March 26, 2019
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Payday lenders get unexpected reprieve from CFPB rule

A federal judge delivered another victory to payday lenders by leaving in place a stay on the compliance date for the Consumer Financial Protection Bureau's 2017 payday lending rule.

That rule, drafted under former CFPB Director Richard Cordray, had two key components: new underwriting requirements for high-cost, small-dollar lenders, and limits on how often a lender can attempt debiting payments from a borrower's bank account.

The CFPB under Trump-appointed Director Kathleen Kraninger already proposed eliminating the underwriting portion. But in a surprising development, U.S. District Judge Lee Yeakel's ruling that a stay of the Aug. 19 deadline will remain in effect means the payment provision will continue to be delayed as well.

Yeakel, who did not indicate when he would lift the stay, is presiding over an industry lawsuit in Texas seeking to kill the rule. Once the Trump administration took control of the CFPB, the bureau sided with the plaintiffs in the case and announced its intent to reopen the rule and propose changes. The judge issued the stay in November to give the agency time to formulate a proposal.

Following the CFPB's proposal in February, legal observers had expected Yeakel to lift the stay, setting in motion a deadline to comply with the payment restrictions. But he wrote in his ruling that he has received no request to lift the stay. Read more at AMERICAN BANKER

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Small business loan approvals hit record in February

The loan approval percentage for small business Opens a New Window. credit applicants hit a record high of 27.2 percent at big banks Opens a New Window. ($10 billion+ in assets) in February, while approval rates at small banks, alternative lenders and credit unions dipped slightly, according to the Biz2Credit Small Business Lending Index™ for February 2019.

"After two months at an even 27 percent, the approvals by big banks climbed a bit at big banks in February. Overall, the cost of capital is relatively low, small businesses are looking to secure funding, and for many companies, recent financial performances have made them creditworthy borrowers," said Biz2Credit CEO Rohit Arora, who oversees the monthly research derived from more than 1,000 small business credit applications on his company's online lending platform.

"The Federal Reserve has slowed its trend of incremental interest rate hikes, which is good news for borrowers," said Arora, one of the nation's leading experts in small business finance. "Money is flowing to small business borrowers, while the cost of capital is still reasonable - especially traditional bank loans." Read more at FOX BUSINESS

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Standards Needed for Safe Small Installment Loans From Banks, Credit Unions: PEW TRUSTS

Millions of borrowers could save billions of dollars annually

Several recent developments have raised the possibility of banks and credit unions offering small installment loans and lines of credit-which would provide a far better option for Americans, who currently spend more than $30 billion annually to borrow small amounts of money from payday, auto title, pawn, rent-to-own, and other small-dollar lenders outside the banking system. Consumers use these high-cost loans to pay bills; cope with income volatility; and avoid outcomes such as eviction or foreclosure, having utilities disconnected, seeing their cars repossessed, or going without necessities. Many of these loans end up harming consumers because of their unaffordable payments and extremely high prices; in the payday and auto title loan markets, for example, most borrowers pay more in fees than they originally received in credit.

Millions of households could benefit if banks and credit unions were to offer small installment loans and lines of credit with standards strong enough to protect consumers, clear enough to avoid confusion or abuse, and streamlined enough to enable automated low-cost origination.
Read more at PEW TRUSTS


Trump administration expands penalty relief for Americans who underpaid taxes

The Internal Revenue Service (IRS Opens a New Window. ) is waiving the underpayment penalty for more Americans who may have unintentionally underpaid their 2018 tax Opens a New Window. liabilities.

The Department of Treasury announced on Friday that it was lowering the withholding underpayment threshold to 80 percent - meaning people whose total withholding and estimated tax payments for 2018 are equal to or greater than 80 percent of their taxes owed will not be penalized.

"Treasury is exempting even more taxpayers from the usual underpayment penalties in an effort to help those who attempted in good faith to meet their withholding obligations," Treasury Secretary Steven Mnuchin said in a statement.

