January 15, 2019
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CFPB to scrap key underwriting portion of payday rule

The Consumer Financial Protection Bureau is expected to eliminate underwriting requirements in a highly anticipated revamp of its payday lending rule, according to sources familiar with the bureau's proposal.

The CFPB in October signaled its interest in "revisiting" the ability-to-repay provisions in the 2017 small-dollar lending rule issued under former Director Richard Cordray.

But sources familiar with the agency's thinking say the CFPB - now led by Trump appointee Kathy Kraninger - has concluded the best approach is to remove those provisions altogether. Under the current rule, which has not yet gone fully into effect, lenders must verify a borrower's income as well as debts and other spending, to assess one's ability to repay credit while meeting living expenses.

Such a course would gut the centerpiece of a rule that consumer advocates had hailed as a preventive measure against spiraling debt for consumers who rely on short-term credit.

The agency under then-acting CFPB Director Mulvaney signaled its intent to reopen the rule as far back as January 2018. Now the acting White House chief of staff, Mulvaney sided with two payday lending trade groups that sued the CFPB in April to invalidate the regulatory restrictions.

In court documents, the CFPB argued that payday lenders would suffer "irreparable harm" from the 2017 final payday rule and that it was "in the public interest" to reopen the rulemaking.


South Carolina bill would require high schoolers to pass personal finance class to graduate

It's part of a nationwide push to teach students real life skills. An "Adulting 101," you could say.

YORK COUNTY, S.C. - When you graduated high school, did you know how to balance your checkbook? How about picking the right insurance plan or making 401k investments?

If South Carolina lawmakers have their way, students in the Palmetto State will. They're working on a new bill that would require all students to take a personal finance class before they can graduate. It's all part of a nationwide push to teach "real life" skills.

An "Adulting 101," you can say.

From creating a realistic budget and cooking (without using the microwave) to changing a flat tire, there are many skills students can learn in school, but typically it's in a course that specializes in one field, such as auto shop. But now, some schools are picking up on the idea of "adulting days," where they skip science or math class and teach kids some of these skills they'll need once they're on their own, either in college or in the workforce.

If the bill passes, it would go into effect starting the next school year. The class would be a half-credit course and students will be required to pass a test before they can walk across the stage and receive their diploma. Read more at WCNC.COM

CFSA Conference

New Zealand: Put a beautiful woman on a loan brochure, and more men borrow.

Each of us has our mix of competence and incompetence, sanity and neurosis, especially when it comes to money. I know I do.

How else can you explain the bizarre phenomenon that just putting the face of a pretty woman on a loan brochure can increase the likelihood that men will take out a loan? That gem of behavioural finance comes from a paper submitted to Minister of Commerce Kris Faafoi, who is changing lending laws to crack down on exploitative high-interest lenders.

It comes from a paper by economist Richard Tooth. "There is some direct evidence that borrowers can be influenced," Tooth writes.
"For example, male South African recipients of junk mail offering a short-term loan were found to be much more likely to take up the loan if the letter included a photo of a woman's face." "The photo increased take-up as much as a 4.5 per centage point reduction in the monthly interest rate."

He gives other examples. Read more at STUFF NEW ZEALAND


Should My Employees Receive Cybersecurity Training?

Cybersecurity training has quickly become extremely important for businesses. Employees don't need to be cybersecurity experts, but they should be practicing healthy cyber habits.

New-hire training and regularly scheduled refresher training courses should be established in order to instill the data security culture of your organization. As always, preparedness is the key to preventing most security breaches. It is always best to know how to avoid becoming a victim.

Improper or lack of cybersecurity training can cause many problems for your business. We want you and your employees to be prepared so that you don't become a statistic! What could happen if proper cybersecurity training isn't implemented?

Dangers of Not Training
Ransomware will be one of the most common security breaches in 2019. We've explained how ransomware - and security breaches like it - can wreak havoc on a business' infrastructure. Given proper training, these types of attacks are easy to avoid.

Besides the risk of losing valuable information, you may also experience loss of business. Unfortunately, victims of a cybersecurity breach typically suffer financial or reputational damage. Compromised information usually results in customers pulling away from the affected business, and some of those customers may also seek litigation. By contrast, proper cybersecurity training will limit the risk of a breach, thus keeping your customers happy.  

Dreher Tomkies LLP

Pawn shops among industries that may see boost despite shutdown

While the partial government shutdown slows businesses at some federal agencies throughout the U.S., it could end up boosting business for some industries, including pawn shops

Bruce Harris, owner and operator of A-OK Pawn Shop locations in Wichita says there is a concern for his business regarding the government, shutdown, but not much.

"A lot of our customers are day-to-day customers and here around Kansas, there just doesn't seem to be much effect at all," he says.

A-OK area manager Martin Swanson says there many actually be more financial confidence than usual thanks to the announcement by the federal government that refunds will go out as planned.

