September 25, 2018
2018 edition: 76/104
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This payday-like loan is brought to you by ... a bank?

Consumer advocates for years have decried payday loans as a costly way to borrow and one that keeps people trapped in a cycle of high-interest debt. The howls of protest could grow louder now than a major bank has stepped forward with a similar product.

U.S. Bank, the fifth-largest bank nationally, is lending up to $1,000 to cash-strapped consumers through its Simple Loan program. The company has branches in 25 states, including Arizona, where it ranks ninth in statewide deposits with $2.2 billion.

The annualized interest rate on this new loan could be nearly 71 percent, or even higher. That puts them above the cap on small-dollar loans in Arizona and many other states, critics say.

Various consumer-advocacy groups are concerned that a major bank has unveiled a short-term, high-cost loan such as this. But given how many Americans are struggling to make ends meet, the product could prove popular.

A Federal Reserve study this year found that about 40 percent of Americans said they would have trouble covering a surprise $400 expense. A survey estimated that 23 percent of adults have no emergency savings at all. Read more at AZ CENTRAL

The voice for the small-dollar, short-term lending industry.

Allow lenders to compete on a level playing field. by Jamie Fulmer

Many Americans, including tens of thousands of Missourians, live paycheck to paycheck. Short-term loans - whether from a non-bank lender like Advance America, a bank like U.S. Bank, or a nonprofit like Red Dough - help bridge the gap.

For many, a regulated payday loan from Advance America makes sense because it is simple, transparent and convenient. Despite the editorial's assertion, there's no compounding interest, no legalese designed to obfuscate terms and fees. Just a flat, one-time fee of $19 per $100 borrowed, and repayment due on the next payday. This simplicity is why 96 percent of borrowers say they fully understood how long it would take to pay off their loan as well as what it would cost, and why 94 percent consider obtaining a payday loan to be a sensible decision.

Advance America welcomes greater competition. But, in praising U.S. Bank, the editorial board overlooks practicality and reality. Without special exemptions, banks avoid this market because it's not profitable for them. Expensive overdraft programs - which typically cost north of $30 per item, regardless of loan size, and generate $34 billion each year - are their preferred form of short-term lending. And while nonprofit lenders provide a valued option in the marketplace, they cannot meet consumer demand at such low rates without being subsidized.

A thriving credit market requires a regulatory environment in which lenders can equitably develop new products and platforms to compete on a level playing field, with similar incentives and rules. Then, consumers can weigh all of their options and choose the service that meets their personal situation. That's where theory meets practice and consumers win.
Read at St. Louis Post-Dispatch
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Small-Dollar Lending Industry Groups Continue Case Against BCFP (CFPB) Rulemaking

The groups seek to block the rule currently under reconsideration by the bureau.

Industry groups representing the small-dollar lending industry filed a motion for preliminary injunction to block the Bureau of Consumer Financial Protection's final rule on "Payday, Vehicle and Certain High-Cost Installment Loans" from taking effect next year.

"Small businesses are already incurring enormous financial costs and laying off employees to comply with the Bureau of Consumer Financial Protection's (Bureau) small-dollar loan rule and some are already scaling back operations," according to a news release from plaintiffs Community Financial Services Association of America (CFSA) and the Consumer Service Alliance of Texas. "The motion also details the massive irreparable financial losses that small-dollar lenders will incur if the bureau's rule continues as written and seeks to halt the rule to protect small businesses from incurring more costs, laying off employees and shuttering stores for a rule that may never go into effect, given the Bureau's pending reconsideration of the rule."

In January, under the new leadership of Acting Director Mick Mulvaney, the BCFP announced it is reconsidering the rule. The BCFP issued the final rule in October 2017, imposing complex new requirements on payday loans, auto title loans, deposit advance products and longer-term loans with balloon payments. The previous proposed rule reportedly drew over one million comments, the majority of which were from opponents of the bureau's proposals, including a huge number from consumers who have relied upon and benefited from payday loans.

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Americans can put their credit reports in the deep freeze - and "thaw" them whenever they want - without cost thanks to a federal law that goes into effect today.

Spurred by the massive Equifax data breach in 2017 that exposed the private data of nearly half of all Americans, Congress passed legislation earlier this year that gives every consumer the right to lock up their credit information quickly and for free. That makes it unavailable to both creditors and identity thieves.

"It's not a cure-all, but it will be a great help in preventing identity theft," said John Heath, partner at Lexington Law, a credit-repair firm.

Although consumers could freeze their credit in the past, most credit bureaus charged between $3 and $10 each time a credit file was frozen or thawed. That made the process cumbersome and costly. The new law makes the process free, and also demands that credit bureaus make the process nearly instantaneous.

Here's what you should know about the new consumer protection law:

What does the law do? Read more at CBS NEWS

Dreher Tomkies LLP Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

As industry shifts to technology, a Bank is cutting face-to-face mortgage lenders

BMO Harris Bank is eliminating most mortgage loan officers who meet customers face to face and now directs people who want to buy a house or refinance to its centralized mortgage call center.

The Chicago-based bank said the move - and a new online mortgage application platform coming soon - reflects changing customer behavior trends and actually offers time and ease benefits for mortgage applicants.

"Things evolve, and we have to change with the times and with our customers' wants and needs," said BMO Harris spokesman Patrick O'Herlihy.

BMO Harris is not saying how many people have lost their jobs in the move. But a document sent to a laid-off employee shows the switch to call center mortgage applications is eliminating almost 170 positions in the bank's eight-state market territory.

