July 14 , 2020
AFSPA Partner


Consumers Win As Consumer Financial Protection Bureau Finalizes Payday Loan Rule

On Tuesday, the Consumer Financial Protection Bureau officially rescinded the most harmful provisions of its 2017 payday lending rule. Good riddance.

Thankfully, Bureau Director Kathy Kraninger stood up to the onslaught from so-called consumer activists trying to keep the old rule in place. In the official announcement, Kraninger (correctly) notes that:

A vibrant and well-functioning financial marketplace is important for consumers to access the financial products they need and ensure they are protected. Our actions today ensure that consumers have access to credit from a competitive marketplace, have the best information to make informed financial decisions, and retain key protections without hindering that access.

Detractors of the rule frequently talk about the importance of maintaining access to credit, but their goal is really to provide access to credit only on terms that they think are appropriate. The associate director of the National Consumer Law Center, for instance, wants a national rate cap, despite the fact that price controls end disastrously every time they are implemented.
Read more at FORBES

AFSPA Partner


What to expect as banks report earnings: more loan pain but plenty of fee income

The largest U.S. banks have plenty of ways to make money, even when interest rates are very low

The largest U.S. banks will announce their second-quarter results next week. Investors should expect another big hit to earnings as banks set aside more money to cover expected loan losses. On the other hand, the big banks are also continuing to see a boost to fee income from elevated investment-banking and trading activity, even as the coronavirus crisis continues.

JPMorgan Chase & Co. JPM, +5.46%, Citigroup Inc. C, +6.47% and Wells Fargo & Co. WFC, +5.94% are all scheduled to report their second-quarter results on Tuesday. Goldman Sachs Group Inc. GS, +4.43% is expected to report on July 15, followed by Bank of America Corp. BAC, +5.49% and Morgan Stanley MS, +4.82% on July 16, to round out the "big six" U.S. banks. All earnings announcement will be made before the market open.
Read more at MARKETWATCH


NEVADA: Loan companies say regulations implementing payday loan database are 'excessive,' but supporters praise it for 'protecting consumers'

The state's Financial Institutions Division invited the public to weigh in Wednesday on the implementation of a state payday loan database, with detractors calling proposed regulations "burdensome" and supporters arguing they are the only way to protect vulnerable families from "predatory" lenders.

The database tracks high-interest, short-term payday loans with the goal of increasing transparency and providing lenders with information on an individual's loan history with other lenders. It includes data on whether an individual has outstanding loans, as well as how often and many loans have been taken out, allowing lenders to ensure that an individual is not taking out combined loans exceeding 25 percent of their monthly income.


What Banking For The Unbanked Means For You

The COVID-19 pandemic has highlighted the plight of the unbanked and underbanked in America. For all of our progress as a nation over the past decade, more than a quarter of US households lack access to a basic bank account or other basic financial services.

This segment of the population has been hit particularly hard by the health crisis. Not only have many of them lost their jobs, but because they lack direct deposit capability, they frequently must resort to expensive payday lenders to cash their relief payments.

The good news, however, is that recent innovations-many of them spurred by the crisis itself-are making banking easier and more accessible for these individuals, and for all of us.
Read more at FORBES


Kansas City payday loan tycoon to argue his billion-dollar fine to U.S. Supreme Court

The U.S. Supreme Court on Thursday agreed to hear an appeal by Kansas City payday loan tycoon Scott Tucker that challenges the Federal Trade Commission's authority to demand restitution, as the agency did in his case when it obtained a $1.3 billion order against him.

Lower courts have issued mixed opinions about whether the FTC, a federal watchdog agency, can order people and businesses to return money they obtained from consumers through ripoff schemes.

The Supreme Court consolidated Tucker's appeal with another case that poses similar questions, which justices will hear during oral arguments later this year.

