September 19, 2019
AFSPA helps you grow your business by providing you with the news, information, data and support you need and by vetting the product and service providers for the alternative financial services industry.

The head of the CFPB now believes that the financial regulator is unconstitutionally structured

The head of the Consumer Financial Protection Bureau now believes that the financial regulator she leads is unconstitutionally structured.
CFPB Director Kathleen Kraninger notified senior lawmakers on Tuesday that the bureau had determined that the agency gave her too much independence.
She noted that the Department of Justice, on behalf of the bureau, had formally filed a brief with the Supreme Court including her new position.

The head of the Consumer Financial Protection Bureau now believes that the financial regulator she leads is unconstitutionally structured.

CFPB Director Kathleen Kraninger notified senior lawmakers on Tuesday that the bureau had determined that the law that established the agency in the wake of the financial crisis gave her too much independence. That brings her position in line with the one adopted by the Department of Justice in March 2017.

"Mindful of the Bureau's role as an Executive agency within the Executive Branch [...] I have decided that the Bureau should adopt the Department of Justice's view," Kraninger wrote in letters to House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky.
Read more at CNBC


Trump administration asks Supreme Court to limit CFPB's independence

The Trump administration is urging the U.S. Supreme Court to give the president more control over the Consumer Financial Protection Bureau, the agency that regulates mortgages and credit cards.

Asking the court to take up a pending appeal, Trump administration lawyers said the Constitution requires that the president be allowed to fire the agency's director for any reason. The 2010 law that set up the CFPB says the agency's director can be removed only for "inefficiency, neglect of duty, or malfeasance in office."

The administration's position increases the chances the court will take up the issue in the nine-month term that starts in October. A ruling would come by June, months before the 2020 presidential election.

The filing was a response to an appeal filed by Seila Law, a California law firm being investigated by the CFPB over its sales pitches to indebted consumers. The firm is trying to derail the investigation by arguing that the CFPB was set up in violation of the constitutional separation of powers.


California legislature votes to limit interest rates on loans as low as $2,500

California Gov. Gavin Newsom (D) will decide whether to cap interest rates on some small or short-term loans after state lawmakers approved a measure in the last-minute legislative rush to finalize bills before the end of the year.

The measure, Assembly Bill 539, would prohibit lenders from charging interest rates higher than 36 percent, plus the standard federal rate, on loans of between $2,500 and $10,000.

The bill would require lenders to offer credit education programs to consumers who take out those loans.

Assemblywoman Monique Limon (D), the bill's primary sponsor, said some lenders can charge rates of up to 235 percent annually. Her measure is intended to help cut the number of Californians who default on those small loans every year.
Read more at THE HILL

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New report explores the relationship between Financial Well-Being and the contents of and engagement with credit reports

Today the Consumer Financial Protection Bureau (Bureau) released an Innovation Insight report which describes a first of its kind study exploring the relationship between subjective financial well-being and objective credit report characteristics and consumers' engagement with financial information through educational tools. "Credit Characteristics, Credit Engagement Tools, and Financial Well-Being" presents the findings of a joint research study between the Bureau and Credit Karma, a personal finance technology company providing free credit scores and reports and credit-related educational tools. This report is the first to study the relationship between financial well-being and engagement with financial information based on a survey of consumers matched with actual data on engagement.

Building on the Bureau's previous research efforts on financial well-being, this study uses the Financial Well-Being (FWB) Scale created by the Bureau to measure consumers' subjective financial well-being and relates the derived FWB score to objective measures of consumers' financial health, specifically, consumers' credit report characteristics. The study also seeks to relate consumers' subjective financial well-being to consumers' engagement with financial information through educational tools, including access to a credit score simulation tool, information about credit factors, and emails with information and suggestions.
Read more at CFPB


What Is Powering The Emerging Pawnaissance?

While short-term lending in general has a pretty rough reputation, the pawn loan is the most ill-regarded arena in an already unloved category of consumer lending. By definition, a pawnbroker offers loans on items that are not accepted as collateral by traditional banks or lenders. Items that typically show up in pawn shops include jewelry, electronics and collectible items.

The loan amount a borrower can get from a pawnbroker is determined solely by the value of the item itself; as in most forms of short-term lending.  As a general rule, pawnbrokers are willing to lend 20 percent to 50 percent of what they assess an item to be worth, the borrower then has 30 days to pay the loan back, and the borrower can also opt to pay an additional fee (usually $100) to extend their loan for 30 days.

It's also possible to sell items at a pawn shop - usually one will get a lower offer on a buy vs. on a loan. Read more at PYMNTS.COM



Two recent surveys find a growing demand among workers for new ways to get paid-including off the traditional two-week or monthly cycle.
In the future, you may not have to wait for payday to collect what you've earned. If that sounds good to you, you're not alone: According to two recent surveys, more workers say they'd welcome a more flexible approach to getting paid.

In a survey of more than 12,000 people by the American Payroll Association (timed to National Payroll Week earlier this month), nearly a third of respondents said they want to be able to access their pay as they earn it, rather than waiting for a designated payday.

Lisa Sterling, the chief people and culture officer at Ceridian, noted that the rise of the gig economy and other changes in how people work are building demand for such an approach. "Modern employers should accept that the traditional pay period may soon be a thing of the past, with employees wanting more innovative and immediate ways to receive their earned wages," Sterling said in a news release.