Overall in the banking industry, visits to branches - including consumers coming in for mortgage applications - are declining, said Greg McBride, chief financial analyst for the personal finance website That means fewer mortgage loan officers are needed in branches, he said. Read more at USA TODAY

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'Fintech' Firms Fueling Rise of Personal Loans, Experian Says

Personal loans are the "fastest-growing type of consumer debt" in the past year, according to data from Experian.

Personal loan debt reached $273 million in the second quarter, an 11 percent increase, compared to the same quarter in 2017. That percentage growth is bigger than auto, credit cards, mortgages, and student loan debt, Experian says.

Another factor in the soaring popularity of personal loans is the rise of online lenders, known as "fintech." Startups such as SoFi, Marcus, Prosper, Best Egg, Avant, and Upstart have contributed to the growth of personal loans, says Experian. They now account for more than 30 percent of all new personal loans.

Their market share will likely continue to grow as a U.S. bank regulator recently announced fintech companies, if approved, will be allowed to operate independently across the country under a single federal license.

Personal loans usually come with lower interest rates than credit cards, so they often can be used to consolidate debts into a single, more affordable monthly payment. But interest rates depend much on your credit profile and consumers should shop around since personal loans can carry a range of fees. Read more at eCredit Daily

Come Visit us at Lend 360, 2018 in Chicago, Il. October 8-11 at Booth #801

COLORADO: (OPINION) Poor people are stupid and need Proposition 111

Yes. Poor people are stupid.

Because poor people are stupid, they make stupid decisions. Their bad decisions only make their situations worse and leave them even more poor. And, of course, being even poorer makes them even more stupid, leading them to even more stupid decisions. It is a vicious, circular spiral.

Thank God poor people have government! Government has the power to take decisions away from poor people. This prevents them from acting upon their stupidity.

Some haughty intellectuals believe that all people, being created equal, should be treated equally under the law, meaning poor people have a right to exercise their stupidity, to make bad decisions, just like people with money are empowered to do (of course they don't, being smart and all).

This type of idealist thinking is plainly cruel to the poor.

A caring society has a duty to rip poor people away from their ability to direct their own affairs. It's for their own good and well-being. And it has the added benefit of making the rest of us feel benevolent.

Fortunately, there is a legal way to satisfy both the lofty intellectuals who demand that the poor be empowered to make the same decisions the wealthy do while still taking decision-making power from the poor. Read more at DENVER POST

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Mulvaney plans to move some CFPB staff to new Atlanta office

The Consumer Financial Protection Bureau (CFPB) plans to relocate a group of employees from Washington, D.C., to a new satellite office in Atlanta in an effort to reduce costs.

Acting CFPB Director Mick Mulvaney is seeking to open the regional office to host a small number of analysts and managers who work with agency examiners assigned to financial institutions in the southeast United States, according to a senior agency official familiar with the plans. The staffers would be moved from a CFPB office in downtown Washington, near the bureau's headquarters, to a building in Atlanta owned by the General Services Administration.

The move is expected to take place within the next nine to 15 months, the official said.

The CFPB confirmed the planned move, telling The Hill that it will "align the Bureau with its regulatory partners that already have a regional presence in Atlanta" such as the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency.

"The city selection process led to Atlanta as the city that best enables the Bureau to fulfill its statutory mission and enhance its collaboration with its regulatory partners, while being as efficient as possible," the agency said in a statement to The Hill, adding that the agency's Southeast regional team has been based out of Washington since the CFPB opened in 2011. Read more at THE HILL

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NAFCU retells bureau: Consumer complaints shouldn't be public

NAFCU President and CEO Dan Berger, in a letter Wednesday, agreed with Bureau of Consumer Financial Protection Acting Director Mick Mulvaney's position that the bureau is not statutorily required to "run a Yelp for financial services sponsored by the federal government."

"Publication of unverified consumer narratives can have long-lasting effects on a credit union's reputation, resulting in fewer members, market share, and potentially resulting in more time-consuming examinations," Berger wrote as he reiterated that the bureau should remove its consumer complaint database from public view.

NAFCU has pressed the bureau to avoid publication of complaint information that cannot be fully verified in order to reduce the risk of reputational harm. Mulvaney has indicated that changes will likely be made to the database to keep it consistent with the law.

Berger said since the bureau uses information submitted to the database to inform its examination and supervision of financial institutions, "complaint data should be treated as non-public information and should be limited to internal use given its significant influence over the Bureau's supervisory functions." Read more at NAFCU

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Here's how much money people in their 50s have in their 401(k)s

By age 50, retirement-plan provider Fidelity recommends having at least six times your salary in savings in order to retire comfortably at age 67, and by age 55, seven times your salary. Is the average fifty-something with a retirement account on track?

As of the second quarter of 2018, Americans between 50 and 59 years old with a 401(k) had an average balance of $174,200 and were contributing 10 percent of their paychecks. Those numbers come from Fidelity, which also found that employers were matching, on average, 4.9 percent, which put the total savings rate for fifty-somethings at 14.9 percent.

Fidelity reports that Americans aged 50 to 59 are saving more in their 401(k)s than they were five years ago: In 2013, they had an average balance of $128,900.

While this group has a relatively high savings rate, keep in mind that Fidelity's data only takes into account those Americans with a retirement account and so can't present the full picture. GOBankingRates found in a 2017 report that 40 percent of older Gen Xers (those aged 45-54) and 33 percent of baby boomers (55-64) have nothing at all saved.

Read on to see how much you should be setting aside for retirement and how to get to that savings rate. Read more at CNBC


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