AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
May 14, 2019

CFPB

TOMORROW IS THE LAST DAY TO DO YOUR PART!
*Protect The Right to Small-Dollar Loans
*Protect access to credit!

TAKE ACTION

CFPB Notice of Proposed Rulemaking (NPRM) on "Payday, Vehicle Title, and Certain High-Cost Installment Loans"

TAKE ACTION! COMMENT ON THE PROPOSED REVISIONS!

Comments can be submitted now through May 15, and can be sent electronically, via email or through regular mail.
 
1) Submit electronically via at https://www.regulations.gov/document?D=CFPB-2019-0006-0001

2) Submit via email to 2019-NPRM-PaydayReconsideration@cfpb.gov
Include Docket No. CFPB-2019-0006 in the subject line of the message.

3) Submit via regular mail or hand deliver to:
Comment Intake
Bureau of Consumer Financial Protection, 
1700 G Street, NW,     Washington, DC 20552 
 Include Docket No. CFPB-2019-0006 in the letter. 
Must be mailed by Friday, May 10, to ensure arrival by deadline.

If you have questions or would like additional information, please email comment@cfsaa.com

CFSA


Banks have eased lending terms for business clients this year, Fed survey finds

For households, a fraction of banks tightened standards on credit-card loans in the year's first quarter, according to survey of senior loan officers

The numbers: Banks eased lending terms for large and mid-sized commercial borrowers in the first three months of the year, according to a Federal Reserve survey of senior loan officers released Monday. Standards on most business loans remained unchanged.

What happened: The less uncertain economic outlook in the first quarter was one reason behind the easing of lending terms, the loan officers said. The severe market selloff in the fourth quarter had led to some caution about lending.

The survey also found that banks continued to tighten across all three major categories of commercial loans.

And a moderate net fraction of banks also tightened standards for consumer credit-card loans. Lending standards on automobile loans and most categories of residential real estate remained basically unchanged.  Read more at MARKETWATCH

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Ocasio-Cortez says bill would 'destroy' predatory payday loan industry

Rep. Alexandria Ocasio-Cortez's (D-N.Y.) team said the Loan Shark Prevention Act she unveiled Thursday alongside Sen. Bernie Sanders (I-Vt.) would "destroy" the payday loan industry.

"The bill will officially cap all interest rates on consumer loans at 15% - lowering the credit card rates of millions of Americans, and functionally destroying the predatory 'payday' loan industry," her team said in an email to supporters.

"Predatory lending and our credit rating system targets lower income Americans and people who are living paycheck to paycheck with manipulative practices and hidden fees - trapping millions in a cycle of systemic poverty as their hard-earned money is funneled into exorbitant bonuses for Wall Street executives," the email also said.

The lawmakers on Thursday announced that they would introduce the legislation in a livestream video. They also tweeted about the measure.

A payday loan is a short-term loan that is borrowed at a higher interest rate. Sanders is among more than 20 Democrats running for president in 2020.

Ocasio-Cortez is a member of the House Financial Services Committee. Last month she grilled leaders of major banks over whether more people should have gone to prison for their roles in the 2007 financial crisis. Read more at THE HILL

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Consumer Financial Protection Bureau Outlines Plan to Review Rules Under the Regulatory Flexibility Act

WASHINGTON, D.C. - Today the Consumer Financial Protection Bureau (CFPB) published a notice on how it plans to periodically review regulations under the Regulatory Flexibility Act (RFA) and to request public input. Additionally, the Bureau published a notice requesting public input as part of its first RFA review examining the 2009 Overdraft Rule.

In Section 610 of the RFA, Congress specified that agencies review certain rules within 10 years of their publication, and consider the rules' effect on small businesses. The purpose of the review is to minimize any significant economic impact of the rules upon a substantial number of small entities, consistent with the stated objectives of applicable statutes. At the conclusion of each review, the Bureau will determine whether the rule should be continued without change, or should be amended or rescinded. The RFA requires each agency to invite public comment on each rule undergoing review and to consider specific factors, including: Read more at CFPB

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NEW YORK: New York announces agency to fill CFPB 'void'

The state of New York has fulfilled a promise it made more than a year ago, launching its own version of the Consumer Financial Protection Bureau to counteract what New York officials say is the national CFPB's abdication of its duties to consumers.

Acting New York Department of Financial Services (DFS) Superintendent Linda A. Lacewell announced Tuesday that Katherine A. Lemire had been appointed as executive deputy superintendent of the DFS' new Consumer Protection and Financial Enforcement Division. The new division combines the previously separate Enforcement and Financial Frauds and Consumer Protection divisions.

"As a highly respected and experienced prosecutor, compliance and regulatory professional, Katie is well-positioned to successfully marshal the extensive resources of the department's Enforcement and Financial Frauds and Consumer Protection divisions to deliver real results for New Yorkers," Lacewell said. "DFS's new Consumer Protection and Financial Enforcement Division will be a powerhouse, and Katie's knowledge and skillset will greatly strengthen the department's mandate to guard against financial crises and to protect consumers and markets from fraud."

