July 9, 2020
AFSPA Partner


Consumer bureau revokes payday lending restrictions

The Consumer Financial Protection Bureau (CFPB) on Tuesday revoked rules that required lenders to ensure that potential customers could afford to pay the potentially staggering costs of short-term, high-interest payday loans.

The bureau released Tuesday the final revision to its 2017 rule on payday loans, formally gutting an initiative with roots in the Obama administration that was aimed at protecting vulnerable consumers from inescapable debt.

The initial rule, released shortly before President Trump appointed new leadership at the CFPB, effectively banned lenders from issuing a short-term loan that could not be paid off in full by a borrower within two weeks.

The measure required payday lenders to determine whether the customer had the "ability to repay" the loan with an underwriting process similar to what banks use to determine whether a customer can afford a mortgage or other longer-term loan.
Read more at THE HILL

AFSPA Partner

Consumer Financial Protection Bureau Issues Final Rule on Small Dollar Lending

WASHINGTON, D.C. - The Consumer Financial Protection Bureau today issued a final rule concerning small dollar lending in order to maintain consumer access to credit and competition in the marketplace. The final rule rescinds the mandatory underwriting provisions of the 2017 rule after re-evaluating the legal and evidentiary bases for these provisions and finding them to be insufficient. The final rule does not rescind or alter the payments provisions of the 2017 rule.

Consumers utilizing small dollar loans continue to have robust consumer protections in place under the prohibition on unfair, deceptive, and abusive acts or practices in the Dodd-Frank Act, the payments provisions of the 2017 rule, and other provisions of federal and state law. Consumers also have increasingly innovative choices among competing small dollar products in the marketplace.
Read more at CFPB


Final Small-Dollar Lending Rule Ensures Millions Will Have Access to Regulated Credit.
by D. Lynn DeVault, Chairman of the Community Financial Services Association of America (CFSA)

ALEXANDRIA, VA - D. Lynn DeVault, Chairman of the Community Financial Services Association of America (CFSA), today released the following statement regarding the Consumer Financial Protection Bureau's (CFPB) final rule rescinding portions of its 2017 small-dollar lending rule:

"While we are still reviewing the new rule, it is clear that the CFPB's decision to issue a revised final rule will benefit millions of American consumers. The CFPB's action will ensure that essential credit continues to flow to communities and consumers across the country, which is especially important in these unprecedented times.

"The ability-to-repay provisions were simply unworkable and imposed burdens on consumers and lenders in the form of unreasonable levels of documentation not even required of mortgage lenders. The provisions set requirements that no operator, especially a small business, could meet and imposed complex and costly regulations that would have effectively put lenders out of business altogether rather than protect consumers. The Bureau's own simulations projected that the reborrowing restrictions imposed by the now eliminated ability-to-repay requirements alone would have caused loan volume to decrease by 60 to 80 percent, severely restricting access to credit.
Read more at Community Financial Services Association of America (CFSA)


Online Lenders Alliance CEO Mary Jackson Statement Responding to CFPB Small Dollar Rule

Today, following the Consumer Financial Protection Bureau (CFPB) release of the final rule on small dollar lending, Online Lenders Alliance CEO Mary Jackson issued the following statement:

"The Online Lenders Alliance supports the CFPB's action addressing the previous rule's mandatory underwriting requirements, which were overly complex and would have impacted our members' ability to provide credit access to the Americans who need it most. Especially given our current national crisis, we need to ensure that the 90 million nonprime consumers have access to credit when they need it, and the revised rule does just that.

"To be clear: we support 'Ability To Repay' provisions in general, because common sense dictates that lenders cannot stay in business if consumers are unable to meet their loan obligations. No reputable lender builds a business model that doesn't calculate a consumer's ability to repay. We believe that any Ability to Repay rules for unsecured consumer credit should be consistent and aligned with similar laws, such as The Card Act, so as not to create disparities amongst various credit instruments or consumer types.
Read more at Online Lenders Alliance (OLA)


FiSCA Applauds Needed Relief for Hardworking Families in CFPB Small Dollar Loan Rule

Leading representative of financial services providers says updated rule will help underserved communities access needed credit

WASHINGTON, DC - In response to the Consumer Financial Protection Bureau's (CFPB) issuance of the final Payday, Vehicle Title, and Other High-Cost Installment Loans Rule, the Financial Service Centers of America (FiSCA) issued the following statement today on behalf of Ed D'Alessio, Executive Director: 

"Today's CFPB announcement provides welcome relief for hardworking Americans across the country who need immediate access to credit and liquidity, especially given the unprecedented economic crisis brought by the coronavirus pandemic.

