September 11, 2018
2018 edition: 72/104

Consumer protection bureau (CFPB) faces constitutional challenge in Supreme Court

The Obama-era Consumer Financial Protection Bureau faced a legal challenge at the Supreme Court on Thursday to its singe-director format, a setup that Supreme Court nominee Brett M. Kavanaugh has consistently ruled against for placing too much power in the hands of one unaccountable bureaucrat.

State National Bank of Big Spring, Texas, along with the nonprofit Competitive Enterprise Institute and the seniors' advocacy group 60 Plus Association, filed a petition with the high court to hear a lawsuit that seeks to declare the CFPB's organizational structure unconstitutional. The agency was created in 2010 as part of the Dodd-Frank financial regulatory law.

"Dodd-Frank gave unelected bureaucrats czar-like power over America's financial system, and the bureau has used that power to inflict damage on businesses and consumers alike," said CEI General Counsel Sam Kazman. "The Supreme Court should intervene to restore the Constitution's checks and balances on this unrestrained government power and to make it clear that Congress cannot abdicate its power of the purse."

Republicans have often criticized the CFPB as an unaccountable regulator run amok. President Trump has curtailed the agency's impact, installing Office of Management and Budget Director Mick Mulvaney, a fiscal conservative, as the interim head after the departure of activist director Richard Cordray in late 2017. Read more at WASHINGTON TIMES

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WORLDWIDE: Top 5 world markets for payday lenders

Payday lending frequently hits the headlines across the globe - but not always for the right reasons. We take a look into the history of payday lending, and examine the strictest and most lenient markets for lenders

Payday lending first entered the fray in the early 1990s, as banks reduced their small credit offerings and consumers looked elsewhere for quick-fix cash. These short-term, high-cost loans have risen in popularity in the past two decades, but they aren't without their pitfalls. Many lenders have come under fire for charging sky-high interest rates, using aggressive debt collection tactics and driving thousands of consumers into unmanageable debt.

As Wonga, the UK's largest lender, teeters on the brink of collapse, many payday loans firms will be considering their next move. Join us as we look at the top 5 most significant markets for pay day lending, from the strictest to most lenient.

1 - Netherlands
The Netherlands has some of the strictest payday lending regulations in the world. Back in the early 2000s, the country saw a rise in the popularity of 'Flitskrediet', or 'flash credits', which were essentially unregulated payday loans with APR rates up to 600 percent. At its peak, the Flitskrediet market was estimated to be worth €6m ($6.9m), and because of the small size of the loans, they were not covered by the Authority for the Financial Markets or the Act on Financial Supervision.
Read more at WORLD FINANCE

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Consumer Bureau Highlights That It Has Taken Enforcement Actions Under Mulvaney

The Consumer Financial Protection Bureau on Thursday released its first enforcement highlights report under acting Director Mick Mulvaney, drawing attention to fixes made by lending companies to bring themselves into compliance with consumer law.

The findings addressed automobile loan servicing, credit cards, debt collection, mortgage servicing, payday lending and small business lending largely from December 2017 to May 2018.

Coming as Mulvaney's agenda has been derided by consumer advocacy groups as pro-corporate, the report "shares information regarding general supervisory and examination findings, communicates operational changes to the bureau's supervisory program and provides information on recent bureau final rules."

Under the 2010 Dodd-Frank Financial Reform Act, the bureau is authorized to supervise banks and credit unions with more than $10 billion in assets, as well as certain nonbanks. The new iteration of a regular report noted that "institutions are subject only to the requirements of relevant laws and regulations," and CFPB does not "impose any new or different legal requirements."

The 22-page document reported two enforcement actions, the first against Citibank N.A., for violating the Truth in Lending Act by failing to periodically re-evaluate and reduce annual credit card percentage rates with clear written policies. The second action was taken in the form of a consent order with Triton Management Group Inc., a payday lender that operates in Alabama, Mississippi and South Carolina, for violating the Consumer Financial Protection Act and the Truth in Lending Act by failing to properly disclose finance charges associated with auto title loans in Mississippi.

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Bureau of Consumer Financial Protection (CFPB) Releases Latest Supervisory Highlights
SEP 06, 2018

WASHINGTON, D.C. - The Bureau of Consumer Financial Protection (Bureau) today released its 17th edition of Supervisory Highlights. The report covers Bureau supervision activities generally completed between December 2017 and May 2018, and shares observations in the areas of auto loan servicing, credit card account management, debt collection, mortgage servicing, payday lending, and small business lending.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Bureau is authorized to supervise banks and credit unions with more than $10 billion in assets, as well as certain nonbanks. Institutions are subject only to the requirements of relevant laws and regulations.

The report shares information regarding general supervisory and examination findings, communicates operational changes to the Bureau's supervisory program, and provides information on recent Bureau final rules. The information is disseminated to help institutions better understand how the Bureau examines institutions for compliance. The Bureau expects that the publication of Supervisory Highlights will continue to aid Bureau-supervised entities in their efforts to comply with federal consumer financial law. The document does not impose any new legal requirements.

