March 24, 2020
AFSPA Partner


Regulators Weigh Opening Up Banks to Small-Dollar Lending Amid Pandemic

Experts anticipate boom in small-dollar lending as layoffs intensify

Talks between regulators to open up the small-dollar lending market to banks are continuing amid the coronavirus pandemic, according to two federal banking regulator staff members, with new importance assigned to the issue as experts fear that a wave of Americans will need help covering gaps in their budgets.

With the pandemic continuing to worsen, companies are starting to lay off workers, with many more rounds coming in the next few months as the economy grinds to a halt. These layoffs are expected to first hit workers in industries where many are already relying on tips or living paycheck to paycheck, in the service and travel industries.

And in an economy where more than a third of U.S. adults can't cover a $400 emergency expense, experts anticipate the rise in unemployment to create a surge in small-dollar lending, as more consumers might soon need to borrow a few thousand dollars to pay rent, car payments or other expenses as the economic downturn continues.

AFSPA Partner


US tax filing deadline moved to July 15, Mnuchin says

(CNN)Americans will have an additional three months to file their taxes amid the coronavirus pandemic, the US treasury secretary said on Friday.

"We are moving Tax Day from April 15 to July 15," Secretary Steven Mnuchin tweeted. "All taxpayers and businesses will have this additional time to file and make payments without interest or penalties."

He said he was acting at President Donald Trump's direction.

The White House had announced previously they were deferring tax payments for 90 days, but that Americans would still need to file by April 15.

Now, the deadline will be extended into the summer.
Read more at CNN


ICYMI: Brown, Van Hollen Announce Legislation to Cap Consumer Lending Rates During COVID-19 Outbreak

Members Urge Negotiators to Include this Proposal Within Phase 3 Package

WASHINGTON - U.S. Senators Sherrod Brown (D-Ohio) and Chris Van Hollen (D-Md.) announced legislation to temporarily cap consumer lending rates, also known as usury rates, at 36 percent during the COVID-19 outbreak. The Senators also urged leadership to include this cap within the phase three coronavirus emergency package. The legislation, as described in their letter below, would amend the Military Lending Act to extend to all consumers the credit protections provided to members of the Armed Forces and their dependents throughout the duration of the COVID-19 National Emergency. The Senators are also sponsors of legislation to cap the usury rate at 36% permanently, but further support the temporary enactment of this rate in response to the current public health emergency.

"During this time of crisis, American consumers and small business owners need support. They should not be preyed upon by unscrupulous lenders and loan sharks seeking to capitalize on those most in need. That is why I am proud to join my colleague Senator Van Hollen in calling for an immediate cap on lending rates and will continue to fight to ensure fairer lending practices now and in the future," said Senator Brown.

"The exorbitant fees charged by payday lenders are abhorrent, even under normal circumstances - but in an emergency, these fees should be criminal. Loan sharks should not be able to profit on those who are struggling to get by, due to the impacts of the coronavirus. We should immediately cap consumer lending rates to ensure fairer lending practices across the country," said Senator Van Hollen.
Read more at U.S. Senate Committee on Banking, Housing, and Urban Affairs


Virus could deal blow to leveraged loans. What's that mean for banks?

WASHINGTON - A rollercoaster stock market. A quickly planned White House meeting with bank CEOs. Uncertainty about the next shoe to drop.

With the coronavirus outbreak spurring increasing worries about the economic fallout, there are shades of 2008 in 2020.

Which segment of the financial sector could be hardest hit, if any, is still a matter of debate. But some industry watchers say a worsening crisis could unmask the historically high levels of risky corporate debt, including leveraged loans, with a spillover effect for banks.

"We may be in an economic moment just as serious as 2008, but it's an economic moment that looks very different than 2008 in a lot of ways," said Marcus Stanley, the policy director for Americans for Financial Reform. Read more at AMERICAN BANKER


Payliance Response to COVID-19

In response to the COVID-19 pandemic, Payliance has implemented the following changes to consider the health of our communities while continuing to deliver the high-quality service that our customers deserve and expect.

Most of our employees are now working from home. We are fortunate to have invested in an infrastructure that has allowed for this relatively seamless transition. This operating architecture allows Payliance to provide our full range of services without interruption.

We have had the appropriate conversations with the 3rd party partners in our service delivery path. These partners include our bank sponsors, Amazon Web Services and other platform technology partners. All have relayed their ongoing ability to support our shared partnership.

As you know, this continues to be a fluid situation with swift, sometimes dramatic changes implemented at the Federal and State government levels without notice. We will continue to provide updates where deemed helpful. In the interim, please find below a couple of contacts points for Payliance if something is needed.
Read more at PAYLIANCE


A dozen years after the 2008 recession, a different kind of debt threatens the world economy

In 2008, trillions of dollars in risky mortgage debt fed a worldwide recession. Now a different kind of ballooning debt could hurt the world economy.

The coronavirus is threatening the global economy and financial markets. But so is another, less obvious peril - the mountain of risky debt issued by companies and bought by investors during the recent economic expansion.

