May 16, 2019

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AOC and Sanders' credit card interest rate cap would be disastrous. by Diego Zuluaga

Back in the early 1900s, Progressives helped drive loan sharks out of business by lobbying to lift state usury caps. Those caps had barred lenders from charging interest above 6% to 10% a year, forcing low-income Americans to seek credit in the illegal market. Now, Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders want to bring back a similar usury law that would cap annual credit card interest rates at 15%.

The ostensible aim of their proposal is laudable: to make credit more affordable for American households at a time when they carry a collective balance of $870 billion, with an average credit-card APR of 17.73%. But the consequences of a cap would be disastrous, removing access to credit for millions of low- and moderate-income households and forcing them to rely on family members, tighten their belts or seek higher-cost forms of credit.

Ocasio-Cortez and Sanders wonder why banks charge double-digit interest if they can borrow funds at 2.5%, the rate at which banks lend to each other.

But that is a misleading comparison. First, 2.5% is the rate banks pay on very short-term borrowing, which is less risky and therefore cheaper than longer-term consumer credit. Second, the business of banking is expensive. Banks spend time and resources screening borrowers to assess their creditworthiness. They invest in physical and virtual facilities to ensure the safety of customer funds and their personal information, online and offline. Banks also employ hundreds of thousands of staff to help customers find the products they need, understand the terms of each product, and service mortgages, small-business loans and credit-card debt.
Read more at CNN BUSINESS

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Battle Over Payday Lending Shifts To Public Comments

The battle over payday lending - specifically, how tough U.S. federal rule will be in governing the industry - is heating up as an important deadline looms. Letters favorable to the payday lending industry reportedly are flooding in to authorities before the May 15 cutoff for public comment regarding a proposed policy change.

At issue are payday lending rules from the U.S. Consumer Financial Protection Bureau (CFPB). They were drafted under the tenure of Richard Cordray, who had served as the previous director of that agency. The Obama-era appointee sought to put in place new underwriting requirements for lenders (such as verifying borrowers' ability to repay the payday loans). The rule also had another component, focused on how often a lender can try to debit payments from a customer's bank account.

New Director Kathleen Kraninger has proposed eliminating one of the components of the rules - the requirement that lenders would have had to verify a borrower's income, debt and spending habits to assess their borrowing threshold before underwriting their loan - or avoid this stipulation by changing their loan type to an installment loan, paid over a set amount of time agreed upon at the outset of the loan. Read more at PYMNTS.COM

Lending as a Service

Walmart Offers To Improve Employee Financial Health

Although can let Walmart employees access their wages ahead of payday, that is its least important features, according to its CEO, Jon Schlossberg. For $8 a month - like many employees Walmart pays a share of the fee - it aims to improve financial wellness. It shows users with a glance at a smart phone how much they have left to spend safely and helps them save for specific goals.

Providing early access to wages is a help in an emergency, but it can become a habit. Admittedly it's better than being trapped in an endless cycle of payday loans, but it doesn't address the concerns so many people have about money. PWC has estimated that people spend three hours a week at worrying about finances, and employers are beginning to realize that can affect productivity.

That has led some companies, including Walmart, to look at apps that help employees improve their financial wealth.

"We are not an earned wage access (EWA) company," Schlossberg said. "We lose money when people take their pay early Read more at FORBES

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Will Reforming Consumer Finance Regulation Cause a Recession?

Will reforming consumer finance regulation cause a recession? That is the claim of a recent article in The Hill by two former Washington Post business reporters. In particular, the article claims that an array of Trump administration actions represent "a scenario eerily reminiscent of events that drove the U.S. into a ditch in the Great Depression of the 1930s and the Great Recession 10 years ago."

That's a bold claim. And yet for such a prediction, the article provides little evidence to back it up. At best, it is a confused mix of hyperbole and fear mongering. In response to some particular claims regarding consumer protection (there are too many for one blog post), I've provided some brief responses below.

1. "Trump's undoing of the Dodd-Frank Act, which Congress passed in 2010 to end the unsustainable consumer debt that triggered the mortgage crisis and plunged the country into the worst downturn since the Great Depression -produces a toxic mix: rising consumer debt and decreasing oversight of lenders."

