February 13, 2020
AFSPA Partner



In The News: Interest Loan Caps Have a Record of Failure. By D. Lynn DeVault

The Journal Gazette's Jan. 14 editorial ("Lending change/Cap rates, end impasse on payday loans") erroneously asserts that an arbitrary 36% interest rate cap on short-term loans will protect consumers when, in fact, the opposite is true. The move would restrict access to credit for Indiana consumers and potentially force them to seek dangerous alternatives.

History has proven that arbitrary caps do not work. Dozens of financial institutions have tried to introduce cheaper substitutes for loans considered high cost, only to eliminate the products from their portfolios. The Federal Deposit Insurance Corp. also experimented with a 36% interest rate cap, but the loans simply weren't profitable enough for banks to continue offering the product.

The editorial fails to mention that consumers in South Dakota, which instituted a rate cap in 2016, have been worse off in recent years, according to several key financial indicators.

A National Financial Capability Study conducted by the Financial Industry Regulatory Authority found that more South Dakotans reported having medical bills overdue and only paying the minimum on their credit cards in 2018 than in 2015, before the rate cap was in effect.

Rather than restricting access to loans that customers value and forcing them into worse outcomes, policymakers should work toward real financial inclusion and ensure that all Hoosiers have access to legal and licensed sources of credit. Contrary to popular belief, small-dollar loans are also often the least expensive form of short-term credit, particularly when compared with bank fees or unregulated offshore internet loans and penalties for late bill payments.
Read more at CFSA


REPAY Announces the Acquisition of Ventanex
Upsizes Existing Credit Facility to $345 million

Repay Holdings Corporation (NASDAQ: RPAY) ("REPAY"), a leading provider of vertically-integrated payment solutions, today announced the acquisition of Ventanex for up to $50 million, of which $36 million was paid at closing.

Let's not hinder consumers' access to credit. by Bill Himpler president and CEO of the American Financial Services Association

Perhaps coincidentally an organization not wholly unfamiliar with less than reputable financial institutions, the Center for Responsible Lending, released a poll that indicated a bipartisan majority of American consumers supported a 36 percent rate cap on pay day and installment loans.

Let me be clear, there are plenty of predatory payday lenders out there taking advantage of unsuspecting consumers. It's a worthy goal to protect consumers from predatory or unscrupulous lending practices by payday or vehicle title lenders.

But CRL rigged its poll outcome by asking an incomplete question: "As you may know, the average annual interest rate on payday loans is 391 percent. Would you support or oppose a proposal to put a cap on the interest rates that payday lenders may charge at 36 percent annual interest?"

When asked that way, who wouldn't agree?
Read more at THE HILL


U.S. household debt tops $14 trillion and reaches new record

(Reuters) - American households added $193 billion of debt in the fourth quarter, driven by a surge in mortgage loans, and overall debt levels rose to a new record at $14.15 trillion, the Federal Reserve Bank of New York said on Tuesday.

Mortgage balances rose by $120 billion in the fourth quarter to $9.56 trillion, the New York Fed said in its quarterly report on household debt. Mortgage originations - pushed up by an increase in refinancing - also rose to $752 billion in the fourth quarter, reaching the highest volume since the fourth quarter of 2005, the report found.

Student loan balances grew by $10 billion in the fourth quarter, a slower pace when compared to five years ago. However, the total $1.51 trillion outstanding in student loan debt could be holding back young consumers trying to build up credit, the researchers found.
Read more at REUTERS



National Debt Holdings: 5 Factors That Affect the Value of Accounts Receivable Portfolios

Many elements impact the value of accounts receivable portfolios. When evaluating a portfolio to determine its worth, careful analysis of targeted factors helps buyers ensure appropriate value determination. In this article, we will discuss 5 of the key factors that should be considered when assessing a portfolio for purchase.
  1. Age of the Accounts- Debt buyers carefully evaluate the age of accounts and the historical treatment of the accounts as a key factor to determining the value of a debt portfolio. Understanding how much time remains in statute of limitations and what collection efforts have already been tried on the accounts has a strong correlation to the portfolios future value.
  2. Location of the Accounts- With regulations varying in each state, it is important to know the location of accounts within the portfolio. Rules and regulations vary from state to state and those rules may affect the statute of limitations, garnishment efforts, and other enforcement options. Understanding the geographic breakdown of the accounts in a receivable's portfolio is an important criterion for predicting account value.

Read more at National Debt Holdings


Big banks are set up to 'kill' change, says founder of $2.5 billion fintech firm Monzo
  • Monzo CEO Tom Blomfield says big banks are saddled with outdated tech and a risk-averse culture.
  • Blomfield says the banks are "set up to prevent change" and are "hunting out change and trying to kill it."
  • His mobile bank's valuation rose to $2.5 billion on the back of a $146 million capital injection last year.

