May 21, 2020
AFSPA Partner


AFSPA Partner


CFPB Director Says Agency to Issue Revised Payday Loan Rule, Defends Rule-Making Process

In letter, Kraninger rebuts Senate Democrats' claims of improper interference in revamping Obama-era rule

Consumer Financial Protection Bureau Director Kathy Kraninger said she is pressing ahead with a revised payday lending rule despite criticism from Senate Democrats who accused the CFPB's political appointees of interfering with the rule-making process, according to a letter obtained by Morning Consult from Sen. Sherrod Brown's (D-Ohio) office.

"Upon my determination, the Bureau will issue a final rule on the basis of the record before the agency," Kraninger wrote in the letter, dated Monday. "And upon that basis, I will defend the agency's action."

The letter answers one dated May 4 sent by Brown, the Senate Banking Committee's ranking member, Sen. Elizabeth Warren (D-Mass.) and other Senate Democrats that asked the CFPB to stop work on revamping an Obama-era payday lending rule that would unwind a provision that requires lenders to determine if borrowers have the ability to repay a loan. The agency had expected to revise the rule by the end of April, but it hasn't yet been issued.

Alternative financial services in the time of coronavirus: What you need to know

Jacob Faber was waiting in line outside the Whole Foods at the corner of Bowery and East Houston in lower Manhattan this past April, when he heard two security guards talking about their checks from the economic relief package President Donald Trump signed on March 27.

One guard said his money was directly deposited into his bank account, recalls Faber, an associate professor at New York University's Robert F. Wagner School of Public Service. The other said he took his check not to a bank, but to a well-known tax preparation provider.

The first guard used the kind of checking-and-savings bank millions of Americans use. The second turned to an institution many academics - and federal agencies - consider to be part of the alternative financial service universe that comprises rent-to-own stores, money transmitters, check cashers, car title lenders, pawnshops and payday lenders.

As the coronavirus downturn stretches into mid-2020 with historic unemployment rates, low- and middle-income Americans may increasingly turn to alternative financial services for cash to pay for food, shelter and other essentials. Academic research shows these services primarily cluster in black and Hispanic neighborhoods - and rural areas with a dearth of traditional banking.

In Letter to Fed and Treasury, Congresswoman Waters Presses for Emergency Lending Programs Not to Support Predatory Lenders

Today, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, sent a letter to Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, and Steven Mnuchin, Secretary of the U.S. Department of the Treasury, following up on conversations to ensure that the Federal Reserve and Treasury programs and facilities to respond to the COVID-19 crisis do not support predatory lenders.

"I write to follow up on our recent conversations confirming that predatory consumer loans offered by payday, installment or other lenders are not eligible to be pledged as collateral to the Term Asset-Backed Securities Loan Facility (TALF) or any other Federal Reserve program or facility that is supported by funds appropriated by Congress and approved by the Secretary of the Treasury," Chairwoman Waters wrote. "While many Americans struggle with access to credit for a variety of reasons, research shows that the decline in credit conditions and the dramatic rise in unemployment during the Great Recession caused an uptick in borrowers' reliance on payday loans. I'm glad we agree that using the Federal Reserve's TALF to directly or indirectly support such loan products with triple-digit interest rates or predatory features that target vulnerable communities is not appropriate, especially during this crisis."
Read more at U.S. House Committee on Financial Services


TEXAS: Eviction proceedings and debt collections can resume this month, Texas Supreme Court orders

The state's highest civil court initially paused eviction proceedings and debt collections during the coronavirus pandemic. Those moratoriums are being lifted after more than 1.9 million Texans filed for unemployment.

Evictions and debt collection proceedings can resume in Texas next week, the Texas Supreme Court has ordered, after the court temporarily put both on hold during the coronavirus pandemic.

Eviction hearings can be held as soon as Tuesday, with orders authorizing evictions allowed starting May 26. That does not apply to certain tenants who are protected through the federal Coronavirus Aid, Relief and Economic Security Act, including renters in homes covered by federally backed mortgages. Tenants covered under that federal moratorium have protections through Aug. 23. Others may be protected through local orders, like those in place in Austin, Dallas and San Marcos.
Read more at TEXAS TRIBUNE


About the Community Financial Services Association of America

The Community Financial Services Association of America was formed in 1999 to promote laws and regulations that protect consumers while preserving access to credit options and to support and encourage responsible practices within the short-term loan industry.