The "undoing" of Dodd-Frank presumably refers to S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, a bipartisan piece of legislation passed in 2018. Yet that legislation merely tinkered around the edges of Dodd-Frank, predominantly raising certain restrictions placed on community banks under $10 billion is assets, which were far from the troubles of Wall Street. The vast majority of Dodd-Frank, let alone the enormous of amount regulation that preceded it, remains solidly intact. Read more at Competitive Enterprise Institute

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Consumer bankers call for federal data breach standards

The Consumer Bankers Association (CBA) is urging Congress to enact federal data security and breach notification standards to protect consumers better.

Federal standards would be preferable to the current patchwork of state laws, CBA President and CEO Richard Hunt said in a letter to Senate Commerce Committee Chairman Sens. Roger Wicker (R-MS) and Ranking Member Maria Cantwell (D-WA).

"In light of recent data breaches and abuses, consumers are rightly concerned about the manner in which their personal information is being collected and how this sensitive information is being both shared and protected," Hunt wrote. "No industry was immune from breaches in 2018 ... However, it is important to note that the non-financial business sector, which is not subject to national data security requirements, was responsible for the overwhelming majority (93 percent) of the personal records compromised. Congress should take seriously its authority and enact a federal data security and breach notification standard and preempt the current patchwork of state laws. With the recent breaches that have put millions of consumers at risk, the need to pass legislation to establish such a standard could not be more evident. Protecting consumer information is a shared responsibility of all parties involved."

The business sector accounts for 46 percent of data breaches, which is the most of any sector, Hunt said. The healthcare/medical industry accounts for 29 percent, while banks, credit unions, and financial institutions accounted for just 11 percent.
Read more at Financial Regulation News

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40 Fastest-Growing Companies in Georgia

ATLANTA - May 14, 2019 - The Atlanta Chapter of the Association for Corporate Growth® (ACG), today announced the 2019 Georgia Fast 40, recognizing the top 40 fastest-growing middle-market companies in Georgia.

Honored companies for 2019 include: REPAY Realtime Electronic Payments

"The companies being honored this year exemplify ACG's focus on driving middle­market growth and demonstrate the strength and significance of this sector in Georgia," said Melanie Brandt ACG Atlanta's President and CEO.

Applicants were required to submit three years of verifiable revenue and employment growth records, which were validated by national accounting firm and founding Diamond sponsor, Cherry Bekaert LLP. ACG also conducted in-person interviews with all qualified applicants. All companies on the list are for profit and headquartered in Georgia with year-end revenues ranging from $15 to $500 million. Read more at REPAY

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Democrats can bank on this in 2020

Making financial institutions fully accessible to all is good policy and good politics.

Access to the basic banking services necessary for prosperity should be a human right, yet millions of Americans lack such access. The 2020 election presents an opportunity to change that.

My education in finance started early. Brick-and-mortar banks lined the streets in Rye, where I grew up. When I was a fourth-grader, my mom took me to our local TD Bank to open checking and savings accounts. At the time, all I cared about was having a place to park my cash earned shoveling snow and showing off my debit card to my friends.

Later, that introduction to the financial system meant more to me. I could withdraw money at an ATM, order an Uber, buy textbooks cheaper through Amazon and pay my rent online.

Those banking services made me a productive, trusted member of society; TD looked at me and said, in essence, "You are important." However, private-sector banks today look at many other Americans and say, "You don't matter."

In October, the Federal Deposit Insurance Corp. released its National Survey of Unbanked and Underbanked Households, which measures the inclusiveness of the U.S. banking system.
Read more at NEWSDAY


Duplicate messages demanding mercy on payday lenders overwhelms regulators

Federal regulators have been inundated with messages calling for looser restrictions on payday lenders - and a lot of them look alike.

The Consumer Financial Protection Bureau has received about 27,000 messages urging regulators to ease proposed Obama-era restrictions on short-term, high-interest loans - and thousands of them are duplicates, apparently created via pre-written letters supplied by the payday loan industry, according to consumer group Allied Progress.

While the duplicate messages appear to fall on both sides of the issue, the vast majority of those surveyed by The Post - maybe nine out of 10 - appear to call for deregulation of payday lenders.

