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January 31, 2019
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The government shutdown was a reminder of how little Americans are saving

The emotional stress and financial chaos caused by the government shutdown illustrates a widespread problem: Despite a robust economy, many Americans are living paycheck-to-paycheck with no financial safety net to deal with unexpected expenses or sudden loss of income.

Only 40 percent of U.S. adults say they can pay an unexpected expense of $1,000 or more, according to a survey by

"It's a reminder that we need to try to plan for the unexpected," said Mark Hamrick, Bankrate's chief economic analyst. "It's critically important for those who are walking a financial tightrope to be prepared for the inevitable, whether it's an emergency car repair, something health-related or as in this case, a loss of income."

A survey taken during the last week of the shutdown by NerdWallet, a personal finance website, found that:
  • 62 percent of employed Americans couldn't cover basic expenses for more than three months, if they were unexpectedly told they would not be receiving another paycheck indefinitely.
  • 36 percent of employed Americans couldn't cover basic expenses for more than one month, if they unexpectedly were told they would not be receiving another paycheck indefinitely.
  • Nearly half (45 percent) of employed millennials couldn't cover basic expenses for more than one month.
Read more at NBC NEWS

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House advances three bills to improve financial oversight

The U.S. House of Representatives advanced three bills that seek to foster better financial oversight of potential bad actors and illegal activities.

One of the bills is the Promoting Transparent Standards for Corporate Insiders Act (H.R. 624), sponsored by House Financial Services Chair Rep. Maxine Waters (D-CA) and Ranking Member Rep. Patrick McHenry (R-NC). This bill would protect 'Mom and Pop' investors from illegal insider trading and helps the Securities and Exchange Commission (SEC) better understand how to prevent illicit activity.

"Preventing and cracking down on fraud and abuse within our financial system, such as illegal insider trading, is apolitical. When a corporate insider breaks the rules on trading and profits from trading on insider information, that illegal activity hurts the everyday investor who diligently puts their hard-earned money away for retirement," McHenry said. "By directing the SEC to study whether Rule 10b5-1 should be amended and to consider how any amendments to the rule would clarify and enhance existing prohibitions against insider trading, this legislation achieves the bipartisan goal of protecting Mom and Pop investors while encouraging economic growth."

The second measure advanced is the FIND Trafficking Act (H.R. 502), sponsored by Reps. Juan Vargas (CA-51) and Ann Wagner (R-MO). The legislation directs the Government Accountability Office (GAO) to study how virtual currencies are linked to the supply chain for drugs and human trafficking. It also provides insights into how these links can be severed.
Read more at Financial Regulation News

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

Consumer Bankers Association weighs in on small-dollar lending

The Consumer Bankers Association (CBA) maintains actions by federal regulators unfavorably impact small-dollar lending consumers by forcing them to payday lenders and other less regulated sources when in need.

CBA officials said the input stems from the Federal Deposit Insurance Corporation's (FDIC) request for information on its 2013 small-dollar guidance.

"A tremendous amount of attention has been rightfully given to the hardships furloughed federal employees are facing, and banks have stepped up to the plate," Richard Hunt, CBA president and CEO, said. "But, for millions of Americans, the need for short-term assistance to meet emergency expenses existed before the shutdown and will exist after the government reopens. Instead of turning to less regulated, more costly lenders, families should be able to rely on their bank for assistance."

Hunt said banks are ready to help, but noted existing rules and guidance from federal regulators stand in the way.

The CBA is urging regulators to adopt guidelines based on sound evidentiary conclusions, especially concerning bank-offered products. It is also encouraging regulators to provide for reasonable consumer protections as well as ease of administrative burdens to allow greater reach to the unbanked and underbanked. It also urges the entities to provide an option for banks to offer small-dollar loans as a line of credit and offer banks a clear and easily applied standard that consumers will understand. Read more at Financial Regulation News

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60% of Consumers Initiate Car Buying Online, TransUnion Says

TransUnion is making efforts to support the "paradigm shift" in auto finance that has consumers looking at financing as the first step to the car buying process instead of the last, Brian Landau, senior vice president and automotive business leader, told Auto Finance News.

