November 5, 2019

Bureau hasn't budged on cutting payday loan protections

WASHINGTON (AP) - The Consumer Financial Protection Bureau has not budged on its June decision cutting additional protections.

"There was insufficient evidence and legal support for these requirements," CFPB Director Kathleen Kraninger wrote in a Sep. 23 letter to Rep. Maxine Waters, D-California, who is chairwoman of the House Financial Services Committee and a critic of the agency's move.

Kraininger added that states should regulate payday lending, as they "have determined it is in their residents' interests to be able to use such products, subject to state-law limitations."

The 2017 Payday Rule governs "unfair and abusive" lending practices, such as withdrawing money from borrowers' bank accounts without their knowledge, neglecting borrowers' "ability to pay" when approving loans, and issuing balloon loans, in which payments are consistently lower for the majority of the lending term but "balloon" to one significantly larger payment at the end.
Read more at The Associated Press


Will the Supreme Court Decimate the CFPB? Latest Developments. Manatt, Phelps & Phillips, LLP

Even though the Supreme Court generally moves relatively slowly, the Court's recent decision to grant certiorari in the CFPB v. Seila Law case is forcing courts and litigants to adjust quickly. And the Supreme Court is itself taking a number of procedural steps to move the case forward. What happens next could reshape consumer financial regulation for years to come.

In Seila Law, the law firm petitioner is challenging the validity of a civil investigative demand (CID) issued by the Consumer Financial Protection Bureau (CFPB). Seila Law seeks to invalidate the entire CFPB, and seeks that draconian result.

The Supreme Court case will present two questions. First, "[w]hether the vesting of substantial executive authority in the [CFPB], an independent agency led by a single director, violates the separation of powers." Second, the Court likewise asked the litigants, if the CFPB is "found unconstitutional on the basis of the separation of powers, can 12 U.S.C. §5491(c)(3) [i.e., addressing "for cause" removal of the director] be severed from the Dodd-Frank Act?"

As our recent article notes, both the CFPB and the Department of Justice concur that the CFPB structure is indeed unconstitutional but assert that the appropriate remedy is to sever the for-cause removal provision and enforce the CID.
Read more at JD Supra, LLC

CFSA Conference
CFSA Conference

Consumers Get More Control Over the Banking Data Shared With Financial Apps

Some banks are adopting new technology to discourage 'screen scraping' and protect customers' information

Budgeting apps and online services can help consumers manage their finances, but they may also vacuum up lots of personal data from bank accounts, which could compromise privacy and lead to security risks. Banks have begun giving their customers tools to safely connect to these apps and control what data is shared.

Bank of America, Chase, and Wells Fargo have created dashboards to let customers decide what information to share, and experts say more consumers should use them. For example, you may want to provide your checking and credit card balances to a budgeting app but not the details of your mortgage.

Consumers can also use these dashboards to rescind an app's access to their account.


Despite reputation, CFPB not toothless under new leadership

Mounting criticism for going too soft on the financial services industry under Trump has not stopped new Consumer Financial Protection Bureau Director Kathleen Kraninger from putting her own enforcement stamp on the agency.

"There may be a misimpression that the CFPB is lax when, in fact, it is not; it's a very active Bureau," says Anthony DiResta, a partner at Holland & Knight. "They've been looking at many players in the financial services industry-banks, lenders, credit-repair organizations, debt collectors."

They're also paying attention to a broad range of consumer protection issues-from unfair and deceptive practices to failing to honor consumer requests and much more.


5 Factors That Affect the Value of Accounts Receivable Portfolios

Many elements impact the value of accounts receivable portfolios. When evaluating a portfolio to determine its worth, careful analysis of targeted factors helps buyers ensure appropriate value determination. In this article, we will discuss 5 of the key factors that should be considered when assessing a portfolio for purchase.
  1. Age of the Accounts- Debt buyers carefully evaluate the age of accounts and the historical treatment of the accounts as a key factor to determining the value of a debt portfolio. Understanding how much time remains in statute of limitations and what collection efforts have already been tried on the accounts has a strong correlation to the portfolios future value.
  2. Location of the Accounts- With regulations varying in each state, it is important to know the location of accounts within the portfolio. Rules and regulations vary from state to state and those rules may affect the statute of limitations, garnishment efforts, and other enforcement options. Understanding the geographic breakdown of the accounts in a receivable's portfolio is an important criterion for predicting account value.
  3. Original Account Type - The type of account a debt was originated as has a direct effect on the value of the accounts. Auto loans, mortgages, credit cards, and consumer loans all have different values based on the historic probability of recovering funds. Reviewing the type of account, the originating creditor and underwriting standard used to issue the account.
Read more at National Debt Holdings


NEBRASKA payday lending ballot campaign gets $485,000 boost

LINCOLN, Neb. (AP) - A ballot campaign seeking to tighten the cap on how much interest payday lenders can charge in Nebraska has received a major boost from a national donor, increasing the odds that it will succeed in placing the issue on the 2020 ballot.

Nebraskans for Responsible Lending received $485,000 in cash and in-kind contributions last month from the Sixteen Thirty Fund, a liberal, Washington-based group that has helped in other states with campaigns to expand Medicaid, raise the minimum wage and restrict payday lending.

"A lot of the early conversations we've had about fundraising have been positive," said Aubrey Mancuso, an organizer for Nebraskans for Responsible Lending. "A lot of people get this issue, and I think we're hopeful that we'll have all the resources we need to succeed."
Read more at The Associated Press


Alternative Data as a Means for Making Credit Decisions

A 2017 report from the Consumer Financial Protection Bureau (CFPB) maintains that an estimated 44 million Americans have little to no credit profile. This lack of credit can make it impossible for consumers like this to gain access to traditional credit opportunities.