CFSA's member companies represent more than half of all traditional small-dollar loan storefronts across the country, in more than 30 states. Our members provide credit to more than 19 million households, as well as a wide range of other financial products and services, including check cashing, installment and auto title loans, prepaid debit cards, as well as bill payment and tax preparation services.

Our members' storefront locations put us in the heart of many financially underserved communities. CFSA members are heavily regulated at the federal level and in the individual states where they operate. Additionally, to serve our customers responsibly, CFSA has developed a set of Best Practices that begin with compliance with all applicable state and federal laws, and also cover everything from advertising to collection practices. Our members hold themselves to a higher standard, and we believe that these practices differentiate our members from other providers in the small-dollar credit industry.
Read more at CFSA

Covid-19 and Business Interruption Insurance - How To File a Claim the Right Way

Passivity is seldom a good business plan, especially in a crisis when the survival of your business may be at stake. Covid-19 is a crisis that greatly threatens franchised businesses. It is clear that action must be taken, but what action?

Many businesses have received federal or state relief, but since no one knows how long the effects related to Covid-19 will continue, no one knows for sure if that relief will be adequate over time. Owners of franchised businesses know that another potential lifeline is business interruption insurance. But owners hear so many conflicting things about Covid-19 and business interruption insurance that they often end up in a paralysis of indecision. This article is about breaking that paralysis by taking practical steps that keep your options open.

All owners of franchised businesses have (or should have) business interruption insurance. This type of coverage is included in "property insurance," or what many people refer to as "fire" or "casualty" insurance.

Dreher Tomkies LLP

PPP is failing black, Latino-owned businesses, survey shows

Twelve percent of black and Latino business owners who applied for Paycheck Protection Program (PPP) loans reported receiving what they asked for, according to a survey the Global Strategy Group conducted on behalf of Color of Change and UnidosUS, two equal rights organizations. Meanwhile, 26% said they received a fraction of what they had requested. Nearly half of the 500 business owners surveyed between April 30 and May 11 said they anticipated having to close permanently within the next six months, The New York Times reported. Two-thirds of the survey's respondents sought loans of less than $50,000. And almost half said they've had to lay off employees.
The figures come as lawmakers are working to overhaul at least two of the PPP's limits: the requirement that 75% of the loan money be used toward payroll for the loan to be forgiven, and the eight-week deadline by which businesses need to use the loan, according to The Wall Street Journal.

The Small Business Administration (SBA) and Treasury Department on Friday released an 11-page application borrowers can use to seek forgiveness for PPP loans. The guidance comes more than two weeks after the April 26 deadline Congress set for the agencies.
Read more at BANKING DIVE

'Major reallocation shock' from coronavirus will see 42% of lost jobs evaporate: Study

Permanent job losses are likely to be a feature of the eventual U.S. recovery, according to University of Chicago research, which estimates that 42% of recently unemployed workers will not return to their jobs amid the "profound" shock stemming from coronavirus lockdowns.

The pandemic has taken a brutal toll on the world's largest economy, with at least 36 million people thrown out of work over the last two months. With states gradually relaxing restrictions that have shut down businesses and locked workers at home, economists are forecasting at least some of those employers could rehire laid off workers.

However, researchers at the U of C's Becker Institute for Economics have painted a dour picture of the labor market reallocating those lost positions. Calling the crisis a "major reallocation shock" across all major economic sectors, the authors found that for every 10 coronavirus-induced job losses, only 3 were created. Read more at YAHOO FINANCE

New Guide Will Help Employers Improve the Financial Wellness of Their Workforce

WASHINGTON, May 19, 2020 /PRNewswire/ -- Almost half of low-wage workers find it difficult to "just get by" on their regular income. A single unforeseen expense can upend their lives. Workers are bringing this stress into the workplace, and many employers are trying to do something about it. The Guide to Employee Financial Wellness, developed by the National Fund for Workforce Solutions and the Social Policy Institute at Washington University in St. Louis, sets a clear process for employers to follow to ensure they select the right program for their business and their workers.

The devastating impact of COVID-19 on the financial well-being of frontline workers has shined a spotlight on the tremendous value workplace financial wellness programming can yield. Employees who participate in these programs can reduce some of the financial stress they face and come to work focused on their job, not their financial burdens. Employers who implement financial wellness programs can also develop mutual trust with their employees, resulting in a more productive and motivated workforce. Read more at YAHOO FINANCE


Loan Forgiveness Under the PPP and SBA EIDL Programs: 10 Things Small Businesses Need to Know

The U.S. Treasury has just provided guidance on a safe harbor for PPP Loans. See New Treasury Guidance Provides Safe Harbor for PPP Loans.