The credit bureau launched an online tool, Auto Payment Shopper, that prequalifies consumers for loan offers before entering the dealership, the company announced this week.

"About 20 years ago, auto websites were more about the vehicle and not about the financing," Landau said. "Now you're starting to see that change, and that's great for lenders because now lenders become top of mind in the buying decision."

With more than 60% of consumers initiating the car buying process online and 75% considering completion of the buying process online, lenders are embracing the digital disruption and many are trying to capitalize on that, Landau said. "Digital tools help support the lender initiative," he added. Read more at AUTO FINANCE NEWS

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Commentary: Yes, Nevada, there are alternatives to payday loans. by Hugh Jackson

Gov. Steve Sisolak appeared at a forum put on by the Nevada Independent last week, which the Indy has now helpfully transcribed (so get your control f on, if you like). And in that transcript, we find Sisolak, saying this, about payday lenders:

"Some people can use payday loans responsibly, other people can't use payday loans, whether that's the government's place to interfere or intervene in that, I'm not totally sure. I'm happy to listen to both sides. But it's a need. A lot of people in Nevada do not have bank accounts. A lot more don't have them than you realize don't have them and sometimes people need to access money and they can't get it from a bank and I don't know what's the alternative frankly."

The Center for Responsible Lending does. Know what's the alternative frankly, that is. I explained some of what the group has to say about the subject in a September commentary politely headlined "Nevada can, and should, outlaw this industry." Yes, you should read the whole thing if you didn't/haven't. But here's part about the matter at hand:

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LendingTree Analysis Reveals How Personal Loan Purposes Vary by States and Credit Scores

CHARLOTTE, N.C., Jan. 30, 2019 /PRNewswire/ -- LendingTreeĀ®, the nation's leading online loan marketplace, today released its study on the reasons Americans are getting new personal loans and how purposes vary by states and credit score profiles.

Debt balances are on the rise in America, with total consumer debt up by $1 trillion in the past five years. While Americans are borrowing more overall, the popularity of personal loans has shot up.

Personal loan statistics show that the number of outstanding personal loans currently stands at nearly 20 million today and have a combined balance of more than $125 billion. The demand for personal loans has certainly increased. The amount owed on personal loans is more than twice what it was five years ago, and the number of outstanding loans rose 50 percent in the past three years.

Key takeaways
  • Managing existing debt is far and away the most popular reason for a personal loan, representing 61 percent of all loan requests in 2018. Thirty-nine percent of borrowers plan to use their loans to consolidate debt, and 22 percent plan to use it to refinance credit cards.
  • Consumers seeking personal loans to manage debt also requested the highest origination amounts: $14,107 average amount for credit card refinance, and $12,670 for debt consolidation.
  • Almost 15 percent of loans reasons are categorized as "other" - the third most popular choice. Home renovation and improvement loans are the next-most popular loan purpose, accounting for 7.7 percent of loan requests with an average loan amount of $12,384.
  • New Englanders are the most likely to use their loans to manage existing debt, taking the top five spots. The residents of Mississippi, Louisiana, and Arkansas are the least likely.
  • Washington, D.C. is home to the highest rates of a few offbeat loan purposes, with more residents requesting loans here for a move (7.4 percent) or business (2.6 percent). It's also tied with New York and Louisiana as the place where wedding loans are most requested, with 1.5 percent of loans in these states intended to cover the costs of tying the knot.
  • West Virginia is the top state for borrowers requesting loans for their home, specifically home improvements (8.6 percent of loans requested in this state) or home buying (4.9 percent).
Read more at LendingTree

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Nine FEDERAL TRADE COMMISSION developments that could impact your business in 2019

Steely Dan may be one of the best duos of the rock era. (Sorry, Donnie and Marie fans.) Their song "Hey Nineteen" reminds us to mention some FTC consumer protection developments that could be of interest to your company or clients in 2019. As "Any Major Dude Will Tell You," when you're "Reelin' in the Years" - or at least recapping the past one - consider this non-exhaustive and in-no-particular-order case compilation.

