February 12, 2019
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Payday loan regulations rollback is win for business and consumers. FOX BUSINESS

Chalk up another win for President Trump's deregulatory agenda - the Consumer Financial Protection Bureau last week announced a plan to reconsider an Obama-era regulation that would have made it harder for working Americans to access credit.

Without reform, the CFPB's rule governing payday and vehicle-title loans would have all but eliminated the industries, wiping out around $20 billion worth of credit from the economy and stripping away loan options from countless consumers.

Payday loans may not be suitable for everyone, but they help millions of people bridge a gap during hard times. For example, a recent Federal Reserve survey found that 40 percent of American adults do not have enough savings to cover a $400 emergency expense.

For those on the financial fringe who lack savings or access to credit, paying a past-due utility bill or fixing a broken down car can be tough. Small dollar loans can get those vulnerable consumers through to their next paycheck, and they beat having the electricity shut off or being stranded without a car.

So what was the CFPB's justification for the near-elimination of a valued industry? The Obama-era Bureau said that "consumers lack the requisite level of understanding" of these loans. That is, consumers are incapable of grasping the risks of short-term, high interest loans.

To support that claim, the CFPB relied on a study from Columbia Law School professor Ronald Mann. The problem is that Mann's study showed a majority of consumers do appreciate the risks of short-term, small dollar loans, and rationally decide to take them out anyway, concluding that the majority of borrowers "have a good understanding of their own use of the product."
Read more at FOX BUSINESS

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Dennis Shaul


Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA), today released the following statement regarding the Consumer Financial Protection Bureau's (CFPB) Notice of Proposed Rulemaking (NRPM) on small-dollar lending:

"We are pleased by today's announcement that the CFPB is proposing to rescind part of its 2017 final rule and to delay the compliance date. These rulemakings are good first steps, and we appreciate that the CFPB has recognized some of the critical flaws of the final rule as promulgated during former Director Richard Cordray's tenure.

However, we are disappointed that the CFPB has, thus far, elected to maintain certain provisions of its prior final rule, which also suffer from the lack of supporting evidence and were part of the same arbitrary and capricious decision-making of the previous director. Today's new NPRM also does not appropriately address the issues and concerns that were raised in more than one million comments during the prior rulemaking process. As such, we believe the 2017 final rule must be repealed in its entirety.

"We do hope that the CFPB will also address illegal and unlicensed lenders operating in the shadows. This failure to protect consumers leaves them vulnerable to these bad actors and their unscrupulous lending practices. Continuing to target legal and licensed state-regulated lenders through regulatory restrictions on their ability to offer short term credit options will push consumers into dangerous, harmful alternatives. We also continue to believe that the Bureau, under former Director Richard Cordray, did not conduct an adequate cost benefit analysis and has failed to achieve the goal of treating similar products in an equitable manner.
Read more at Community Financial Services Association of America (CFSA)

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Summary of Proposed Rulemakings: 2019 Proposals to Amend the Payday Lending Rule

On February 6, 2019, the Consumer Financial Protection Bureau (Bureau) issued two notices of
proposed rulemaking (NPRMs) inviting the public to comment on potential amendments to the
Bureau's 2017 rule governing Payday, Vehicle Title, and Certain High-Cost Installment Loans
(Payday Lending Rule).1

These two NPRMs are as follows:

Reconsideration NPRM: In the first NPRM, the Bureau is proposing to rescind the
provisions of the Payday Lending Rule governing underwriting of certain loans
(mandatory underwriting provisions) (specifically, 12 CFR 1041.4 through 1041.6,
1041.10, 1041.11, and portions of 1041.12).2 The Reconsideration NPRM has a comment
period of 90 days following publication in the Federal Register.

Compliance Date Delay NPRM: In the second NPRM, the Bureau is proposing to delay
the August 19, 2019 compliance date for the mandatory underwriting provisions of the
Payday Lending Rule.3 The Compliance Date Delay NPRM has a comment period of 30
days following publication in the Federal Register.

Read more at CFPB

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Credit unions respond to CFPB payday proposal

Washington, DC (February 6, 2019) - The Consumer Financial Protection Bureau (CFPB) today released a proposed rule making changes to its short-term, small-dollar lending rule. Credit Union National Association (CUNA) has consistently advocated for the CFPB to revise its rule to ensure their 115 million credit union members have access to short-term, small-dollar lending options.

The trade group is currently analyzing the proposal and sent a letter to Director Kathy Kraninger in December, supporting revisions to the rule that would create an express, broader exemption for credit union loan products. CUNA agrees with the CFPB that payday lenders should be effectively regulated.