"Instead of getting a $1,000 loan, they may be getting a $1,500 loan, knowing full well they're going to have to pay a little bit more back," Swanson says. "But they don't seem to mind, knowing that tax refund is in the pipeline."

The consensus among pawn shops that spoke with Eyewitness News is that that that confidence will fade if the government shutdown continues in the form of a higher demand for loans
Read more at KWCH.COM


Fed Chairman Powell says he is 'very worried' about growing amount of U.S. debt

Federal Reserve Chairman Jerome Powell is "very worried" about the ballooning amount of United States debt.

The Fed raised its benchmark overnight lending rate four times in 2018 as a part of its goals of maximizing employment and keeping prices in check. Powell and his colleagues have cited months of strong labor statistics and healthy GDP numbers while hiking rates.

However, tepid inflation and concerns surrounding the longevity of the current economic expansion have prompted backlash from some market participants. Fears that policymakers may be elevating borrowing costs at too quick a pace contributed to a broad stock sell-off in the fourth quarter of 2018, with both the Dow Jones Industrial Average and the S&P 500 posting their worst Decembers since the Great Depression.

Recent commentary from central bank members suggests that Fed members may be heeding those concerns. Minutes from the central bank's December meeting showed some members hesitant to hike the federal funds rate , citing the lack of inflationary pressure. Read more at CNBC


Tax season: Top 3 changes that may affect you

Taxpayers can begin to file their 2018 returns later this month, the first season under the Tax Cuts and Jobs Act, which was signed into law in December 2017.

Despite the fact that the tax law triggered the biggest changes to the U.S. tax code in more than three decades, 85 percent of Americans reported being only slightly familiar or not familiar at all with the changes to the law that might affect them, according to a recent survey from tax preparation firm Liberty Tax.

The Tax Cuts and Jobs Act enacted a sweeping overhaul of the nation's tax code - impacting everything from the standard deduction to personal exemptions.

Here are some of the biggest changes Americans need to know heading into the upcoming tax season.

State and local tax deduction caps

One massive change that stands to hurt some middle- to upper-class Americans in higher tax states is the new cap on state and local tax (SALT) deductions.

"The biggest [change] by far is the cap on the state and local taxes, including the real estate taxes," Lisa McCann, special counsel at law firm Withers Worldwide, told FOX Business.

The Tax Cuts and Jobs Act decreased the cap on SALT deductions to $10,000, which is well below the average amounts claimed by individuals residing in states such as New York, California and New Jersey. The average deduction claimed in California, for example, is $22,000.
Read more at FOX BUSINESS


Top Tax Tips for Investors for 2019

With year-end statements, W-2s and 1099 forms arriving, it's time to look for ways to trim capital gains tax liability, especially given the many changes that kicked in for 2018 due to the tax law passed just over a year ago.

As always, the end of the tax year -- Dec. 31 -- closed the door on many opportunities to save on your tax bill, like selling losing investments to book capital gains tax losses. But experts say a few tax tips are still possible for investors, mainly by contributing to retirement accounts.

"The year is over and, for the most part, the time has passed to make tax-smart moves for 2018," says Steven J. Weil, president and tax manager of RMS Accounting in Fort Lauderdale, Florida. "The things you can still do include fully funding an IRA, if you qualify, maximizing contributions to a pension plan, and being sure you don't miss out on any of the changes found in the new tax law that could benefit you."

The biggest change for 2018 was a near doubling of the standard deduction to taxable income taken by people who do not itemize deductions. For 2018, it is $12,000 for single filers, up from $6,360 in 2017, and $24,000 for couples filing a joint return, up from $12,700.

Also, the individual tax rates for ordinary income were cut. For couples filing a joint return, for example, income from $77,401 to $165,000 will now be taxed at a 22 percent marginal rate. Most those taxpayers were in the 28 percent, 33 percent and 35 percent tax brackets the year before. (Income ranges, as well as rates, changed for each tax bracket.)
Read more at YAHOO FINANCE


Meet The Woman Turning The Payday Loan Industry On Its Head. by Erin Spencer

It's the early 2000s and Ennie Lim is what creditors refer to as credit invisible. Despite touting a bachelors degree from a prestigious university in Montreal and logging several years of work experience in the US working for San Fransisco nonprofits, Lim has no history with any of the US banking institutions and therefore is unable to get approved for any of the major credit cards. Working in Silicon Valley, her funds are understandably tight and once she goes through a divorce - in spite of the fact that she was working a good job with a steady income - she finds herself unable to afford San Francisco rent prices. She applies and feels a bit hopeful after getting accepted for a T.J. Maxx store rewards card and begins purchasing everything she needs from there in order to have a regularly paid off credit bill. Credit building; however, takes time and Lim's store rewards card isn't doing enough to keep up with the climbing costs of the Bay Area. As a last-ditch-effort, she researches payday loans only to find that they all come with exploitative interest rates. Eventually, without any other options, Lim packs her bags and moves 3,000 miles away to her old room in her parents' house in Canada.