Bureau examinations may result in supervisory recommendations to address problems that they find. These recommendations may include paying refunds or restitution, or taking actions to stop unlawful practices and promote future compliance such as implementing new policies, or improving training or monitoring. When appropriate, the Bureau opens investigations for potential enforcement actions based on information obtained during the supervisory process.
Read more at The Bureau of Consumer Financial Protection

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The Federal Reserve this week released a new report on the economic well-being of U.S. households in 2017. The report highlights that even with improved financial conditions over the past five years, 40 percent of Americans either could not cover or would struggle to cover an unexpected expense of $400. Additionally, the report found that more than one-fifth of adults are unable to pay their monthly bills in full, more than one-fourth of adults skipped necessary medical care due to financial reasons, and more than 13 million Americans are unbanked or underbanked.

"The Federal Reserve's report proves what we have long known: millions of hard working Americans live paycheck-to-paycheck and struggle to bridge financial gaps or pay for unexpected expenses. Despite these facts, the CFPB proceeded with its misguided small-dollar loan rule under former Director Richard Cordray, which will cut off a vital source of credit for millions of Americans," said Dennis Shaul, CEO of the Community Financial Services Association of America (CFSA).

"Demand for small-dollar credit will continue to exist even if small-dollar loans are no longer available. Removing consumers' access to small-dollar loans provided through legal, licensed lenders will only exacerbate the financial struggles that millions of Americans face and will force them to turn to unregulated, illegal lenders operating in the shadows," Shaul added. "This is why CFSA recently filed a lawsuit to obtain relief for American consumers and small businesses who will be hurt by the regulatory overreach of the CFPB under former Director Richard Cordray's highly partisan tenure." Read more at Community Financial Services Association of America (CFSA)

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Unbanked vs. Underbanked: Who they are and how they differ. by Walt Wojciechowski

Slightly more than two-thirds of households in America frequently make use of traditional banking services, according to the Federal Deposit Insurance Corporation. But that leaves 33 percent of people in the U.S. who don't, a significant percentage by any measure.

Making up this group are the so-called credit invisible, who for any number of reasons opt to go without regular patronage of traditional money management and transaction options. They're typically classified as "unbanked" or "underbanked."

The problem with this terminology is the two distinctions are often used interchangeably. In reality, however, they're quite different, even though the similarity between these titles might suggest otherwise.

For the sake of clarity, here are the characteristics that the unbanked and underbanked frequently possess, and how they compare and contrast:

As the title implies, unbanked Americans are those who don't make use of any banking services whatsoever. This includes debit cards and checking accounts, as well as savings accounts. In 2015 - the most recent year for which data is available - the unbanked represented 7 percent of U.S. households, translating to approximately 23 million individuals, including children, the FDIC reported. The percentage of unbanked households in the U.S. is down slightly from 2013, when it was 7.7 percent. Read more at MICROBILT
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CALIFORNIA: This bill could make predatory lending worse. Gov. Brown must veto it

Legislators had a chance to protect Californians from predatory lenders, but instead sent a special-interest bill to the governor that threatens to expand the damage.

Gov. Jerry Brown should veto Assembly Bill 237 promptly.

AB 237 expands the use of unlicensed and unregulated brokers, called "finders," who are allowed to operate under the Small Dollar Pilot Program, which is aimed at helping people or build credit with loans for small amounts.

The bill expands the program from loans of $2,500 up to $7,500 and allows for using finders for these larger loans. It has been pushed by just one company, INSIKT, whose business model relies on finders.

But finders have not worked out as originally hoped. Legislators originally thought finders would be credit unions or community banks that refer borrowers to the pilot loan program if they do not qualify for a lower cost loan.

In fact, most finders are check cashing stores, grocery stores and even payday lenders. We worry that through these finders, payday lenders can sell borrowers loans that carry triple-digit interest rates.    Read more at SACRAMENTO BEE

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Will your employer pay you to manage your own finances?

Having a hard time paying your bills each month? There's a growing chance that your employer wants to help, and not just by giving you a regular paycheck.

For years, companies have tried to convince employees to improve their physical health. Now, U.S. companies are increasingly pushing workers to also improve their personal finances and offering more robust advice to help them do so.

Here's where it gets juicy: Some employers are paying workers extra for participating in the voluntary finance programs, whether they are senior managers or call center assistants.

Atlanta-based SunTrust, one of the nation's biggest banks, offers each of its 23,000 employees up to $1,000 to take part in its own program, called Momentum onUp.

And while SunTrust's offer is unusually generous, it's not alone in doling out cash for financial wellness or pushing to help employees get their financial houses in order. A number of rival programs also exist.

"I think the competitive job market is driving it," said Brian Ford, who designed the program at SunTrust. Read more at ATLANTA JOURNAL CONSTITUTION

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10 most stressed cities of 2018

Workplace stress can have a big impact on employees, often leading to higher rates of illness, absenteeism and turnover. While employers have put in place some effective well-being strategies that have made meaningful strides in reducing behavioral and biometric risks, fostering emotional well-being in general, and reducing stress in particular, remains stubbornly challenging.

Office-related stress plays a big part in a new study from WalletHub that compares stress among some of the country's largest cities. The financial site compared 180 cities across four key dimensions using 37 different metrics: work-related stress, money-related stress, family-related stress and health and safety-related stress.

Regarding work-related stress, points were tallied based on factors including unemployment rates, average commute times and income growth rates. As for money-related stressors, median incomes and housing affordability were taken into consideration. Family-related stress was calculated using childcare costs rates and parental-leave policies while health and safety stressors were calculated using statistics on increases in annual health premiums, suicide rates and mental health.
Read more at Employee Benefit News

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