"Credit unions are known for providing safe and affordable short-term, small-dollar loans designed to keep members away from predatory payday lenders and debt traps," said CUNA Chief Advocacy Officer Ryan Donovan. "We support bureau efforts to revise this rule, and urge the bureau to ensure these changes do not inhibit credit unions participating in the short-term, small-dollar loan market." Read more at CUNA

Dreher Tomkies LLP
Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

Payday loans making a comeback? Lenders praise Trump proposal, consumer advocates worry

The sight of payday lenders packing the streets of Valley communities has become more rare - though they are far from going extinct.

Ten years ago, as the central San Joaquin Valley began feeling the effects of recession and spiking unemployment, nearly 200 payday lending businesses operated out of no-frills storefronts up and down the region.

Many were prevalent in low-income neighborhoods where many families struggle to make ends meet.

Now, with unemployment rates at lower levels not seen in two decades, the number of payday lenders has also fallen.

As of last year, the Valley had 133 payday lenders. But as in 2008, low-income areas remain the most prevalent sites where the businesses flourish.

Their ranks could grow again under a plan by the Trump administration to do away with a couple of key components of federal regulations developed under the Obama administration that were due to take effect later this year.

One would require that payday lenders assure borrowers could afford to repay their loans, and another would limit the number of times a customer could "roll over" a loan, or take out another payday loan to pay off an earlier loan. Read more at FRESNO BEE

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New Payday Lending Rules Present An Opportunity For Fintechs

The payday lending marketplace just got a little more dangerous for small business owners and cash strapped consumers with protections against predatory lending soon to be rescinded by the Trump Administration.

For fintech companies increasingly eyeing the small business market and looking to grow their user base of consumers, the rollback opens up a new area for them to go after. With a government shutdown fresh on the minds of many people in need of short term capital and with the payday lenders free to potentially engage in predatory lending practices, fintechs have an opportunity to capitalize.

When announcing it will roll back the rule that requires payday lenders to underwrite loans or make an effort to determine if borrowers can pay them back, the CFPB said it will increase the access consumers have to credit. But critics of payday loans contend the terms can be predatory making it impossible for someone to pay it back without incurring fees, creating a cycle of expensive debt. The law being gutted was finalized under CFPB director Richard Cordray, who left the government agency to run for governor in Ohio. The Trump Administration has been working to chip away at the oversight power of the CFPB ever since his departure. Read more at FORBES

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Americans expect financial situation to worsen as pessimism rises

Americans started the year with a less optimistic view of the U.S. economy , as households see a number of headwinds potentially impacting their personal financial situations Opens a New Window. .

According to a new survey from the Federal Reserve. Bank of New York, most households predict they will be worse off financially in one year - only 38.6 percent think they will be better off, the lowest reading in more than two years.

Expectations for income growth decreased when compared with December - as did expectations for spending. Spending growth estimates fell to 3 percent in January, from 3.5 percent in December. However, as noted by the bank, these predictions can be volatile.

Consumers expect to have a harder time accessing credit - as the number of respondents expecting credit availability to improve fell to the lowest level since 2016.

People also expect interest rates on savings accounts will rise over the next 12 months.

The New York Fed's findings are in line with monthly cconsumer sentiment readings. According to the University of Michigan, sentiment. in January fell to the lowest level since October 2016 amid concerns about U.S. economic growth. Read more at FOX BUSINESS

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Data provider, MicroBilt, improves decisioning tool for growing alternative credit marketplace

Alternative credit data pioneer MicroBilt recently announced the launch of iPredict Advantage, the next iteration of its powerful automated decisioning tool for lenders.

Built on an improved algorithm that takes in traditional and proprietary alternative credit data, iPredict Advantage boasts +10% added predictive value over the original iPredict which was launched in 2000. Unlike conventional credit decisioning tools, iPredict Advantage also includes bankruptcies, liens, judgments and evictions data in its consumer assessment.

"By combining traditional credit reporting with our PRBC Alternative Credit database and civil records data, we're able to provide lenders with a more comprehensive picture of a consumer's creditworthiness," said Sean Albert, SVP/CMO at MicroBilt. "This delivers a win-win benefit. For the business, it often means opening the doors to customers they might have otherwise rejected due to thin traditional credit files. For consumers, it means access to the credit market where they didn't have it before."

iPredict Advantage factors in over 165 data attributes in calculating the potential risk of a loan applicant and returns a risk score, loan history, credit inquiry attributes, and consumer stability indicators. It is particularly relevant to the sub-prime lending space which has grown significantly in recent years and is increasingly vital to businesses and consumers.
Read more at MICROBILT

CFSA Conference _ Expo
Dan McCabe
"See you at the CFSA Conference & Expo in March"
Dan McCabe, President at AFSPA

Treasury says lower tax refund reports 'misleading'

The U.S. Treasury Department is firing back at claims refunds are meaningfully lower this year, based on data the Internal Revenue Service Opens a New Window. released from the first days of the new filing season.