The technology for on-demand wage payment, which would effectively make the controversial payday loan industry obsolete, is already in place. Writing recently in Bloomberg Tax, National Payroll Reporting Consortium President Pete Isberg, an executive at the payroll firm ADP, said speeding up wage access would help employees avoid high-interest options for short-term loans that are widely seen as predatory. Read more at ASSOCIATIONS NOW


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New Report: How Consumers Use Connected Devices To Shop And Pay

In collaboration with Visa, PYMNTS asked 2,800 U.S. consumers about the devices they own and how they use them to buy things. We also asked those consumers about the purchases they made in the past seven days, the devices they used to make those purchases and why they made a purchase with that device in that way.

We studied the usage of connected devices such as smartphones, desktops, laptops, tablets, smart televisons, voice-activated assistants and cars with connected dashboards, among others.

This is the second year of this study, so we were eager to observe how those consumer trends have evolved since last year's study.

Every year since 2003, the Bureau of Labor Statistics has published a study of how Americans use their time. Very little has changed over the course of those last 15 years. There are still only 24 hours in the day, and, last year, Americans used those 24 hours in much the same way as they did in 2016, 2010 and 2003. The average American spent 9.6 hours sleeping and getting ready for bed, worked 3.6 hours, shopped 0.7 hours, watched TV for 5.2 hours, cooked and cleaned for 1.8 hours and spent the rest of their day on a variety of other things, including commuting to and from work.
Read more at PYMNTS.COM


Trump administration asks Supreme Court to take up challenge to consumer bureau

The Trump administration and Consumer Financial Protection Bureau (CFPB) on Tuesday asked the Supreme Court to take up a lawsuit challenging the agency's constitutionality.

Top Justice Department and CFPB attorneys argued in a brief filed Tuesday that the structure of the powerful financial watchdog infringes on the president's executive authority.

The lawyers urged the Supreme Court to take up a case that could have potentially fatal implications for the CFPB, halting or weakening its efforts to police the financial sector.

"The structure of the Bureau, including the for-cause restriction on the removal of its single director, violates the Constitution's separation of powers," wrote the administration's attorneys, asking the Supreme Court to take up the lawsuit, Selia Law v. CFPB, from the 5th Circuit Court of Appeals.

The brief is the latest step taken by the Trump administration and Republicans to gut the CFPB and sideline what Democrats designed to be a powerful, independent financial regulator.
The CFPB was created by the Dodd-Frank Wall Street reform law and began overseeing banks and lenders in 2012. Under the leadership of former Director Richard Cordray, a Democrat, the bureau issued sweeping regulations and severe penalties to firms alleged to have harmed or abused consumers. Read more at THE HILL


Consumer Financial Protection Bureau to Enhance Consumer Complaint Database

WASHINGTON, D.C. - Today the Consumer Financial Protection Bureau (CFPB) announced that it will continue the publication of consumer complaints, data fields and narrative descriptions through the Bureau's Consumer Complaint Database while making several enhancements to the information available to users of the database. The enhancements include: modified disclaimers to provide better context to the published data; integrating financial information and resources into the complaint process to help address questions and better inform consumers before they submit a complaint; and information to assist consumers who wish to contact the financial company to get answers to their specific questions. Additionally, the Bureau will work to provide enhanced features for the database that include dynamic visualization tools on recent complaint data.

"Since its inception, the Consumer Complaint Database has not been without controversy. When the Bureau asked for feedback in 2018, we received nearly 26,000 comments from a wide array of stakeholders including government officials, consumer groups, companies, academics, and individual consumers. After carefully examining and considering all stakeholder and public input, we are announcing the continued publication of complaints with enhanced data and context that will benefit consumers and users of the database while addressing many of the concerns raised," said CFPB Director Kathleen L. Kraninger. "The continued publication of the database, along with the enhancements, empowers consumers and informs the public."
Read more at CFPB

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A crack just emerged in the financial markets: The NY Fed spends $53 billion to rescue the overnight lending market

New York (CNN Business)Borrowing rates skyrocketed on Tuesday in a corner of the markets the public rarely notices but that is critical to the functioning of the global financial system.

The spike in overnight borrowing rates forced the New York Federal Reserve to come to the rescue with a special operation aimed at easing stress in financial markets.

It was the NY Fed's first such rescue operation in a decade, the last occurring in late 2008.

"It's unprecedented, at least in the post-crisis era," said Mark Cabana, rates strategist at Bank of America Merrill Lynch.

On Tuesday morning, the NY Fed launched what's called an "overnight repo operation," during which the central bank attempts to ease pressure in markets by purchasing Treasuries and other securities. The goal is to pump money into the system to keep borrowing costs from creeping above the Fed's target range. Read more at CNN


The Average Millennial Has $27,900 In Debt And Feels Very Guilty

Having lots of debt at a young age "is the new normal."

Millennials carry an average of $27,900 in debt, not including mortgages, according to new data released today by Northwestern Mutual. Gen Z, the oldest of whom are now 22 years old, have an average debt of $14,700.

Having sizable debt at a young age "is the new normal," said Chantel Bonneau, wealth management advisor at Northwestern Mutual. "There are lots of people who exit school, and before they start their first job, have debt. That is a different situation from 30 years ago."

Millennials' main source of debt is credit card bills, and Gen Z's is student loans. In a previous poll by, 40% millennials said the top reason they carried a credit card balance was daily expenses such as groceries, childcare, and utilities, and about 20% pointed to unexpected emergencies such as medical bills and car repairs. Bonneau said discretionary expenses such as vacations and eating meals out also contribute to credit card debt.
Read more at BUZZ FEED NEWS


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