During any given year, taxpayers can avoid the underpayment penalty if they paid withholding and estimated tax of at least 90 percent of the amount owed.
Read more at FOX BUSINESS

Payliance: The Power Behind Payments Technology

Trump's bold claims about cutting red tape give Democrats a possible weapon in 2020 election

President Donald Trump is happy to boast that he slashes more regulations than any president who preceded him. He literally cut red tape in the White House in December 2017 while standing before stacks of paper representing rules.

The president may want to tread carefully on the issue as the 2020 election nears. Democratic candidates aim to turn Trump's rhetoric about regulation against him as they try to deny him a second term next year.

Trump campaigned on chopping regulations, arguing fewer rules would boost businesses and the economy. He has made some significant changes - rolling back Obama administration efforts to limit emissions from coal-burning power plants and automobiles, among other steps. The president also backed a law to scrap some bank rules passed after the 2008 financial crisis. While bank stocks took a beating in December along with the broader market, the Financial Select Sector SPDR ETF - which counts the largest U.S. banks among its top holdings - has climbed nearly 10 percent since Trump took office. Read more at CNBC

Alternative Credit Reporting

4 Ways that Alternative Data Can Help You Lift Your 2019 Growth Goals

The lending market can always benefit from a new technological tailwind. And while there's been a lot written about AI, the real fuel that's driving the tailwind is alternative data. In this blog, we discuss four ways alternative data is transforming the lending market and propelling lenders to sustainable financial success in the face of market uncertainty.

Leverage AI and Alternative Data to See More and Accept More Creditworthy Borrowers
Alternative data is data that's different from the credit scores that lenders have traditionally relied on when screening accounts. Those traditional scores, primarily derived from a consumer's credit history, did a satisfactory job for a long while predicting the creditworthiness of traditional middle-class and upper-class borrowers - consumers who had stable jobs, known addresses, and an ever-growing track record of credit purchases.

But today, the limitations of these scores are glaringly obvious. They are missing up to 30% of the market or lack the predictive signals to help lenders make informed decisions. Alternative data addresses these limitations in powerful ways, enabling savvy lenders to meet or exceed their growth goals, even in a tightening credit market. Read more at ACCELITAS

Lending as a Service

CFPB examines debt collection measure

The recently released Consumer Financial Protection Bureau (CFPB) annual report to Congress on the administration of the Fair Debt Collection Practices Act (FDCPA) highlighted continued unlawful collection prevention efforts.

Preventive measures implemented by the CFPB, along with the Federal Trade Commission (FTC), include, per officials, vigorous law enforcement, education and public outreach and policy initiatives - adding the two agencies reauthorized their memorandum of understanding on Feb. 25, 2019, providing for coordination in enforcement, sharing of supervisory information and consumer complaints and collaboration on consumer education.

The report examines the CFPB's intent to issue a Notice of Proposed Rulemaking on debt collection addressing issues ranging from communication practices to consumer disclosures. The report highlights that the CFPB handled 81,500 debt collection complaints related to first-party and third-party collections.

Debt collection is among the most prevalent topics of consumer complaints about financial products or services received by the Bureau. Read more at Financial Regulation News

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.

US consumer sentiment improved in March

U.S. consumer sentiment Opens a New Window. rose at the beginning of March, a sign that consumers may be feeling more optimistic than they did to start the year.

The University of Michigan on Friday said its consumer sentiment index increased to 97.8 after registering 93.8 at the end of February and 91.2 in January, the lowest level since October 2016 . Economists surveyed by The Wall Street Journal had expected a 95.3 reading.

Measures of consumer sentiment dipped earlier this year as Americans grappled with the partial government shutdown, a patch of market volatility Opens a New Window. and the threat of a global economic slowdown. Those fears seem to have receded.

