Payday Loan Reform in the News – February 1, 2019



Columbia prof’s ties to payday lenders cloud CFPB rollback
January 31, New York Post

Kevin Dugan

Since at least 2017, US regulators have relied on a single, “objective” academic study to shape restrictions on short-term, high-interest loans, which critics claim are prone to victimize cash-strapped borrowers. But the Ivy League professor behind that study — which scrutinized in particular the causes behind delinquency rates in various states — has enjoyed cozy ties to a payday-lending executive and advised other academics on how to sway policymakers, The Post has learned. Ronald Mann, who teaches at Columbia Law School, has done previously undisclosed work at the behest of Hilary Miller, the president of the Short-Term Loan Bar Association, an industry group of payday lawyers, according to e-mails obtained by The Post.

Top Stories

As Warren Eyes White House, Big Banks Brace for Browbeating
January 28, Wall Street Journal

Andrew Ackerman and Reid J. Epstein

Elizabeth Warren’s presidential bid will be driven by her populist assault on big banks that helped her rise to prominence during the financial crisis and in her successful 2012 Massachusetts Senate race.

Maxine Waters readies for combat
January 25, Washington Examiner

Colin Wilhelm

Maxine Waters, the new Chairwoman of the House Financial Service Committee, is one of President Trump’s most vocal critics. She is set to shift the committee’s focus from arcane banking and capital markets issues to some of the hottest political controversies of the day, including honing in on investigations of Acting White House Chief of Staff Mick Mulvaney for his tenure at the Consumer Financial Protection Bureau. More widely, Chairwoman Waters is also preparing to probe Trump’s financial dealings using the panel’s subpoena power.

Native Groups Say Lender Ruling Cramps Tribal Businesses
January 25, Law360

Andrew Westney

Three national Native American groups urged the Fourth Circuit on Thursday to overturn a Virginia district court’s refusal to toss a proposed class action against two lending companies, saying the ruling that they weren’t entitled to share in a Michigan tribe’s immunity to suit intrudes on tribal sovereignty and hamstrings tribal economic development. We will be following this story line closely

The Trump Appointee Delivering a Jackpot for Hedge Funds
January 28, The American Prospect

David Dayen

Joseph Otting, as an acting overseer of Fannie Mae and Freddie Mac, sets in motion a plan to overhaul the housing finance system, which would enrich wealthy investors.

Think twice, shop around, consider alternatives before you resort to a payday loan
January 28, Komo News

Connie Thompson

Payday loans seem simple enough. Borrow the cash you need, and pay it back on your next payday. But there’s a hefty interest charge and the money comes due quickly. If you’re a furloughed federal worker — or anyone else who needs emergency money — be extremely careful about turning to payday loans as a solution.

FDIC’s small-dollar riddle: How to entice banks, yet stay tough
January 31, American Banker

Rachel Witkowski

Scores of consumer groups, state authorities and others are urging the Federal Deposit Insurance Corp. to maintain controls on small-dollar loans if the agency proceeds with a plan to enable banks to compete with payday lenders.

CFPB News: Constitutionality, Military Lending, Enforcement and More
January 30, Manatt

Richard Gottlieb and Charles E. Washburn, Jr.

A brief overview of some important issues related to the CFPB including: the cases challenging the CFPB’s constitutionality, MLA exams, other enforcement actions.

Podcast: Why the CFPB is watering down its payday lending rule
January 29, American Banker

Penny Crosman

The Consumer Financial Protection Bureau dropped a provision that would have required payday lenders to assess potential borrowers’ ability to repay. American Banker reporter Kate Berry explains why.

CFPB Settlements

Man pays $1 fine for selling deceptive, high-interest loans to veterans
January 28,

Kaylah Jackson

One dollar. That’s how much Mark Corbett will pay the Consumer Finance Protection Bureau (CFPB) for targeting veterans in his predatory lending practices. According to the consent order, Corbett worked as a broker for Doe Companies where he falsely marketed credit offers as pension or disability payments. Through these contracts, veterans would receive lump-sum payments and in exchange would repay investors using their monthly pension or disability payments over the course of five to ten years.

More Coverage:
$1 fine from CFPB for scammer of veterans’ pensions | BenefitsPRO
CFPB Announces $1 Settlement With Military Pension-Advance Broker | JD Supra

CFPB fines Enova $3.2M for unauthorized account debits
January 25, American Banker

Kate Berry

Enova International, a large online payday and installment lender, has agreed to pay $3.2 million to settle allegations by the Consumer Financial Protection Bureau that it extracted funds from consumers’ bank accounts without their authorization.

More Coverage:
CFPB Announces $3.2 Million Settlement with Online Payday Lender | JD Supra
CFPB Settles With Online Lender | ACA International

News in the States

Go into debt to pay rent? California startup finances your rent with high-interest loans
January 29, San Jose Mercury News (CA)

Marisa Kendall

As soaring prices leave many Bay Area residents struggling to pay rent, one startup is offering an innovative but controversial option for tenants in a bind — finance your rent with a high-interest loan.

With New Limits On Interest, Colorado’s Payday Lenders Could Soon Close
January 31, Colorado Public Radio (CO)

Andrew Villegas

On Friday, Colorado will severely restrict how much interest payday loan businesses can charge consumers — which could force all of them to close. Voters made the change last November when they approved Proposition 111 by an overwhelming margin.

Will Indiana payday loan rates remain above state’s ‘loan shark’ threshold?
January 31, IndyStar (IN)

Tim Evans

Community-based advocates In Indiana are fighting powerful lobbyists for out-of-state payday lenders on legislation proposing an Annual Percentage Rate cap of 36 percent on the two-week loans of up to $605. Excluded from the state’s loan-sharking law that caps APRs at 72 percent, payday lenders in Indiana can now legally charge up to the equivalent of a 391 APR.

More Coverage:
Indiana Community, Faith, and Military Groups Call For Rate Cap On Payday Loans| WBIW

This Raleigh native’s startup is taking on payday lenders — and helps manage your money, too
January 30, Raleigh News & Observer (NC)

Zachary Eanes

Even is an app that connects with your bank account to track spending and give you a real-time ability to see how much money you can spend versus your expenses, like a car payment or an electricity bill. When used in arrangement with a business, the app can also allow employees to take a portion of their paycheck early — which allows workers to avoid going to payday lenders.

Court Certifies Class of Consumers in Payday Lending Suit
January 30, Manatt (MN)

Brad W. Seiling

A federal court in Minnesota has certified a class of consumers suing a lead generator and related payday lenders for violations of state law, rejecting the defendants’ concerns that the damages calculations would require individual inquiries.


When loans are not worth the risk
January 28, Daily Press

Editorial Board

Virginia Attorney General Mark Herring issued a warning last Tuesday to federal workers and contractors who had gone without pay for more than a month: If you’re strapped for cash, be aware of scams. But the General Assembly has done little to reign in an industry that has come up with an infinite number of ways to separate the most vulnerable from their hard-earned money. Legislators must strongly consider Del. Yancey’s bill. And the voices of industry lobbyists must not outweigh that of a wide array of advocacy groups that are calling for more consumer protections.

Letter: Push to change Iowa’s payday lending regs
January 25, Globe Gazette

Joe Bolkcom (LTE)

A letter to the editor asking for the Iowa Legislature to cap the interest rate for payday loans to 36% APR and encourage traditional banks to loan to consumers.