If you were one of the lucky businesses to receive a Paycheck Protection Program (PPP) loan as provided under the CARES (Coronavirus Aid, Relief, and Economic Security) Act, you currently have eight weeks to use the funds appropriately to meet the criteria for loan forgiveness or face repayment.

There is still some PPP money available from Round 2 of Congressional relief, so if you haven't yet applied and still need the money, do so immediately. There was approximately $90 billion remaining as of May 6, largely because most loans in this second round have been much smaller than in Round 1 and many larger companies have returned their loans. You will likely have better luck receiving a loan by applying through a smaller community bank as opposed to a large national bank.
Read more at ALL BUSINESS


Powering Decisions & Payments

ValidiFI is a technology company that delivers data and payment solutions for companies in the financial services industry. Our data and payment solutions provide insights to acquire more customers and improve the payment process. Businesses of every size-from new startups to public companies-use our solutions to increase sales and facilitate payments. Through a combination of technology and strategic partnerships, we create better ways to validate and analyze information.

Our platforms give companies the confidence to serve financial products to consumers, and enable choices when sending payments, or getting paid. Through ValidiFI's data and payment solutions, businesses are empowered to manage risk more efficiently, protect its consumers from unnecessary fees, lower costs associated with customer acquisition and payment processing, and maximize profits.
Read more at ValidiFI

5 ways the CFPB has eased industry's coronavirus burden

The Consumer Financial Protection Bureau's response to the coronavirus pandemic has included relaxing or eliminating rules so financial institutions can focus on aiding consumers

Continuing a regulatory relief focus for the agency that preceded the crisis, CFPB Director Kathy Kraninger said in March that the agency planned to deliver "temporary and targeted regulatory flexibility" to financial firms.

"We recognize that many institutions are facing operational challenges due to COVID-19, and the priority must be responding to consumers facing nearer-term issues," Kraninger said March 22 at a Financial Stability Oversight Council meeting. "We will continue to provide further relief as needed to ensure that resources can be focused on consumers."


CDC Releases Massive List of Reopening Guidelines

Reopening Guidance for Cleaning and Disinfecting Public Spaces, Workplaces, Businesses, Schools, and Homes

This guidance is intended for all Americans, whether you own a business, run a school, or want to ensure the cleanliness and safety of your home. Reopening America requires all of us to move forward together by practicing social distancing and other daily habits to reduce our risk of exposure to the virus that causes COVID-19. Reopening the country also strongly relies on public health strategies, including increased testing of people for the virus, social distancing, isolation, and keeping track of how someone infected might have infected other people. This plan is part of the larger United States Government plan and focuses on cleaning and disinfecting public spaces, workplaces, businesses, schools, and can also be applied to your home.

Florida pawn shops making fewer loans, cashing more checks amid coronavirus pandemic

TALLAHASSEE, Fla. (WFLA) - During every economic downturn over the last 50 years and perhaps longer, many people turn to pawn shops for a quick loan to tide them over.

Pawnbrokers expected the same when the pandemic hit, but they got a big surprise as shops are bustling these days, but not because people need money it's just the opposite.

"We fully expected with everything that is happening that we would have a huge demand for loans. We're actually having people pick up loans rather than make new ones," said Mark Folmar, owner of Folmers Pawn Shop in the state capital.

Loans are down between a third and 50 percent.
Read more at WFLA News 8

Majority of Americans who lost a job or wages due to COVID-19 concerned states will reopen too quickly

Last week's report on unemployment underscored the catastrophic impact the coronavirus outbreak has had on the U.S. economy. The focus in many states has now turned to reopening businesses and getting people back to work. However, most Americans - including 68% of those who have lost their jobs or taken a cut in pay due to the coronavirus outbreak - are concerned that state governments will lift restrictions too quickly, according to a new Pew Research Center survey. A similar share of Americans whose jobs were not affected say the same (69%). On the other hand, only about three-in-ten U.S. adults in these categories expressed more concern that restrictions would not be lifted quickly enough.
Read more at Pew Research Center



Alternative Financial Service Providers Association

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