Paying back this debt is going to be tough for businesses that have issued it if their earnings fall because of the coronavirus. Delinquencies, defaults and investment losses are likely, analysts say, possibly subjecting the economy to what economists call a negative feedback loop.

United States debt levels are at record levels and markets for riskier debt - such as high-yield corporate bonds - have been flashing warning signs. Buyers of riskier debt are also withdrawing from the markets, analysts report. In mid-February, for example, an index of high-yield bonds was up almost 1.2 percent for the month, according to LevFin Insights, an analysis firm. By month end, the index was down 1.5 percent. Read more at NBC NEWS

Dreher Tomkies LLP

Apply to serve on the advisory committees

The Consumer Financial Protection Bureau's advisory committees comprise a wide range of experts and stakeholders who provide input to the Director on a variety of consumer financial issues, as well as on the Bureau's strategic research planning process and agenda. The advisory committees also allow us to hear directly from small financial institutions. Members of the advisory committees are typically:
  • Experts in consumer protection, community development, consumer finance, fair lending, and civil rights
  • Experts in consumer financial products or services, including consumer reporting, student lending, small dollar lending, credit cards, debt collection, and debt relief
  • Experts in consumer finance education
  • Representatives of banks and credit unions that serve underserved communities
  • Representatives of communities that have been significantly impacted by higher priced mortgage loans
  • Current employees of credit unions and community banks

Read more at The Consumer Financial Protection Bureau


National Debt Holdings

National Debt Holdings is a receivables management firm assisting creditors with improving their cash flow performance from their account portfolios. Our team understands the precise balance needed to successfully recover accounts receivable while protecting the brands and reputations of our creditor partners.

Headquartered in Miami, FL, our team of professional recovery experts has developed deep relationships with creditors and service providers, giving us a unique perspective to drive business and create success for everyone involved. Within our local community, National Debt Holdings embraces social responsibility and is committed to helping our South Florida community as well as supporting various charities.

Understanding the Landscape
National Debt Holdings strives to stay on the cutting-edge of our industry. By participating in conferences, webinars, and other live events, we keep abreast of the ever-changing environmental landscape in the receivables management industry. Read more at National Debt Holdings


Fintech-Bank Partnerships Can Level the Financial Playing Field For Subprime Consumers

Last week the House Financial Services Committee held a hearing on fintech-bank partnerships. This hearing followed the introduction of a new California bill that went into effect on January 1st which limits the ability of the state's financial industry to provide short term loans to consumers in need of emergency financial services.

I've written about it at length over the last year but to summarize, California's AB539 caps installment loan between $2,500 and $10,000 at 36% in the hopes of "protecting" low-income loan consumers from paying exorbitant interest rates. In reality, the bill has done what other bills passed in the same legislative session have done: it has reduced financial options for people who need them most while severely undercutting a vital business-consumer relationship and driving some businesses and services out of state.

In short, it's a loser for families who don't meet the prime credit threshold, but there is still good news out there when it comes to lending. Options are available, thanks to bank lending that is supported by third party service providers. Read more at RED STATE



Responsible Business Conduct: Self-Assessing, Self-Reporting, Remediating, and Cooperating (CFPB Bulletin 2020-01)

In 2013, the Bureau issued a Bulletin that identified several activities that businesses could engage in that could prevent and minimize harm to consumers, referring to these activities as "responsible conduct." The Bureau is issuing this updated Bulletin to clarify its approach to responsible conduct and to reiterate the importance of such conduct.

Bureau of Consumer Financial Protection


COVID-19 Will Fuel the Next Wave of Innovation

This global pandemic will shape businesses for decades to come.

Black swan events, such as economic recessions and pandemics, change the trajectory of governments, economies and businesses - altering the course of history. The Black Death in the 1300s broke the long-ingrained feudal system in Europe and replaced it with the more modern employment contract. A mere three centuries later, a deep economic recession - thanks to the 100-year war between England and France - kick-started a major innovation drive that radically improved agricultural productivity.

Fast forward to more recent times, the SARS pandemic of 2002-2004 catalyzed the meteoric growth of a then-small ecommerce company called Ali Baba and helped establish it at the forefront of retail in Asia.
Read more at Entrepreneur


The CFPB continues to help consumers make informed financial decisions with up-to-date information and resources

Despite the nationwide disruptions being caused by the coronavirus, or COVID-19, we continue our daily work to help consumers. One way we do that is by providing you with up-to-date information and resources to protect and manage your finances during this difficult time. Another is by continuing to take complaints about consumer financial products and services.

Since our inception, we've built a robust and technologically forward complaint process that handles approximately 30,000 complaints every month. Even in these challenging times, we are ready to send your complaints to companies to help you get the response you need.

Having a problem with a financial product or service?
If you have a problem with a financial product or service, try reaching out to the company first. Companies can usually answer questions unique to your situation and more specific to the products and services they offer.
Read more at CFPB


Alternative Financial Service Providers Association

315 Tuscarora St., Lewiston, NY 14092