This month's increase was driven by particularly strong sentiment among people in the bottom two-thirds of the income distribution, said Richard Curtin, the survey's chief economist.

The survey revealed a jump of one percentage point in income expectations among this group -- coupled with the lower expected inflation in the next year they indicated -- points to consumers anticipating higher real incomes. Read more at FOX BUSINESS

Merchant Boost Announces Name Change to ValidiFI
Redefining how financial service businesses measure risk and process payments.

ACH Payment Processing: Four Ways to Streamline Operations

Without an electronic payment model such as ACH payment processing, fund disbursal can be a lengthy and cumbersome process. The ACH network provides a cost-effective framework where lenders can quickly and efficiently deliver funds to borrowers and collect repayments.ACH payment processing not only empowers lenders to quickly send funds to borrowers but is also generally a lower cost option than debit card, delivering a cost-effective and streamlined payment solution.

ACH processing empowers lenders to streamline business operations in these four important ways.

Same-Day ACH
Same-day ACH credits* allow lenders to provide funds to borrowers in the same banking day that a loan is approved. Same-day ACH enables lenders to quickly deliver borrowers funds on short notice at a lower cost than a wire or card payment, streamlining the lending process in emergencies.

This important to lenders in a variety of ways: Read more at PAYLIANCE

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Fintech Is Booming, While Posing New National Security Risks for the U.S.

New financial technology-so-called fintech-has rapidly become an important part of the financial industry, from mobile payment systems to cryptocurrencies. But it also represents a new area of national security vulnerability for the United States. The U.S. is a leader in fintech investment and development for now, but other countries are quickly catching up in key areas. U.S. policymakers should act to improve fintech regulations and coordinate a strategy in order to ensure that this kind of technology remains a strength, rather than a vulnerability, for the U.S.

There has been a huge investment boom in fintech in recent years, with an estimated $111 billion or more invested globally in 2018, according to research from KPMG. Fintech has seen more mainstream use, especially in countries like China, where mobile payments now outstrip any other country in the world-there were over $17 trillion in such payments in China in 2017-and where a range of fintech products are widely used, from peer-to-peer lending platforms to app-based insurance and investment products.

For the U.S., leading in the development of fintech means maintaining the strength and influence of the U.S. financial system. Fintech also holds tremendous promise in making financial activity more efficient, transparent and cheaper overall. It can better protect banks from fraud and human error, for example, while potentially fostering more inclusive financial systems by offering greater access to savings accounts, credit and loans, and a means to send remittances. All of that is worth encouraging in the U.S. through greater investment and incentives.
Read more at World Politics Review

We are a revolutionary merchant service and technology firm servicing the debt repayment industry.

Everything wrong with traditional credit scoring in 3 headlines

Noticing a trend here? Are these headlines not insane?
In order to improve their credit scores, consumers are being encouraged to get more credit cards and jump through ridiculous hoops (or "hack" as one "journalist" put it), just so they can get access to more credit. Seems a little, odd....

Then you see something like this.
This woman had a fantastic credit score, 820 to be exact. She had access to all sorts of financial products.

$20,000 line of credit - check.

$17,000 credit card - check. Read more at TRUST SCIENCE

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Advisory Committee on Community Banking session slated

Federal Deposit Insurance Corporation (FDIC) officials will conduct an Advisory Committee on Community Banking meeting on March 28 to broach an array of topics.

The meeting is open to the public and will be held from 9 a.m. to 3:15 p.m. (ET) in the FDIC's main building located at 550 17th Street, N.W., Washington, D.C. The session will also be webcast live.

The FDIC said senior staff would discuss efforts regarding de novo institutions, community bank technical assistance efforts, the 2017 FDIC National Survey of Unbanked and Underbanked Households and various supervisory policy issues.

The FDIC Ombudsman is expected to provide an update and representatives from the Financial Crimes Enforcement Network are scheduled to present a Committee briefing while the Committee will discuss local banking conditions. 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.

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