Health claims. In 2019, you can count on the FTC to continue to challenge unsubstantiated health claims. The agency's recent efforts have spanned the demographic spectrum from products raising safety concerns for kids to so-called treatments for serious illnesses affecting older consumers. Cases against Regenerative Medical Group, Cellmark, iV Bars, and Nobetes challenged unproven representations for products promising to treat Parkinson's disease, macular degeneration, cancer, multiple sclerosis, and diabetes. Other actions addressed deceptive claims aimed at Boomer Consumers - for example, Telomerase's anti-aging promises and representations that MSA 30X was "independently tested to help you hear up to 30 times better." A $2 million settlement with ad agency Marketing Architects reminded advertising professionals of the weighty consequences of false diet claims. And joint warning letters from the FTC and FDA targeted unproven representations for treating opioid addiction and the sale of nicotine-laced liquids for e-cigarettes in packaging that mimicked kids' candy and treats.

Made in USA. When evaluating competing products, many consumers consider country-of-origin information in deciding what goes in the basket and what stays on the shelf. FTC actions against mattress seller Nectar, backpack purveyor Sandpiper of California, and Patriot Puck - which touted its hockey disks as "100% American Made!" - allege the companies made Made in USA claims for products actually made in other countries. Read more at FEDERAL TRADE COMMISSION

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Public's 2019 Priorities: Economy, Health Care, Education and Security All Near Top of List
Pew Research Center

Growing share sees 'great deal of difference' between the parties

At the outset of Donald Trump's third year in office, the public's to-do list for the president and the 116th Congress spans domains with the economy, health care costs, education and preventing terrorism all cited as top priorities by majorities of Americans.

The public's agenda for the president and Congress is only modestly different from a year ago, but it reflects a continued evolution of the national agenda.

Improving the economy (70% top priority) remains among the public's highest priorities, but its prominence has waned significantly in recent years. In 2011, following the Great Recession, 87% called it a top priority. And as public ratings of the employment situation have grown increasingly positive, 50% now say improving the job situation should be a top priority; in each of the previous 10 years, majorities cited jobs as a top priority, including 84% who said this in 2011 and 68% who said this as recently as 2017.

Most (67%) continue to say defending the country from future terrorist attacks is a top priority, though this is one of the lowest shares citing the issue since the Sept. 11 terrorist attacks and far lower than the roughly eight-in-ten who called it a top priority through much of the early to mid-2000s.
Read more at Pew Research Center

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State Tax Revenue Makes Biggest Gains in Seven Years
Pew Charitable Trusts

State tax revenue rose sharply in mid-2018 for the third quarter in a row, closing out most states' budget years with the second-strongest stretch of growth since the Great Recession. At least some of the gains, though, are expected to be temporary. As of the second quarter of 2018, tax collections in 36 states were higher than before receipts plunged in the downturn, after accounting for inflation.

The spike resulted in a turnaround year for many states after they had slogged through the weakest two years of tax revenue growth-outside of a recession-in at least 30 years. Starting in late 2017, the surge propelled total state tax collections to 12.2 percent above the peak recorded in 2008.

The results mean that states collectively had the equivalent of 12.2 cents more in purchasing power in the second quarter of 2018 for every $1 they collected at their recession-era peak, after adjusting for inflation and averaging across four quarters to smooth seasonal fluctuations.

Revenue collections were boosted by favorable economic conditions, robust stock market returns in 2017 and the first half of 2018, and state policy actions. At least a portion of the growth also was due to short-lived effects on state tax revenue from the federal Tax Cuts and Jobs Act.
Read more at Pew Charitable Trusts

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IRS Reportedly Needs Up to 18 Months to Catch Up From Government Shutdown

The U.S. Internal Revenue Service is open for business again this Monday for the first time following Friday's end to the record-setting 35-day partial government shutdown. But while the agency is back to accepting tax returns and issuing tax refunds, it will reportedly take months -- if not more than a year -- for the IRS to dig out from under the blizzard of paperwork that piled up.

