ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
December 14, 2021
Paving the Payments Future
CFPB Report Highlights Supervisory Findings of Wide-Ranging Violations of Law in 2021

Examiners found violations in areas including mortgage servicing, fair lending, payday, and remittances

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today issued a Supervisory Highlights report, which shines a light on legal violations identified by the CFPB’s examinations in the first half of 2021. The report also highlights prior CFPB supervisory findings that led to public enforcement actions in the first half of 2021.

“Today’s report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic," said CFPB Director Rohit Chopra. "We will continue to supervise firms to halt harmful practices before they become widespread."

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB has the authority to supervise large banks, thrifts, credit unions with assets over $10 billion, and certain nonbanks for compliance with Federal consumer financial law. Bureau-supervised nonbanks include mortgage companies, private student lenders, and payday lenders, as well as nonbanks the Bureau defines through rulemaking as “larger participants” of other consumer financial markets.

IRS provides revised questions and answers for 2020 Recovery Rebate Credit: 

Get ready for taxes: What's new and what to consider when filing in 2022

#IRS is offering a webinar called ‘Tax Changes from a Forms Perspective – Tax Year 2021.’ For details and to sign up for this free webinar, visit: www.irs.gov/webconference
Congressional roundtable tackles unbanked, underbanked

Today the U.S. House Select Committee on Economic Disparity & Fairness in Growth held a roundtable, “America’s Unbanked and Underbanked,” and talked with industry leaders about the ways Congress can work with financial institutions and private sector stakeholders to expand access to banking services to underserved communities.

Highlights from the roundtable discussion include the pros and cons of digital payments as opposed to cash, the need for banks in rural jurisdictions and the potential of offering bank accounts to all citizens. 

While the discussion touched on a large range of issues, guest speakers did provide their own potential solutions and thoughts on how Congress can help bring access to the underbanked and unbanked. Key suggestions included:

  • Introducing ‘immediate fund availability’ legislation, raising the statute of immediate funds from $200 set in 1987 (Aaron Klein, Senior Fellow, Economic Studies, Brookings Institution)
  • Provide flexible institution-level equity capital to Community Development Financial Institutions (CDFI) that touch unbanked individuals and entrepreneurs (Ines Polonius, CEO, Communities Limited)
  • Equitable implementation of the Corporate Income Tax (CIT) from the US Treasury, protection against predatory lending practices leaking into fintech (Robert E. James II, Chairman, National Bankers Association)
  • Involve the Treasury Department in banking solution innovation conversations (Wole Coaxum, CEO, MoCaFi)
  • (Justin Fisk, Director of Research and Policy, Online Lender’s Alliance)

How Should Regulators Review Bank Mergers? By Rohit Chopra

Across our economy, major sectors have become more consolidated. But consolidation can actually make it more difficult for smaller players to break in, denying the public of the benefits of competition. It can also make our economy less resilient and more vulnerable to shocks.

At the Consumer Financial Protection Bureau, we’ve also seen how some mergers and acquisitions can create chaos for consumers. Financial companies that rapidly expand through buyouts are often unprepared when it comes to integrating systems and ensuring accuracy of consumer accounts.

More broadly, the last crisis over a decade ago revealed the consequences when banks became too big to fail, requiring taxpayers to bail them out since their failure would destabilize the economy. And while prosecutors and regulators are often quick to sanction small financial institutions, they’re more reluctant to do so for bigger players, out of fear of collateral consequences. We must always be careful that mergers and acquisitions don’t amplify these risks.

CUNA Research: Unemployment Decline Shows Signs of Economic Recovery

“The labor market added fewer than expected new jobs in November. The unemployment rate, however, has shown a marked decline to 4.2%, a sign of continued recovery.

“Labor force participation has increased for the first time in several months, showing a return to work by some who opted out due to COVID fears or lack of childcare. Emergence of the new variant Omicron, which is more transmissible than Delta, could derail progress in labor market and exacerbate supply chain disruptions if cases continue to rise.

“As inflation continues to rise, Federal Reserve Chair Jerome Powell has indicated that he is open to ending the large-scale asset purchase program sooner than anticipated. Although the economy is not yet at maximum employment, a declining unemployment rate is a step in the right direction to fast track those changes.”

Pawn Shops see uptick in sales during holiday season

Economic hardships due the pandemic are causing stores to work in overdrive

SOUTH BELOIT, Ill. (WIFR) - Jason Vandiver has worked in the pawn industry with his family for more than 35 years, but he’s never quite seen a year like this one. Vandiver says sales have skyrocketed at his Rockford store, Paymaster Pawn and Jewelers, and has opened a second store in South Beloit with the expectation of it doing the same.

“Having a pawn shop is almost like having two businesses. We have the one aspect of the business where we loan people money for the items that they bring in,” said Vandiver. “And then we have the other aspect of retailing merchandise as well. So we see a big uptick in each of those during the holiday season”

Kelly Swisher, President of the Illinois Pawnbrokers Association says nearly 40% of annual traffic at pawn shops comes from people looking to sell unwanted items for cash.

The FTC and CFPB Target Big Tech, While the Chamber of Commerce Pushes Back. by Arnall Golden Gregory LLP

The first full year of the Biden Administration has seen an overhaul of the leadership of executive agencies, coupled with an intense focus on how big business affects the United States economy. Nowhere are these changes more apparent than in the new leadership and enforcement initiatives of the Consumer Financial Protection Bureau (“CFPB”) and the Federal Trade Commission (“FTC”). After a lengthy confirmation process, former Federal Trade Commissioner Rohit Chopra, previously one of the staunchest consumer advocates at the Commission, took over as the new head of the CFPB in October 2021. Meanwhile, in June 2021, Lina Khan, a former associate professor at Columbia University, legal fellow to Mr. Chopra and outspoken critic of big business, assumed the role of chair at the FTC. Through their respective organizations, Mr. Chopra and Ms. Khan have increased scrutiny of big technology companies, sometimes even without allegations that the companies have engaged in any wrongdoing.

Making financial wellness a top New Year’s resolution

The new year often symbolizes a clean slate — a time to start over and start fresh, a time to reevaluate or prioritize your goals and overall lifestyle.

Jan. 1 represents the start of something new, and it presents a good opportunity to start thinking and planning ahead for the future, especially as it relates to your finances.

Most New Year’s resolutions and goals tend to be based on behaviors or habits, like exercising more or eating healthier. The same principle can apply to your financial health and wellness.

With the past 12 months in the rearview, you have access to a full year’s worth of information to further evaluate and assess your spending, saving, borrowing and investment habits. That data can then be leveraged to establish new resolutions related to your financial activities and goals in the year ahead.

Lenders use AI to offer low credit score personal loans to borrowers

Fintech lenders seeking to open access to credit to underserved populations

Fintech lenders are taking an unprecedented step of using artificial intelligence (AI) to offer personal loans to consumers with low credit scores or even no credit scores. 

In fact, one fintech startup lending platform called Upstart is soon going to offer small-dollar consumer loans at a less-than 36% annual percentage rate (APR), according to American Banker. This rate is significantly less than what is typically charged for this type of loan and makes it a viable alternative to credit cards. In fact, payday lenders charge up to triple-digit percentage rates on these loans. But now, Upstart says it will use AI underwriting models to give cheaper rates. 

"It offers reasonable rates to people for short-term loans, and that’s something that almost doesn't exist out there," Upstart co-founder and CEO Dave Girouard said in an interview with American Banker.

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
757.737.4088
315 Tuscarora St., Lewiston, NY 14092