July 26, 2018

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

Mulvaney snubs consumers to help payday lenders

Every payday, working Americans are reminded of the multiple tax deductions that pay for government. If you're like most people who work for a living, the biggest deduction is for federal taxes.

It's a tax that people pay rather than face the ire of the Internal Revenue Service. It's also an expenditure that is made with the expectation that our democracy will also live up to its promises to be "of, by and for the people."

Yet when it comes to the current leadership at the Consumer Financial Protection Bureau (CFPB), that adage no longer applies. Instead, Acting CFPB Director Mick Mulvaney has changed the bureau from one that provided protections and restitution to scammed consumers into a full-fledged protection of financial service firms.

The unfortunate result for citizens is that we're just not getting any value from this key office these days. The Dodd-Frank Consumer Protection and Wall Street Reform Act is clear as to the responsibilities given to the CFPB.

Under the previous director, billions of dollars were returned to consumers for a host of illegal and deceptive acts by predatory financial institutions. These achievements were accomplished with the support of a dedicated staff. Read more at THE PHILADELPHIA TRIBUNE

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OHIO: Ohio House sends payday loan crackdown bill to Gov. John Kasich

COLUMBUS, Ohio - A bill reining in payday lending in Ohio cleared its last legislative hurdle Tuesday and is heading to Gov. John Kasich's desk.

The Ohio House, in a 61 to 24 vote, followed the recommendations of consumer advocates and House Bill 123's sponsors and voted to agree with changes to the measure made by the Senate.

Kasich, a Republican like the majority in the General Assembly, hasn't publicly said what he plans to do with the bill. A Kasich spokesman said it will be reviewed when it gets to the office.

The payday loan industry has dozens of lobbyists working to kill the bill.

H.B. 123 will get to his desk in the next several days, at which point he has 10 days to sign or veto it - or allow it to become law without his signature.

The payday loan industry opposes the legislation. It has said many businesses will go under because they won't be able to operate under the parameters in H.B. 123. Read more at CLEVELAND.COM 

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U.S. consumer watchdog slashes fine in payday lender settlement

WASHINGTON (Reuters) - The U.S. consumer finance watchdog ordered an Alabama-based payday lender on Thursday to return $500,000 to borrowers who were overcharged, a fine that people familiar with the matter said was only a third of what the prior Obama-era head of the agency had sought.

The settlement between Triton Management Group Inc and the Consumer Financial Protection Bureau (CFPB) was signed by Mick Mulvaney, who President Donald Trump named in November as the agency's interim director.

Mulvaney's predecessor, Richard Cordray, a Democrat who was appointed by President Barack Obama, had decided Triton's customers were owed about $1.5 million and he wanted that money returned, according to three sources with direct knowledge of the matter. Read more at REUTERS

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Millennials among leading users of online lenders

With the oldest of the generation now in their mid-30s, millennials represent a considerable portion of America's populace, accounting for 56 million individuals of the country's workforce, according to government data compiled by the Pew Research Center. Their actions largely dictate how and where business owners invest and dedicate their marketing energies.

Perhaps as a result of their growing up in an analog era that quickly transformed into digital, millennials are among the chief users of online channels, making them an outlet financial firms must ensure is up to par.

When it comes to banking, over 9 in 10 millennials say they regularly conduct financial transactions via the internet, according to a polling done by Gallup. Nearly 80 percent said they also utilize mobile devices for banking purposes.

What stands to be the biggest takeaway from the survey is millennials use online channels more than their older peers. Indeed, two-thirds of 18- to 35-year-olds said they'd physically gone to a brick-and-mortar branch in the previous six months, Gallup reported. This compared to 81 percent of baby boomers and 80 percent of traditionalists, the oldest generation. Read more at MICROBILT NEWS

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CFPB Nominee Sparks Debate Over Future of Agency. by Troutman Sanders LLP

On July 19, the Trump Administration's nominee for director of the Consumer Financial Protection Bureau, Kathy Kraninger, faced harsh scrutiny from Democrats on the Senate Committee on Banking, Housing and Urban Affairs regarding her qualifications for the position, reflecting the heated partisan divide since the Bureau's inception in 2010.

Kraninger is currently an associate director with the Office of Management and Budget, where she oversees budget development and execution for several executive branch agencies and manages roughly $250 billion in federal government programs, including the Department of Homeland Security. The Committee questioned Kraninger's intentions to continue the governing approach taken by acting Director Mick Mulvaney, who is also Kraninger's current boss as Director of the OMB.