"We look forward to proving to the Supreme Court that the FTC Act empowers us to fully protect consumers by ensuring that money unlawfully taken from them is rightfully returned," said FTC general counsel Alden Abbott in a written statement.
Read more at MSN


Job Prospects In Cities Dim For Workers Without College Degrees, Study Finds

Middle-income job opportunities in America's cities have become increasingly hard to come by since the 1980s for workers without college degrees, a trend that has been especially pronounced for Black and Latino workers, according to new research.

The study by Massachusetts Institute of Technology economist David Autor, seeks to answer questions about why the ranks of workers who do not have four-year college degrees have been thinning in affluent cities during the past 40 years. Autor identifies both "push" and "pull" factors that are to blame here.

On the push side, the cost of living in major cities-especially the cost of housing-has experienced a well documented rise, making it harder for lower-earners to get by and in some cases driving them from cities.
Read more at ROUTEFIFTY

Dreher Tomkies LLP

CFPB Releases Report on Debt Settlements and Credit Counseling

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) released a report today examining recent trends in debt settlement and credit counseling. Many Americans struggle with their debts, especially during times of crisis. Today's report documents changes over time in how consumers have used these debt relief options for unsecured debt.

Using the Bureau's Consumer Credit Panel (CCP), a nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting agencies, this report shows that nearly one in thirteen consumers with a credit record had at least one account reported by the creditor as settled or with payments managed by a credit counseling agency from 2007 through 2019.
Read more at CFPB


California Bill to Establish Nation's Second Public Bank Applauded as 'Historic Challenge to Wall Street Domination'

"If California is serious about addressing racial and income inequities, we must create a banking system that centers people not profits."

In a move advocacy groups celebrated as a "historic challenge to Wall Street domination of municipal finances," a pair of California state lawmakers on Thursday unveiled legislation that would establish the nation's second publicly-owned bank and empower the institution to lend to businesses and local governments fighting to stay afloat amid the Covid-19 pandemic.

The Bank on California Bill (AB 310)-introduced by Democratic Assemblymembers Miguel Santiago of Los Angeles and David Chiu of San Francisco-would transform the state's Infrastructure and Economic Development Bank (IBank) into a public financial institution capable of efficiently distributing desperately needed funding as schools and other crucial social services struggle to cope with the coronavirus crisis and the resulting economic fallout.
Read more at COMMON DREAMS


Covid-19 Exposes Why the Postal Service Needs to Get Back Into the Banking Business

Financial services play a major role in the economic lives of most Americans, from the moment their paychecks are directly deposited into a bank account to the loan taken out to buy their first home or car.

Yet over 12 million people-about 6% of U.S. adults-cannot access these services because they do not have a bank account. Economists call these individuals financially excluded or the "unbanked." Being unbanked is costly, both financially and in terms of missed economic opportunities, and afflicts communities of color most.

The coronavirus recession exposes these costs even further. For example, the unbanked have had to wait much longer than those with accounts to get "economic impact" checks-and some are still waiting. Prompt access to emergency lending is vital to helping poorer Americans endure the crisis. Read more at ROUTEFIFTY


Wells Fargo pledges $400 million in support of small business after PPP payout

Wells Fargo & Co (WFC.N) will donate over $400 million toward helping small businesses recover from the coronavirus pandemic, giving away all proceeds from its participation in the Payroll Protection Program.

At least $28 million is earmarked for non-profit community lenders catering to Black entrepreneurs, the bank said.

"The hardest hit business in this are minority owned," president of consumer banking Mary Mack said in an interview. Read more at REUTERS


Supreme Court rules against law allowing debt-collection robocalls to cell phones

It struck down a 2015 provision that allowed robocalls on US-backed debt

The US Supreme Court decided today that debt collectors can no longer make robocalls to cell phones (via Ars Technica). In doing so, the court has ruled that the prior provision to the law violated the First Amendment by favoring debt-collection speech over other kinds of speech.

The law cited here is the Telephone Consumer Protection Act (TCPA) of 1991 which prohibits almost all robocalls to cell phones. In 2015, however, Congress added a provision that allowed debt-collection robocalls on government-backed loans, which include student loans, mortgages, past taxes and so forth. Read more at ENGADGET



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