The state first announced its intent to create the new division in January 2018, following what it called the CFPB's "troublesome policy shift away from consumer protection" under then-Acting Director Mick Mulvaney. Read more at MORTGAGE PROFESSIONAL MAGAZINE

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Credit bureaus draw the most consumer complaints to the CFPB

Getting incorrect or outdated information fixed or removed from one's credit report is a problem many consumers share. It's so common that hundreds of thousands of them lodged complaints against the three major credit bureaus last year. And that made credit reports the most-complained-about product in 2018, according to a new analysis of more than 257,000 complaints to the Consumer Financial Protection Bureau.

Credit reporting, credit-repair services or other personal consumer complaints accounted for 43 percent of all complaints to the CFPB last year. That's up from 23 percent in 2016, according to U.S. PIRG Education Fund, a nonpartisan consumer advocacy group.

Complaints against Equifax, Experian and TransUnion include ones involving data breaches and customer-service issues in their aftermath. The 2017 Equifax breach affecting nearly 150 million consumers is a case in point. Yet last year, 61 percent of consumers identified wrong information as the main problem with their credit report, according to the study

Mistakes on credit reports can lead to consumers having to pay more for credit or being turned down for jobs or mortgages. The three major credit bureaus may be less responsive to resolving the issues "because consumers are not their direct customers," PIRG stated. Instead, the credit bureaus' primary clients are lenders. Read more at CBS NEWS

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Enhance your depository system by moving from ACH to eChecks

WHAT IT IS:
Preserve your bank relationships by eliminating ACH returns and converting to eChecks (check images).

WHAT IT DOES:
All transactions are run through our rVd+ Code Model scrub databases to separate high risk of failed transactions from approved transactions.
Fed-Ready eCheck image format is created for all approved items and is delivered to your bank of choice in your name.
Optionally, our Consolidated Returns program routes your returned images to a separate bank to keep your depository account free of most returns and clean for audit and reconciling purposes.

WHAT IT IS USED FOR:
Using an eCheck image is not governed by NACHA and has less restrictive return percentage guidelines. Customers can choose their deposit method based upon risk of return.
Meet risk thresholds by eliminating ACH returns with no coding or expensive check image software required. Read more at MICROBILT

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Compete in the data-driven lending era

Bank short-term credit options explored

The Consumer Bankers Association (CBA) is touting the potential of financial institutions to aid Americans in need of emergency funds.

"Millions of Americans live paycheck to paycheck, leaving consumers with less cushion for emergencies, strained credit scores, and fewer credit option," CBA president and CEO Richard Hunt wrote in correspondence to House Financial Services Consumer Protection and Financial Institutions Subcommittee Chair Gregory Meeks (D-NY) and Ranking Member Blaine Luetkemeyer (R-MO). "The need for access to affordable, short-term liquidity products has become more important than ever. CBA is encouraged by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation's recent actions related to DAP and the CFPB's decision to revise the small dollar rule as these actions will help to foster a vibrant small-dollar loan market for consumers in need."

Six years ago the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued guidance on small-dollar bank loans, officials said, often known as deposit advance products (DAP), which served as a safe and affordable alternative to payday loans.

The guidance recommended the use of underwriting that is more appropriately applied to a much larger credit product, such as a mortgage loan and placed other restrictions on the products.
Read more at Financial Regulation News

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San Francisco Bans Cashless Stores

City officials say card- and app-only stores exclude low-income people who may not have access to bank accounts or credit.

San Francisco has officially banned cashless stores, with city officials saying businesses that only accept payment by card or app exclude low-income people who may not have access to bank accounts or credit.

In a unanimous vote Tuesday, the city's Board of Supervisors approved an ordinance that will require brick-and-mortar business to accept cash payment for goods and services.

The law makes an exception for internet-only businesses like ride-hailing companies, as well as for food trucks and pop-up stores.

The ordinance specifically pointed to the "many City residents" who are denied access to credit or are unable to open bank accounts and therefore wouldn't be able to use stores that don't accept cash.

"This is especially true of the very poor," the ordinance says, noting that particularly vulnerable groups are homeless and immigrant populations.
Read more at HUFFINGTON POST

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AOC and Bernie Put Postal Banking Back on the Agenda

Representative Alexandria Ocasio-Cortez and Senator Bernie Sanders just put postal banking back where it belongs: high on the agenda of those who seek to create a just and equitable United States. On Thursday, the pair drew national attention with the announcement of their Loan Shark Prevention Act, a sweeping plan to "combat the predatory lending practices of America's big banks and protect consumers who are burdened with exorbitant credit-card interest rates. The legislation imposes a 15 percent federal cap on interest rates and empowers individual states to establish lower limits."

