Highlight
One study, two vastly different visions for CFPB payday rules
January 23, American Banker
Kate Berry
When Columbia University law professor Ronald Mann undertook a survey of 1,000 payday loan customers to determine if they could estimate how long it would take to repay a loan, little did he know that the resulting study would become a lightning rod in the drafting of the first federal regulation for small-dollar lenders.
The Consumer Financial Protection Bureau’s prior leadership cited Mann’s research over 30 times in an existing rule meant to impose strict underwriting requirements for payday loans.
“The funding came from an industry trade association, which hoped that the study would produce favorable findings, but the arrangement, as always, was that I could publish whatever I wanted whether the results struck them as good or bad,” Mann said. “There was not really any relationship with the payday lender.”
More Coverage:
Changes On Deck For The CFPB’s Payday Lending Rule | PYMNTS
Top Stories
Predatory loans offer tempting stopgap for federal workers missing second paycheck
January 25, NBC
Prior to the shutdown, a 2018 Federal Reserve report found that 40 percent of Americans could not afford an unexpected expense of $400. Without an agreement between Congress and the White House, [payday] loans could become more appealing as the shutdown continues to delay payments to federal workers.
“What it looks like on the surface is that the government is shutdown and these people will get back pay, but that’s not the case if you had to go out and borrow money and pay a premium for it,” he said. “You’re worse off than you were, and every community in this country is going to have its own saga of woe that it went through when this is over.”
More Coverage:
Emergency plan for federal workers: Credit cards, pawnshops, second jobs | Politico
Suze Orman: Don’t take out this kind of loan, even in an emergency like the shutdown | CNBC
Shutdown standoff gets nastier | Politico
Pawnshops and payday lenders surge on US government shutdown | Financial Times
DNC List: 110 Trump ‘failures’ at 2-year mark, ‘only getting worse’ | Washington Examiner
Lawmaker Warns Shutdown Will Stop SEC From Policing Bad Actors | Government Executive
New Year, New CFPB? Kraninger Memo Sparks Debate
January 18, JD Supra
Richard Gottlieb and Charles Washburn, Jr.
CFPB Director Kathy Kraninger urged Bureau employees to “vigorously enforce the law” but refrain from presuming guilt about industry participants. And the new director is already facing a firestorm in connection with CFPB supervision of military lending and debt collection, while the Bureau continues to resolve holdover enforcement matters.
More Coverage:
Skadden’s 2019 Insights: Despite Leadership Changes, No Pivot in Priorities Expected for Consumer Financial Services Enforcement | JD SUPRA
State AGs submit comments to FDIC on small-dollar lending
January 24, National Law Review
Alan S. Kaplinsky
A group of 13 state attorneys general and the District of Columbia AG have sent a letter to the FDIC commenting on the agency’s request for information on small-dollar lending. In their letter, the AGs assert that “payday lenders are once again returning to ‘rent-a-bank’ schemes in order to evade state law.” They recommend that “the FDIC discourage banks from entering into these relationships in any guidance it issues on small-dollar lending.”
California payday lender refunds $800,000 to settle predatory lending allegations
January 22, Los Angeles Times
Jim Puzzanghera
A California payday lender is refunding about $800,000 to consumers to settle allegations that it steered borrowers into high-interest loans and engaged in other illegal practices, state officials said Tuesday. California Check Cashing Stores also agreed to pay $105,000 in penalties and other costs in a consent order with the state’s Department of Business Oversight, which has been cracking down on payday and other high-cost consumer loans that critics allege are predatory. The company did not admit guilt in the consent order.
More Coverage:
Calif. regulator settles with lender accused of evading rate cap | American Banker
Who’s watching payday lenders? Feds ask for specific authority to protect troops’ finances
January 28, Military Times
Karen Jowers
In a bogus move, CFPB Director Kathy Kraninger asked Congress to give the Bureau specific authority to conduct examinations of payday lenders and others under their jurisdiction to ensure that they’re complying with the Military Lending Act (MLA). This is posturing is being interpreted as a way to question the legitimacy of the law.
More Coverage:
CFPB seeks clear authority to supervise Military Lending Act compliance | Financial Regulation News
CFPB Director Seeks Authority over Military Lending Act Compliance | ACA International
AG Josh Shapiro’s legal fight vs Navient, for-profit colleges heats up in Pa. | Debt Valley
January 18, Philadelphia Inquirer
Erin Arvedlund and Bob Fernandez
Under Trump appointee Mick Mulvaney, the nation’s federal consumer protection agency has backed off its regulatory role. In its place have stepped some state attorneys general, including Pennsylvania’s Josh Shapiro.
His lawsuit against Navient is one of about a half dozen around the country against the student-loan servicer
Advance Broker To Pay $1 In CFPB Military Pension Deal
January 23, Law360
Jon Hill
A man accused of misleading veterans in his brokering of high-cost loans pitched as pension sales has been slapped with a $1 fine as part of a settlement with the Consumer Financial Protection Bureau
Interesting Stories
Wilbur Ross doesn’t know a thing about the financial lives of Americans
January 24, Washington Post
Helaine Olen (Op-Ed)
Ross was asked in an interview with the network about the plight of the 800,000 federal workers who are now facing a month without receiving a paycheck. Ross (the sort of guy who pretends to be a billionaire when, in fact, he’s worth a mere $700 million) proclaimed it was “disappointing” air traffic controllers have been calling in sick, and that he could not “understand why” federal workers were turning up at food banks and homeless shelters.