Alternative credit data has been identified as a way for information not found in traditional credit reports to be used to evaluate consumers when making lending decisions. This includes information such as utility bill payments, cell phone bill payments, and rental payments.

Alternative credit data for credit scoring is intended to expand the credit file of consumers widening the population of those who can access the credit markets.

This can be especially helpful for groups who are typically considered to be "credit invisible" such as low-income families, immigrants, and younger consumers.
Read more at MICROBILT


Banks are using their Washington clout to stomp on the tech industry

Big bank lobbyists are plotting a Hill strategy to derail tech companies' plans to disrupt the financial industry.

Banks are using their long-established relationships on Capitol Hill and in regulatory agencies to undermine a relative newcomer struggling to get traction in Washington: the tech industry.

The battle of corporate titans is brewing as technology companies look to disrupt what Facebook's Mark Zuckerberg calls the "stagnant" financial industry by giving consumers new ways to pay for things and obtain credit.

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Banks are beginning to realize the trend could pose an existential threat, so they're fighting back with the lobbying clout that they've built over decades.
Read more at POLITICO


Trust Science Finalist in Global Banking Technology Awards - Named Most Innovative Banking Technology Provider

Palo Alto, USA, October 31, 2019 - USA Inc, Credit Bureau 2.0™, a leading provider of AI-powered Credit Scoring, announced today that the Banking Technology Awards has recognized Trust Science® as a finalist for the Most Innovative Banking Technology Provider.

The global recognition highlights Trust Science's position among other international FinTech unicorns. Trust Science's SaaS offering enables automated credit decisioning for lenders. Further, lenders can score a borrower's creditworthiness with financial inclusive and consented data. Lenders are now able to score thin-file and no-hit borrowers.

The Banking Technology Awards recognize excellence and innovation in the use of IT in financial services worldwide. The awards attract major players and specialists in the sector, with attendees including JP Morgan, Morgan Stanley, Deutsche Bank, Virgin Money, TSB, Lloyds Bank, HSBC, Alior Bank, Nordea, DBS Bank, Barclays, and OakNorth, among others.
Read more at Trust Science


FDIC Consumer News: Banking at the Speed of Technology

Follow these tips to help ensure your money stays secure
Millions of people today use mobile devices to manage their finances, and the number of users continues to grow. Why? Mobile banking technology and services provide so much convenience. You can access your account from just about anywhere using a smartphone or mobile computer device today. As demand grows, the banking industry strives to improve online services while keeping customers' funds safe.

Money Transfer Services: Person-to-person payment services and mobile payment apps have become part of everyday life for many people. Payment services and apps let you send money to people without having to write a check, swipe a card, or hand them cash. These services are becoming increasingly popular for things like dividing the cost of rent with a roommate or tracking costs and splitting the bills when traveling. With the development of new payment methods, there are also new risks, so keep the following in mind when using these services and apps:
Read more at FDIC.GOV


Banks must innovate or become 'footnotes,' McKinsey report warns
  • Nearly 60% of the world's banks may not be economically viable ahead of the next downturn because their returns of equity aren't keeping pace with costs, an annual review from consultant McKinsey & Co. indicated Monday.
  • Banks must innovate or risk "becoming footnotes to history" because fintechs are changing customer behavior, and looser regulations are giving them easier entrance to the market, the report said.
  • Banks' valuations have dropped 15% to 20% since the start of 2018, McKinsey said, suggesting "investors anticipate a sharp deceleration in earnings growth."
Fintechs allocate double the share of their information technology budgets to innovation as do banks - 70% versus 35%, McKinsey said.

The report divides banks into four categories and has specific recommendations for each:

Market leaders - the 20% of global banks that capture nearly 100% of the industry's economic value added - should reinvest their capital in innovation and further scale.
Read more at Banking Dive

Dreher Tomkies LLP

How Crowdfunding Is Becoming Regular Investing

A decade ago, an entrepreneur wanting to raise cash pretty much had to have rich relatives or pals, or gain entry into the clubby world of venture capital. Sure, that entrepreneur could take it to the web, asking people to make their own relatively small investments, but that was considered less than respectable - the digital version, perhaps, of panhandling.

My, how much has changed since 2009. Now crowdsourcing is not only the hip way to raise money, but is pretty much expected to be part of the overall fundraising process. And one person who has helped in that shift is Jeff Kelisky, CEO of Seedrs, a crowdsourcing platform where new businesses seek and raise cash. Karen Webster from PYMNTS recently caught up with him to review the past decade of innovation - and to look into where investing and FinTech are headed in the new decade that's about to start.
Read more at PYMNTS.COM


Green Dot, Walmart renew prepaid card deal, launch fintech accelerator
  • Green Dot is renewing a prepaid card partnership with Walmart through Jan. 1, 2027, the companies announced Tuesday.
  • About 35% of Green Dot's second-quarter revenue came from sales at Walmart's stores, according to an August securities filing. Shareholders typically watch negotiations between the companies closely.
  • The companies also announced the launch Tuesday of a fintech accelerator program, TailFin Labs, to be majority-owned by Walmart.
With the deal, Green Dot remains the issuing bank and program manager of the reloadable MoneyCard, the U.S.'s largest prepaid account program, according to the companies' press release.

Financial terms of the deal were not disclosed Tuesday, but Green Dot executives can expect to face questions about it Nov. 7, when the prepaid card provider announces its third-quarter earnings.

Green Dot's CEO, Steve Streit, in a discussion Tuesday at the Money20/20 conference in Las Vegas, emphasized his loyalty to the company's partners.
Read more at BANKING DIVE



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