Mulvaney's Influence on Kraninger

Mulvaney took over as acting Director of the CFPB in November 2017 following the exit of Richard Cordray, who is now running as the Democratic candidate for governor of Ohio. Mulvaney, who has called for increased transparency and accountability of the Bureau and even called for its abolition, immediately began implementing foundational reforms, including requesting a zero-dollar budget for the second quarter of 2018 and putting a 30-day freeze on new regulations.

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Dramatic changes to CFPB proposed by House not part of appropriations bill under consideration by Senate

According to media reports, the Senate was scheduled to begin debate yesterday afternoon on H.R. 6167, the "Interior, Environment, Financial Services, and General Government Appropriations Act, 2019." The bill, which was passed by the House last week by a vote of 217-199 with no Democrats voting for the bill, would make several dramatic changes to the CFPB as described below.

Although the Congressional Record does reflect that the Senate began consideration of H.R. 6167, such "consideration" consisted of the introduction by Senator Shelby of an amendment substituting the Senate's financial services and general government appropriations bill, S. 3017, for the corresponding portions of the House bill.

While the House bill would make the CFPB subject to the regular appropriations process, the Senate bill would not change Section 1017 of Dodd-Frank which provides that the CFPB is funded through transfers from the Federal Reserve. However, it contains a provision (Section 747) that would require the CFPB, during fiscal year 2019, to notify the House and Senate Appropriations Committees, the House Financial Services Committee, and the Senate Banking Committee when it makes a request for a transfer of funds from the Federal Reserve pursuant to Section 1017 and to post the notification on the CFPB's website. Read more at NATIONAL LAW REVIEW

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Bill targets IRS administrative reform

Sens. Orrin Hatch (R-UT) and Ron Wyden (D-OR) introduced last week a measure designed to reform certain administrative practices at the Internal Revenue Service (IRS).

The legislation is based on two 114th Congress bills that unanimously passed the Finance Committee in 2016. The senators said it seeks to assist the agency by increasing taxpayer protections and electronic filing; enhancing whistleblower protections; reforming policies concerning IRS employees; increasing scrutiny of IRS audit criteria; and supporting prevention of identity theft and tax refund fraud.

"Ensuring the IRS has greater flexibility and bringing it into the 21st century continues to be a top priority, especially with the largest rewrite of the tax code in more than three decades on the books," Hatch, who serves as chairman of the Finance Committee, said. "We've been working hand in glove with the administration to ensure a proper and seamless implementation of new policies and are confident this bill will streamline the agency in a way that protects taxpayers from fraud and abuse, increases electronic filing and supports IRS employees."

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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.

TransUnion Study Offers Insights on Consumers and the Alternative Credit Market

Consumers who turn to alternative loan products are commonly perceived as underbanked or too risky to access traditional credit products. In a recent study conducted by TransUnion, the findings suggest there is a creditworthy segment of alternative loan borrowers that also perform well with traditional credit products like a credit card or personal loan.

Alternative loans, which include short-term loans, short-term installment loans, virtual rent-to-own or point-of-sale finance, are a category of credit obligations not visible on traditional credit reports. In TransUnion's alternative credit database, which includes consumers who have applied for or received one of these loans in the past seven years, 66 percent of the population was considered subprime, compared to the risk distribution of the overall credit active population which typically stands at 25 percent. For our purposes, subprime is typically defined as consumers that have a VantageScore 3.0 score that falls below 600.

While the study did find that consumers who have utilized alternative loans are inherently more risky, conventional wisdom has suggested that these consumers participate in this market because they cannot access traditional credit products. However, TransUnion took a closer look and found not only 12 percent of these consumers have prime and above VantageScore scores over 661, but many across all risk tiers have recently opened traditional credit products.
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Watkins to lead new CFPB division

Paul Watkins has been chosen to lead the Consumer Financial Protection Bureau's (CFPB) new Office of Innovation.

Bureau Acting Director Mick Mulvaney recently announced the decision, citing Watkin's expertise, track record of protecting consumers, and commitment to innovation to the Bureau.

"I am confident that, under his leadership, the Office of Innovation will make significant progress in creating an environment where companies can advance new products and services without being unduly restricted by red tape that belongs in the 20th century," Mulvaney said.

Watkins joined the Bureau from the Arizona Office of the Attorney General, where he was in charge of the office's fintech initiatives and managed the FinTech Regulatory Sandbox, the first state fintech sandbox in the country, which allowed
a company limited access to the marketplace in exchange for relaxing some regulations.

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