatory havoc on the American people and the economy.

But that doesn't mean we are out of the woods just yet. While President Trump continues to successfully roll back Obama-era regulations, he cannot stop midstream in this effort.

Before Cordray is shown the door out of Washington to pursue what is expected to be a run for Ohio Governor, we need to first look back at the damage he has left in his wake.

Earlier this month, President Trump signed into law a repeal of the Consumer Financial Protection Bureau's punitive arbitration rule. This regulation was the latest example of how this rogue agency's actions are meant to protect anyone but consumers. While the rule would have made it easier for consumers to sue their bank in the event of a dispute, the reality is that it would have resulted in thousands of lawsuits and hundreds of millions of dollars in costs to banks to protect themselves in litigation, costs which will ultimately be passed onto consumers. What was even more troubling were reports that by his own admission, Cordray said that many banks don't even have arbitration clauses. 
CFSA Conference
The controversy around Mark Warner's payday lending bill, explained

Payday lending is not something you'd think a major Democratic politician would want to boost. But Sen. Mark Warner (D-Va.) has gotten himself into some hot water over a bill that critics say would do exactly that.

Payday lenders and their ilk have come under increased scrutiny recently for offering poor Americans small short-term loans with catastrophically high interest rates. According to Pew Charitable Trusts, 12 million Americans use payday loans each year, averaging $520 in fees just to borrow $375.

Speaking with The Week, Warner's office was adamant that the senator is not motivated by any great concern for payday lenders. Instead, a spokesperson claimed that Warner's benevolently titled Protecting Consumers' Access to Credit Act tries to "restore long-standing legal precedent and encourage access to credit for low- and middle-income Americans" by fixing a problem of patchwork regulation.

But like most things to do with finance, the details are complicated.

At issue is the different ways that states try to handle payday lenders. Some states try to crack down on them with caps on interest rates. But other states are more lenient. And the situation is further complicated by big national banks, which operate under federal law and only have to comply with interest rate caps in the state they're chartered in. Read more at THE WEEK
A_S Management
Wisconsin GOP resurrects bill exempting rent-to-own from consumer act

Wisconsin Republicans are trying again to exempt rent-to-own businesses from the state's consumer protection act.

Rep. Warren Petryk and Sen. Terry Moulton began circulating a bill for co-sponsors this week that would create a new section of statutes specifically for the rent-to-own industry.

Under the new provisions, rental-purchase agreements must disclose in eight- or 10-point type the cash price of the property and the total dollar amount of payments needed to acquire ownership.

The consumer protection act currently requires rent-to-own companies to disclose their interest rates.

The new statutes wouldn't require companies to divulge their rates, although they would have to disclose the difference between the total cost of payments to acquire ownership and the price of the property.

Moulton and Petryk wrote in a memo seeking co-sponsors that Wisconsin is one of only three states that lack statutes dedicated to the rent-to-own industry.

They argue the consumer protection act was written before rent-to-own companies appeared and "does not adequately account for the unique nature of this business." 
As Black Friday Nears, a Record 196 Million Consumers Now Have Access to Various Forms of Credit Cards and Other Revolving Lines of Credit

With the holiday shopping season officially kicking off during Black Friday next week, TransUnion's (NYSE: TRU) just released Q3 2017 Industry Insights Report found that 195.9 million consumers now have access to revolving credit such as bank-issued and private label credit cards. According to the report, powered by PramaSM analytics, this is the highest level of revolving credit access since TransUnion began measuring the variable and is greater than the 192.6 million consumers who had access to such credit products in Q3 2016.

TransUnion also found that, as of Q3 2017, a record 142.5 million consumers had a balance on non-revolving loans. This is up from 140.1 million in Q3 2016. Non-revolving loans are primarily comprised of auto loans, mortgages, student loans and unsecured personal loans.

The number of consumers with the aforementioned credit products, especially revolving lines of credit, will more than likely grow during the upcoming holiday shopping season. In November and December 2016, TransUnion found that average originations for private label credit cards doubled for online (2.00x) and discount store (1.95x) retailers compared to average monthly originations over the rest of the year (January through October)    Read more at TRANSUNION
AFSPA Supporter
4 apps that are perfect for the underbanked
Nov 17, 2017 MicroBilt News

You'd be hard-pressed to find a product that's more ubiquitous these days than smartphones. In 2011, for example, these devices were owned by approximately one-third of adults in the U.S., according to the Pew Research Center. Fast forward to today, and the share has ballooned to more than three-quarters of the country. Whether they're used to snap pictures, listen to music, send text messages or play games, smartphones are the quintessential all-in-one technological companion. However, a sizeable portion of the same people who own them aren't aware just how multifaceted these mobile devices truly are. 

For example, among unbanked consumers, more than half of the respondents to a Pew Charitable Trusts survey said they had neither heard of, nor performed, bill pay on their smartphones. This was a stark contrast to the two-thirds of banked smartphone owners, who had used mobile payment technology on their devices. No matter what your financial status happens to be, there are a host of mobile apps out there that can be used to better manage your finances. Here are a few that are particularly useful for those with limited banking services, which the Federal Department Insurance Corporation says accounts for almost 20 percent of today's households.
1. BankMobile
The Dismal Future of Trump's Least Favorite Agency

Mick Mulvaney, the controversial head of the OMB, might soon direct the Consumer Financial Protection Bureau, an agency he once called "a sick, sad joke."

The strangest thing about the man who's expected to be named the next leader of the Consumer Financial Protection Bureau is that he has long opposed the agency's work. This is the agency established in the wake of the 2008 market crash, whose regulatory reach touches countless financial products that Americans use every day-student loans, payday loans, credit cards, mortgages, and so on.

Earlier this week, the bureau's current leader, Richard Cordray, announced he will step down by the end of November, likely to pursue the governor's office in Ohio. As early as Friday, according to some reports, President Trump could announce his temporary replacement. The frontrunner for the job is said to be Mick Mulvaney, the current head of the Office of Management and Budget (OMB)-a man who once called the CFPB "a sick, sad joke."

If appointed, Mulvaney will have the power to set the agenda for the Bureau's work, but he likely won't direct day-to-day operations. Because he currently holds a Senate-confirmed position, he's eligible to serve as the acting head of the Bureau under the Vacancies Act. He can also simultaneously maintain his current position at the OMB, where he has proven himself a consummate supporter of Trump's policies, particularly those that seek to roll back regulations. Additionally, Mulvaney has supported federal hiring freezes and workforce reduction via attrition in the name of savings. Although Mulvaney couldn't unilaterally shutter the CFBP, or its operations, overnight, he could certainly make the agency weaker, and direct its efforts away from the sorts of aggressive actions that have been its hallmark. Read more at THE ATLANTIC

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