The CEOs of the banking behemoths that have enjoyed a free ride under Republican and Democratic administrations were, undoubtedly, shaken by the progressive populist clarity of the measure. Sanders named names:

The reality is that today's modern-day loan sharks are no longer lurking on street corners breaking kneecaps to collect their payments. They wear three-piece suits and work on Wall Street, where they make hundreds of millions in total compensation and head financial institutions like JPMorgan Chase, Citigroup, Bank of America and American Express.

But what unsettled conservative champions of the banking interests was a parallel proposal by Sanders and Ocasio-Cortez "to build and expand basic post office banking services as an accessible, affordable alternative to check-cashing and payday-lending businesses."
Read more at THE NATION

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

Is your lender violating the Military Lending Act?

M. S. ARCHER Legal Assistance Director Marine Corps Installations East
In recent months, the Military Lending Act (MLA) and its enforcement have been in the news. The current Director of the Consumer Finance Protection Bureau (CFPB) says her agency does not have the authority to investigate financial institutions for MLA compliance absent consumer complaint, a position contrary to that taken by the original CFPB Director. As a result, MLA investigation and enforcement are now entirely dependent on the CFPB receiving consumer complaints.

The following can help customers of the MLA better understand its history and purpose, the types of loans covered by the act, requirements and prohibitions it imposes on lenders, and how consumers can recognize suspected violations.

In 2006 the Military Lending Act (10 USC 987) was signed into law. The law prohibited certain lending practices in loans made to service members or their dependents. Within broad guidelines, the MLA gave the Secretary of Defense (SECDEF) discretion to determine what loans were covered, how the interest rate was to be calculated, what disclosures lenders need to make and what contracts these rules applied to.

The SECDEF's original implementing regulation only covered a very narrow range of contracts. After years of study and experience, the SECDEF amended its regulation in 2016 (32 CFR 232) to cover any credit extended primarily for personal, family, or household purposes that is subject to a finance charge (interest is charged) or payable by a written agreement in more than four installments. As a result the MLA now covers a wide variety of credit, including installment loans, personal loans, credit cards, refund anticipation loans, payday loans and every type of loan or credit (with two important exceptions) extended to a service member or dependent. This regulation applies to covered loans and finance contracts entered into after October 3, 2016 and to credit card transactions after October 3, 2017. Read more at CAMP LEJEUNE GLOBE

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Alexandria Ocasio-Cortez, Bernie Sanders Seek 15% Cap On Credit Card, Loan Interest

The first major legislation Freshman Rep. Alexandria Ocasio-Cortez, D-N.Y., has introduced to lower interest rates banks charge on credit cards and other loans to 15% likely won't pass the Republican-controlled Senate this legislative session, but will stand a much greater chance if Democrats gain Senate seats and the White House in 2020.

The Washington Post reported on Friday that Ocasio-Cortez and Sen. Bernie Sanders, I-VT, who is a frontrunner in the Democratic nomination for president, have teamed up to propose a two-page Loan Shark Protection Act. Ocasio-Cortez took to Twitter on Thursday to argue that "there is no reason a person should pay more than 15% in interest in the United States."

She added borrowers with low credit scores are not the only ones to pay high interest rates. Even borrowers with excellent credit ratings pay higher rates than they did a decade ago.

Sanders has raised the proposed legislation before, during his 2016 bid for the presidency, as well as in 2009 during congressional debate over the CARD Act, which added modest protections for credit card users. Sanders also tweeted on Thursday that interest rates were too high and that together with Ocasio-Cortez, "We are introducing legislation to challenge the greed of Wall Street and protect consumers across America."
Read more at INTERNATIONAL BUSINESS TIMES

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Fintechs want to become nationwide lenders, but they just hit a major roadblock

Online lending from the fintech sector is booming, prompting a legal duel between state and federal banking regulators

New York's banking regulators can proceed with their case to prevent fintech companies from acting like banks, a judge ruled Thursday.

The regulators want to block the federal government from giving fintech companies national licenses that would allow them to pay consumers' checks and lend them money. Online lending from the "fintech" sector is booming - prompting a legal duel between state and federal banking regulators on whose rules the budding industry must follow.

Manhattan Federal Judge Victor Marrero ruled that the New York State Department of Financial Services could proceed with two of its three claims against the Office of Comptroller of the Currency (OCC), an independent bureau within the U.S. Department of the Treasury.

"Today's decision by the court is a resounding triumph for consumers and the regulated banking industry not just in New York, but across the nation," Linda Lacewell, acting financial services superintendent, said in a statement. New York regulators have their eyes on the OCC's "special purpose national bank" charters for "fintechs."
Read more at MARKETWATCH

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Lending as a Service
AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

Alternative Financial Service Providers Association
757.737.4088

315 Tuscarora St., Lewiston, NY 14092
dan@afspassociation.com
www.afspassociation.com