The National Taxpayer Advocate, a watchdog group that oversees the IRS, told House lawmakers that it could take 12 to 18 months for the agency to catch up on all of the correspondence, worker training and other things that it missed during the shutdown, sources told The Washington Post. And that estimate assumes there's not a second government shutdown in a few weeks when the temporary funding deal runs out.

A source told the paper that the IRS is sitting on 5 million pieces of unopened mail, having received 700,000 letters per day during the shutdown instead of the normal 200,000. That's apparently due in part to the fact that in-person taxpayer-assistance centers were closed during the shutdown. Similarly, sources told the Post that the shutdown delayed training for IRS employees on how to handle changes sparked by President Donald Trump's 2017 tax overhaul. The paper also reported that some 2,000 recent IRS hires still need training before they can start answering taxpayers' phone calls. Read more at THE STREET

National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

You Won't Believe How Many Americans Have No Retirement Savings

Millions of workers today are banking on Social Security to pay their bills in retirement. But while those benefits will provide a nice chunk of income, they won't be enough to sustain future retirees by themselves. So, working adults today must take saving matters into their own hands by socking away funds in whatever retirement plan they have available, whether it's an employer-sponsored 401(k) or an IRA.

The problem, however, is that 42% of adults aren't saving for retirement at all, according to a new report by the Center for Financial Services Innovation. And if they don't change their ways, they're apt to struggle financially later in life.

You need independent savings
Many workers assume that Social Security will suffice in retirement because their living expenses will go down once they stop working. The reality, however, is that things like housing and transportation tend to only drop modestly, if at all, during retirement. The reason? While many seniors enter retirement with their mortgages already paid off, as homes age, they tend to require more repairs and maintenance, the cost of which can be enough to offset an absent mortgage payment. The same holds true for owning a car -- though retirees don't have commuting costs to contend with, they still have to worry about insurance and auto maintenance, which can be far more expensive than filling up a vehicle's tank twice a week. Read more at THE MOTLEY FOOL

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Shhh! We don't talk about that. by David Kilby

Surveys have shown that employees are asking for financial wellness help. According to a 2018 PwC survey1, 25% of employees would like financial wellness benefits. You're organization has responded by updating your employee benefits package to include financial wellness. And.... {queue in cricket chirps}

So just what is the problem?   The stigma

There are three things Americans don't talk about: politics, religion and money; a familiar statement many of us have heard since we were children. It seems we've done a good job of taking this advice to heart, especially when it comes to the topic of money. According to a Wells Fargo survey2, 44 percent of Americans find personal finance to be the most difficult subject to talk about, even more than politics, religion and death.

Even with spouses.   Based on data3 from Fidelity Investments, 43% of Americans don't know how much money their spouse makes.

You can lead a horse to water, but...
If money is such an uncomfortable topic even at home, it's certainly not something an employee is willing to talk about at work. However, you can bet for many it's top of mind! When you compound social stigma with the feeling of shame or embarrassment that can accompany financial challenges, it's going to be difficult to get employees to open up about their specific needs. So it's no wonder there aren't more participants in your financial wellness program - employees are likely too uncomfortable to ask you about it. Read more at FINFIT

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Got debt? Your boss wants to help with that

More than 50 percent of employers recently polled by Alight Solutions are in the process of building a financial well-being strategy.
Workplace services may range from education on investing to help with managing your budget to getting a handle on your debt, Alight found.

Your boss knows that your finances may need some help. This year, you just might get it.

Just over half of employers surveyed by Alight Solutions said they are in the process of creating financial wellbeing strategies at the workplace.

And nearly 30 percent of the participating companies said they already have such a program and are putting it into action, Alight found.

The benefits administration company polled 171 employers in September and October of 2018. The participating businesses represent a total of 7.6 million workers.

Whether you call it "financial well-being" or "financial wellness," the concept is the same: Companies want to improve the overall health of their workers' finances.

This can run the gamut from helping you budget to educating you on how to get the most out of your retirement plan. Read more at CNBC


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