It was a humbling experience for Lim, but today seems like one of those hardships that happened for a reason. Sitting in her bedroom, she thought she couldn't be alone in this situation. Still, as you might imagine, she found herself running through a million "if onlys." If only there were more affording housing options in San Fransisco. If only she had been able to get approved for a major credit card. If only there was a payday loan option that didn't come with devastating interest. It was this last 'if only' that seemed to hold the most weight and rattled around in the back of her mind for a while.
Read more at FORBES

CFSA Conference

Regulatory competition is hot again - and that's worrisome

Before the financial crisis, federal and state regulators unabashedly pitched their charters to banks as the better choice. Now regulatory competition is back, despite warnings that such jousting might result in lax oversight.

The renewed competition is a marker of how far the proverbial pendulum has swung in the decade since the crisis. The practice, still in its early stages, may be a boon for some - foreign banks and financial technology companies are among those that seem poised to benefit. But skeptics fear that it will ultimately add risk to the financial system and harm consumers.

One post-crisis study by a Federal Reserve Board economist determined that banks get substantially higher supervisory ratings after they switch charters. Based on historical outcomes, a bank's odds of being rated fundamentally safe and sound increased to almost 100% when they opted for a new overseer, the study indicates.

"If banks can improve their ratings by changing charters, then regulators should be concerned with losing banks that they already supervise and could possibly lower the standards that they apply to these banks," Fed economist Marcelo Rezende wrote in the 2014 paper.

A couple of decades ago, it was common for government officials to tout the benefits of regulatory competition. Their main argument was that the existence of multiple chartering options allowed for more industry innovation. Read more at AMERICAN BANKER

For Sale By Owner
CHICAGO Area Small Dollar Installment Lender
  • Mature, highly profitable single store loan business available for sale.
  • State-Licensed Installment Loan Lender
  • Very desirable Suburban Chicago location
  • High Visibility and Traffic Counts
  • Trailing 12 mos. fees of $700,000
  • Low write-offs (10% of fees)
  • Very low delinquency (80-85% current)
  • Turn-key operation
  • Long-term lease available
  • Owner retiring
  • 18 years of smooth operation with absentee owner
  • Excellent customer base
  • Owner retiring
  • Realistic Seller.
  • Serious Inquiries only!
IOWA: 6 Payday / Check Cashing Stores. will sell individually 
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Little or Nothing Saved For Retirement? You Are Not Alone

If you are in your 50s or older and have little if anything saved for retirement, well you are not alone.

Financial planners say they are increasingly dealing with clients who are middle-aged and older with only paltry savings -- if that -- squeezed between helping college-age children get a start in life and caring for elderly parents.

Roughly a third of Baby Boomers have saved less than $25,000 while just over a fifth of all American have no savings at all, according to a study by Northwestern Mutual.

However, the good news is that it is never too late to start saving for retirement, or to make decisions that will help create more financial stability when it comes time to retire, planners say.

In fact, people in their 50s and 60s who have little salted away in the bank for their golden years should not despair, for they still have the ability to make decisions that could boost their financial security in retirement, planners say.

"If you see a large estimated gap in financial resources for your retirement, it should be a sobering reminder that you need to urgently buckle down, create a plan and start adhering to the plan," said Cynthia Boman Thompson, a certified financial planner, or CFP, in Portland, Ore., and vice president of client relationships at Cinder Staffing. Read more at THE STREET


Shutdown Impacting FinTech Firms, Financial Regulations

Count the FinTech sector - and regulation of that sector - among those impacted by the government shutdown that has roiled Washington through the past several weeks.

As Roll Call reported late last week, the shutdown is creating "serious problems" for FinTechs, with a slowdown across dealmaking and supervision in the sector. That comes as the U.S. Securities and Exchange Commission (SEC) is hobbled by a lack in staff on site to help process registration statements tied to initial public offerings (IPOs). A backlog may mount, as well, said Roll Call, as there are any number of smaller firms that want to come to market with mini-IPOs through Regulation A+. Firms that see such smaller listings include crypto and blockchain-related companies.

The publication noted, too, that online lenders are impacted by the lack of regulatory oversight. Consider the fact that the SEC has to give permission for those companies to sell their loans to investors - and may have to tap financing conduits such as the credit markets to run day-to-day operations. Of course, those same online lenders are typically the companies that may serve as "emergency backstops" for federal workers who need to meet their own financing demands - in other words, paying bills. Read more at PYMNTS.COM


Alternative Financial Service Providers Association

315 Tuscarora St., Lewiston, NY 14092