In a tweet on Monday, the Treasury said so far this year refunds are in line with 2017 levels - even if lower when compared with last year

According to data recently released by the IRS, the average refund so far during the 2018 filing season is $1,865, compared to $2,035 last year - a decline of 8.4 percent.

Between Jan. 28 and Feb. 1, 17 million refunds were processed, according to the agency, a decline of more than 25 percent when compared with the corresponding period last year (Jan. 29 to Feb. 2, 2018). More than 12 percent fewer returns have been received year-over-year.

However, as noted by the Treasury, the data is based on a small sample of data.

The IRS and the Treasury on Friday touted a "successful" start to the 2018 tax season, despite concerns this year's filing process could be complicated by a record-long partial government shutdown. Read more at FOX BUSINESS

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House bill would incentivize employers to help pay off your student loans

Legislative efforts to ease the burden of $1.5 trillion in student loans took a tentative step forward on Capitol Hill.

On Thursday, 101 members of Congress reintroduced the Employer Participation in Repayment Act. The bill seeks to take some of the burden off employees who are struggling to manage their student loan debt.

Under the bill, employers would be allowed to assist employees with student loan payments, tax free, for up to $5,250 a year. The bill, first introduced in 2017, is an expansion of employer-paid tuition assistance.

Mark Kantrowitz, student loan expert and VP of research at, is optimistic about the bill. He says the proposal follows in the footsteps of tax-free 401(k) contributions, which he says started in the same fashion nearly four decades ago and today are a widely accepted and implemented tool.

"It is a great example of a public-private partnership, providing a win-win-win outcome for students, employers and the government," Kantrowitz says in statement to Bankrate. "Given that most employer-paid LRAPs [loan repayment assistance programs] today provide employees with $100 to $200 in monthly loan payment assistance, the $5,250 annual limit is sufficient."
Read more at BANKRATE

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Here's how much wealthy Americans pay in taxes

Out of all of the hundreds of millions of taxpayers who file annually every year, new data shows the country's wealthiest residents bear a sizable tax burden when compared with lower-earning payers.

According to data released recently by the Internal Revenue Service, compiled by the Tax Foundation, the bottom 50 percent of taxpayers paid about $43.9 billion in income taxes 2016- which accounts for roughly 3 percent of all income taxes paid.

The top 1 percent, on the other hand, accounted for about 37.3 percent of all income taxes paid during the same year.

"The 2016 IRS data shows that taxpayers with higher incomes pay much higher average income tax rates than lower-income taxpayers," the Tax Foundation concluded.

Here's a look at what the highest-earning Americans paid:

Top 1 percent
The top 1 percent of earners filed about 1.4 million returns in 2016. They had a cumulative adjusted gross income valued at more than $2 trillion. Read more at FOX BUSINESS

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Payday loan industry celebrates rollback in regulations, consumer advocates not happy

CHATTANOOGA, Tenn. - The payday loan industry is celebrating a victory this week.

Some planned regulations that were set to roll out next year have been cut back.

The overall plan was drafted during the Obama administration.

The part that was cut includes requiring lenders to check borrower's incomes to make sure they have the money to pay back their loans, and not allowing lenders to continue automatic withdrawals after two consecutive failed attempts.

Critics say the Consumer Financial Protection Bureau is siding with the industry that it's supposed to keep watch over.

We asked people in Chattanooga what they think about the payday loan industry.
Read more at NEWSCHANNEL9

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MISSISSIPPI: Who has the highest credit scores in MS? Residents in these cities 'pay their debts'

According to some new data recently released by Wallethub, residents of Madison and Brandon are doing pretty well with their credit, with the average Madisonian's credit score of 745 comparable to such as San Francisco and Cambridge, Massachussetts. Brandon residents' credit scores average of 705 place them in company with trendy cities like Asheville, North Carolina.

This month, the personal finance site released its annual list of thousands of cities and towns across America, ranked by the average credit score of their inhabitants. Wallethub used data from credit bureau TransUnion to compile its list, which omits some significant cities and towns because of issues with gathering data.

"Madison residents pay their debts and act responsibly with money," Madison Mayor Mary Hawkins Butler told me. "It's one more reason our city is such a great place to live."

Topping this year's list nationally once more was The Villages, Florida, a fast-growing retirement community in Central Florida with a whopping average credit score of 806 (the only city with a score over 800). Other retirement locations can be found high on the list as well, largely in Florida, Arizona and California. Read more at CLARION LEDGER


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