Read more at Financial Service Centers of America (FiSCA)

Dreher Tomkies LLP

Pawns shops seeing more people retrieving their items during pandemic

Many used federal stimulus check to reclaim items

OVERLAND PARK, Kan. - The past few months have been anything but ordinary for pawn and loan businesses because of COVID-19. Shops that expected to see people flooding the doors needing personal loans are seeing just the opposite.

On any given day, Heartland Pawn in Overland Park could see just about anything come in the door. One thing they used to see every day was jewelry, at least they used to.

After the first round of stimulus checks, people were lining up at their doors to pick their items up. Read more at KMBCNEWS


KeyBank's digital strategy: Let the client choose

The Cleveland-based bank has spent the past decade strategizing how it can digitize its products to provide remote self-service capabilities for its clients while maintaining in-person options.

Like many financial institutions, KeyBank's digital focus was present long before the coronavirus pandemic forced many banks to interact with customers through digital-only channels.

Jamie Warder, executive vice president and head of digital banking at the Cleveland-based bank, said KeyBank has spent the past decade strategizing how it can digitize its products to provide remote self-service capabilities for its clients while maintaining in-person options.

As the pandemic ushered in social distancing and widespread changes in customer behavior, Warder said the $156 billion-asset regional bank began to question the speed of its existing digital strategy. Read more at BANKING DIVE


'Sin Taxes' Could Help States in Pandemic Budget Slump (at Least a Little Bit)

Gas tax revenue plummeted this spring, income taxes won't rebound anytime soon and some states are offering a property tax holiday because people can't pay during the pandemic. But so-called sin taxes are rolling in as liquor stores boom, marijuana sales continue, vapers vape and smokers smoke.

While not a huge portion of state tax revenue, sin taxes are a relative bright spot in a dark revenue picture. And some states are considering increasing those levies to make up some of the lost pandemic revenue.

Taxes on those items often are more politically palatable because they generally affect a smaller portion of the population and the purchases are seen more as a choice than a necessity.
Read more at Pew Charitable Trusts


Governors' 2020 Priorities in Their Own Words

Analysis of state of the state addresses shows hopes dashed by COVID-19

As legislative sessions began earlier this year, many governors seized on widespread economic stability and revenue growth to lay out wide-ranging agendas and catch up on long-delayed priorities. Those agendas are now in a deep freeze, overtaken by the COVID-19 pandemic and ensuing state fiscal and economic collapse.

Governors' annual State of the State addresses offer a snapshot of 2020's stunning reversal of fortunes, in which many states that started the budget year with surpluses suddenly have billion-dollar budget gaps. Most of this year's addresses-which sought to set the stage for legislative sessions and highlighted priorities for the year ahead-were delivered weeks or months before the dangers of the novel coronavirus were clear.
Read more at The Pew Charitable Trusts


How The COVID-19 Pandemic Is Moving SMB Lending, Disbursements Away From Paper Checks

The small- to medium-sized business (SMB) lending industry is used to adaptation, especially since the 2008 financial crisis, when legacy financial institutions (FIs) began pulling back and FinTechs and digital players stepped up in the space. The COVID-19 pandemic has rocked the industry, too, revitalizing the ongoing shift to digital as well as prompting a resurgence in the role of more established banks as prime SMB lenders.

FinTechs have brought their innovative banking approaches into the SMB lending ecosystem, turning to artificial intelligence (AI), machine learning (ML), automated tools and digital channels to speed processes that had traditionally been paper-based. Alternative lenders like Bolstr, Kabbage and OnDeck used such technologies to approve 57.2 percent of SMB loans from January 2019 to April 2019, for example.
Read more at PYMNTS.COM



Alternative Financial Service Providers Association

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