Allied Progress, which is against loosening payday loan rules, released a report Tuesday showing that at least 7,000 of the messages share personal stories about how payday loans helped them - and are copied verbatim hundreds of times.
Read more at NEW YORK POST

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Top 15 most disruptive office distractions, according to 5,000 employees

Though many employees Opens a New Window. may be looking for a distraction to interrupt their 8-hour workday on occasion - not all interruptions are considered "good."

In fact, a new survey released by LinkedIn last month found that nearly half of Americans report being stressed about their jobs Opens a New Window. . Most of their strain, according to the survey, comes from an overwhelming workload, confidence about the future of their position, work politics, among other factors.

So, while workers are struggling to meet deadlines and manage their work-life balance, some may want to concentrate during the day. And coworkers don't always make that easy.

Communications company Plantronics, Inc., (Poly) recently surveyed Opens a New Window. more than 5,000 employees who work at least three days a week in a corporate environment to determine what they consider some of their biggest office distractions. The majority agreed the biggest disturbances come from their colleagues, specifically when they talk loudly on the phone.

Noise from co-workers congregating nearby was the No. 2 distraction, with 65 percent of respondents saying it causes a moderate to very high level of distraction.
Read more at FOX BUSINESS

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Consumer Watch: One in four household unbanked or underbanked

Financial mistakes of the past can affect more than just your credit score. Some Americans can't qualify for a checking account.

"There's a lot of people out there, put together -- that's about one in four households -- are either unbanked or under banked," says Ted Rossman, industry analyst.

A database called ChexSystems tracks your bank account history, like overdrafts. If you have too many bad marks you could find yourself unable to get a checking account, but that doesn't mean you have to start keeping your money in your mattress.

If you get denied for a checking account, you may need to look at a different financial institution.

"There are many credit unions and community banks that offer free checking accounts to all customers. Our sister site, Bankrate has found that about 40-percent of checking accounts are free to all comers," says Rossman. Read more at FOX 25

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How A Small Bank Plays A Big Part In Inclusive Economic Development In The Mississippi Delta

Bubba O'Keefe stands on the stage of the Paramount Theater, backed by the banker who financed his acquisition, Darrin Williams, CEO of Southern Bancorp, appraising the damage, as if conjuring a poorly formed vision of what could be.

Shortly after acquiring the old vaudeville theater which had been sitting empty in the center of Clarksdale, Mississippi, the roof collapsed, filling the theater with debris and opening it to the sky.

O'Keefe is a big deal in this small town in the heart of the Mississippi Delta. Once home to millionaire cotton farmers, Clarksdale is, like the rest of the Delta, about 80% African American. Its population of about 16,000 to 18,000 people, has been declining for decades.

A white man in a largely black town, O'Keefe is the town's official, paid director of tourism and seems to know everyone in town, including most of the overnight guests. As we sit and chat on the sidewalk outside the small bistro in one of his buildings, an old Woolworth's store that had sat empty for decades, he greets everyone who passes by. Read more at FORBES

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Sanders And Ocasio-Cortez Offer REAL 'Financial Choice' With Their Loanshark Prevention Act

Last week Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez introduced an important new piece of legislation - the Loan Shark Prevention Act. In addition to putting an end to a pervasive form of exploitation that underwrites systemic injustice, this Act would both (a) make a substantial contribution to the financial and macroeconomic stability of the United Sates, and (b) in combination with a public option in banking, bring real economic opportunity to some 63 million presently unbanked and under-banked Americans. The bill also further confirms Senator Sanders' and Representative Ocasio-Cortez's place at the forefront, along with Senator Elizabeth Warren and Representative Ro Khanna, of policy innovators aiming to restore our uniquely American form of "accountable capitalism."

Americans are used to hearing politicians and pundits decry "the national debt" as a threat to long-term economic growth and financial stability. But really it is private, not public debt that has been our economy's primary threat since wage and salary incomes began stagnating some forty years ago. The most dramatic case in point was of course the financial collapse and ensuing debt-deflation of 2008-09, rooted in exploitative "subprime" mortgage lending and related practices by the financial "services" industry. Read more at FORBES

National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

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