Tom Blomfield doesn't think big banks will ever undergo a digital transformation.

The British fintech entrepreneur says banking behemoths like Barclays and HSBC are saddled with outdated technology and a risk-averse culture to respond to the challenge that upstarts like his digital bank, Monzo, present.
Read more at CNBC



MaxDecisions, Inc. founded in 2016 by two analytics and software engineering veterans dedicated to the integrity and excellence in analytics, marketing and risk management consulting for the online lending industry.

The founders of MaxDecisions, Inc. have decades of banking, financial services and online lending experience, both in consumer and small business lending. We have carefully cultivated a team of software engineers, data scientists, statisticians and mathematicians with specific knowledge in marketing analytics, fraud and credit risk management and portfolio and operational optimization.

Service to our clients is the most important aspect of our company. We don't succeed until our clients achieves the best result. We have build up a client base solely based on referral. Our dedicated team is what defines us.

Read more at MaxDecisions


FTC to Examine Past Acquisitions by Large Technology Companies

The Federal Trade Commission issued Special Orders to five large technology firms, requiring them to provide information about prior acquisitions not reported to the antitrust agencies under the Hart-Scott-Rodino (HSR) Act. The orders require Alphabet Inc. (including Google),, Inc., Apple Inc., Facebook, Inc., and Microsoft Corp. to provide information and documents on the terms, scope, structure, and purpose of transactions that each company consummated between Jan. 1, 2010 and Dec. 31, 2019.

The Commission issued these orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. The orders will help the FTC deepen its understanding of large technology firms' acquisition activity, including how these firms report their transactions to the federal antitrust agencies, and whether large tech companies are making potentially anticompetitive acquisitions of nascent or potential competitors that fall below HSR filing thresholds and therefore do not need to be reported to the antitrust agencies.
Read more at The Federal Trade Commission



ValidiFI: We are excited to announce that we will be exhibiting at Inside Credit Conference on February 17th - 20th in San Antonio!

Be sure to visit us at Booth #200 and learn about our innovating payment and data services!





Statement from Online Lenders Alliance (OLA) Following House Committee on Financial Services Hearing

Following today's House Financial Services Committee (HFSC) hearing titled, "Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps," OLA CEO Mary Jackson issued the following statement:

"Today's hearing clearly demonstrates that many members of the House Financial Services Committee have more work to do when it comes to understanding the borrowers of these types of financial products, why consumers rely on them, and their overall satisfaction with them.

Bank-fintech partnerships lead to increased innovation and more competition in the marketplace, providing consumers with loans that satisfy their unique requirements. This competition has led to better financial products at lower costs, and these partnerships benefit both small banks and consumers. These partnerships are operating within the bounds of federal law. What is baffling is that the proposal of a national rate cap preempts 43 state consumer finance laws and that some witnesses complained that bank products can't pre-empt the state law, but they are ok with a national preemption.

Consumers are satisfied with small dollar lending products, as evidenced by the fact that only one percent of all consumer complaints in the CFPB's consumer complaint database are related to these loans.

We encourage the Committee to rethink this dangerous, restrictive policy proposal and focus on promoting policies that help consumers access the financial products they continue to demand."

Read at Online Lenders Alliance

Dreher Tomkies LLP

Private Tax Debt Collection Getting Results but Remains Controversial, Says CRS

The latest iteration of a program in which private collection agencies, or PCAs, are used to attempt to collect on overdue tax debt has yielded about $170 million to the Treasury but controversy remains over such programs, the Congressional Research Service has said.

It said that the latest program, started in 2017, collected $302 million as of last September, of $132 million went to expenses including $54.6 million in commissions to the four participating collection firms and $11.5 million to an IRS fund for hiring and training special compliance agents.

The first of the two earlier programs ended up costing more to implement than it collected, while the second barely broke even, causing both to be canceled among questions about whether any form of tax debt collection should be considered an inherently governmental function.
Read more at FEDweek


Affordable housing cuts, CFPB funding: Takeaways from Trump budget

WASHINGTON - The Trump administration wants to eliminate several affordable housing programs and force some independent agencies to seek congressional funding, yet is also seeking to increase the funding for a division of the Treasury Department tasked with combating financial crimes.

As part of the president's proposed 2021 budget released Monday, the government-sponsored enterprises would suspend their funding of the Housing Trust Fund and the Capital Magnet Fund, and the community development block grant program would be eliminated.

The budget, which is more of a policy document than an accurate picture of funding levels, would also subject the Office of Financial Research, the Financial Stability Oversight Council and the Consumer Financial Protection Bureau to the appropriations process, which the Trump administration has pushed for in previous budget requests.


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