Payday Loan Reform in the News – January 18, 2019



CFPB to scrap key underwriting portion of payday rule
January 14, American Banker

Kate Berry

The Consumer Financial Protection Bureau is expected to eliminate underwriting requirements in a highly anticipated revamp of its payday lending rule, according to sources familiar with the bureau’s proposal. But sources familiar with the agency’s thinking say the CFPB — now led by Trump appointee Kathy Kraninger — has concluded the best approach is to remove those provisions altogether. Under the current rule, which has not yet gone fully into effect, lenders must verify a borrower’s income as well as debts and other spending, to assess one’s ability to repay credit while meeting living expenses.

More Coverage:
CFPB 2018 Year in Review, and What to Expect in 2019 | JD SUPRA

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Ocasio-Cortez Is on the Financial Services Committee, and Banks Are Afraid
January 17, TruthOut

Shilpa Jindia
Rep. Alexandria Ocasio-Cortez’s assignment to the powerful House Financial Services Committee has triggered a fresh round of handwringing from banks that are afraid of her — and they should be. Ocasio-Cortez is already channeling her energy into big ideas for the financial sector. She already announced she wants to focus on two major proposals — public banking and postal banking. Ocasio-Cortez has also said that she supports the restoration of the Glass-Steagall Act and wants to break up the banks — which are booming at near-record levels 10 years after the financial crisis.

More Coverage:
Ocasio-Cortez ready to start ‘digging into’ banks as member of powerful committee | CNBC
Alexandria Ocasio-Cortez vs. Wall Street: Lawmaker wins spot on powerful House committee | The Washington Post

CFPB’s Kraninger asks for ‘clear authority’ over military lending exams
January 17, American Banker

Kate Berry

Kathy Kraninger, the director of the Consumer Financial Protection Bureau on Thursday asked Congress to give it the “clear authority” to conduct supervisory exams of banks and financial firms for compliance with the Military Lending Act. Last year,Mick Mulvaney, at the time the acting director of the CFPB, claimed that further legislation was needed for the CFPB to examine financial firms for MLA compliance. Defense officials said they were not consulted on the bureau’s decision, as required by law, and remained committed to the MLA, which imposes a 36% annual percentage interest rate cap for active-duty military members and their dependents.

More Coverage:
CFPB Asks Congress For Authority To Oversee Military Lending Act Compliance | PYMTNS.COM

Big banks offer to help federal workers on a “case-by-case basis”
January 10, Vox

Emily Stewart

There is worry that because of Federal government shutdown some federal employees might be turning to predatory payday lenders to make ends meet as access to other types of less risky lending remains difficult.

More Coverage:
Government Workers Idled by Shutdown Turn to Emergency Loans | Wall Street Journal
One potential winner from the government shutdown — payday lenders | MarketWatch
The first $0 paychecks emerge, along with outcry to end the government shutdown | Ragan’s PR Daily
The best and worst ways to borrow money during the federal shutdown | CNBC

How Cities Make Money by Fining the Poor
January 8, The New York Times

Matthew Shaer

“No government agency comprehensively tracks the extent of criminal-justice debt owed by poor defendants, but experts estimate that those fines and fees total tens of billions of dollars. That number is likely to grow in coming years, and significantly: National Public Radio, in a survey conducted with the Brennan Center for Justice and the National Center for State Courts, found that 48 states increased their civil and criminal court fees from 2010 to 2014. And because wealthy and middle-class Americans can typically afford either the initial fee or the services of an attorney, it will be the poor who shoulder the bulk of the burden.”

USAA has to meet a higher standard
January 9, San Antonio Express-News

Editorial Board

USAA Federal Savings Bank, a subsidiary, must now pay a $3.5 million civil penalty to the Consumer Financial Protection Bureau, along with $12 million in restitution to some 66,000 customers. This is what the CFPB found: USAA Federal Savings Bank failed to follow through on stop-payment requests for electronic transfers. Some of these requests involved payments to payday lenders.

More Coverage:
USAA customers to receive more than $12 million for alleged violations in handling accounts, errors | Military Times
USAA to pay $12M to members after failing to stop unauthorized electronic payments | Stars and Stripes
More Than 66,000 USAA Members Will Get $181 From The Bank Over Alleged Account Errors | Task and Purpose
USAA mishandled payday disputes, opened unauthorized accounts: CFPB | American Banker
CFPB Enters Into $15.5 Million Consent Order with Bank Over Stop Payment and Error Resolution Practices | JD SUPRA
USAA Bank must pay $15.5M over banking-rule violations | San Antonio-Express News

COMMENTARY: California Congresswoman Maxine Waters Makes History
January 12, Black Press USA

Charlene Crowell

Congresswoman Maxine Waters is now the first Black and the first woman to chair the powerful House Financial Services Committee. For all of Black America, as well as consumer advocates and others who believe financial fairness should be the nation’s watchword, an expectation of a new era of accountability, access and transparency is hoped to soon unfold.
“She is a tough and savvy defender of consumer protection and holds the feet of the banks and the Trump administration regulators to the fire,” said Mike Calhoun, president of the Center for Responsible Lending in a recent interview.

More Coverage:
Maxine Waters’s latest task in the House: protecting you and your money | Vox
Congresswoman Waters Becomes First Woman and African American to Chair Financial Services Committee | Los Angeles Sentinel
Waters is first woman and first African American to chair House Financial Services Committee | New Pittsburgh Courier
Waters & Kraninger Head for Early Showdown | Credit Union Times

These are worthwhile consumer protections
January 10, San Antonio Express-News

Editorial Board

Domestic violence and debt are often intertwined. Abusers will take out credit in a victim’s name, either through force or fraud. And the debt and bad credit that follow can be obstacles for domestic violence survivors as they seek to re-establish their lives. Whether the coercion is done through intimidation and bullying, or secretly filling out a credit card in a partner’s name, the story often ends with ruined credit for abuse survivors and a boatload of debt.
Senate Bill 269 from state Sen. Judith Zaffirini, D-Laredo, would address some of this dynamic by adding “effective consent” to the existing statute.

11 policymakers to watch in 2019
January 8, American Banker

Neil Haggerty, Joe Adler and Victoria Finkle

These heads of regulatory agencies and key members of Congress will determine the course of banking rules in the new year. Here are 11 that banks should keep their eye on: Kathy Kraninger, Rep. Maxine Waters, Sen. Mike Crapo, Joseph Otting, Jelena McWilliams, Randal Quarles, Mark Calabria, Sen. Sherrod Brown, Rep. Patrick McHenry, Sen. Elizabeth Warren and the New House Democrats.

More Coverage:
Auto Finance News’ 4 People to Watch in 2019 | AUTO FINANCE NEWS

Elizabeth Warren didn’t miss her presidential moment. Win or lose, 2020 is her time.
January 7, USA TODAY

Jill Lawrence

America needs a counterweight to Trump values and a playing field tilting once again in favor of the rich and powerful. Warren is the perfect foil. She helped start the CFPB that took on unethical banks and payday lenders, and had recovered nearly $12 billion for consumers by the time he left office.

More Coverage:
Why Elizabeth Warren turned out to be so likable, after all | The Washington Post

Editorial: What we don’t know about finances is costing us
January 11, The Daily Herald

Editorial Board

A 90-second video on payday loans, for example, explains how the short-term loans work and the types of fees to expect, but also warns of the additional costs that can mount when payments are missed or another loan is taken out to cover the earlier one.

LendUp spins off credit card business, names new CEO
January 10, American Banker

Laura Aliex

The subprime fintech lender LendUp is spinning its credit card business off into a new standalone company.

This year’s fintech predictions, from the company powering most of the industry
January 4, CNBC

Kate Rooney

This could be a banner year for fintech, according to one of the industry’s most dialed-in CEOs. “Growth will restart for betting, gambling, and payday lending as regulations solidify.”

The fastest way to address income inequality? Implement a real time payment system
January 2, Brookings Institute

Aaron Klein

In the aggregate, high cost cashiers, ‘pay day’ lenders and bank overdraft fees totaled around $34 billion of revenue in 2015 (collection fees would add to this). A conservative guess of 20 percent would result in about $7 billion in savings a year to lower income families directly from real time payments. This comes at no cost or savings to the wealthier half of Americans who generally do not use these services.The rest of the world is moving on. Nations across the globe (UK, Mexico, Poland, South Africa) have implemented real time payments, mostly a decade or more ago.