NEWS: Trump has killed the CFPB

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

March 21, 2019

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Chart of the Day: Donald Trump Has Killed the CFPB

The Consumer Finance Protection Bureau was set up after the Great Recession to protect consumer finances. Republicans hated it from the start, and you can hardly blame them. After all, there are two sides to everything, and if you're protecting consumer finances you must be protecting them from something. And that something is big banks and other financial corporations. Republicans don't like it when their CEO pals are told that they have to treat their customers fairly or risk big fines.

Still, there was nothing Republicans could do about it once the CFPB was set up. Its funding comes from the Fed and its director is independent of Congress. But then Donald Trump was elected president. He couldn't dismantle the CFPB or cut its funding, but he could install a new director who would simply decide not to bother opening any cases. So that's what he did:

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Payday loans: How it works in different countries

Payday loans are the most popular short term loans throughout the world, but every country has its own functioning of these loans which is why it is crucial to understand how payday loans work in different countries. These loans are short cash term advances that are usually unsecured and given out on the basis of assessment of a user's transaction history. The working of this type of loan is inevitably different throughout the world and here is an overview of the same.

United Kingdom
The point of origin of payday loans was initially in the US, however, they have grown more rapidly in this country. According to a recent study, it was found out that around 40% of the youth take advantage of these borrowings. If the current scenario is to be taken into account, the payday industry of this country is worth billions.

The UK payday credit industry is directed by the FCA (Financial Conduct Authority). The FCA assumed control over the administrative job from the FSA in 2014 to apply more control regulations.

Sweden
Payday loans are short term borrowings that vary between SEK 3,000 and SEK 10,000 mostly, however, you are given a 30-day window to pay back the loan. It is a short period solution but can prove to be quite expensive as the interest rate is usually found to be substantially higher than what other types of loans incorporate.

There are various reputed platforms like https://www.lånapengar.com/snabblån that let you compare multiple payday loans available in Sweden as so to pick the one that aligns the most with your set of requirements. Read more at AUGUSTA FREE PRESS

Small-Dollar Loans Benefit Communities.

Small-dollar lenders provide essential financial services to many individuals in underserved communities throughout the nation. By providing loans to those who cannot otherwise access traditional forms of credit, small-dollar lenders help communities and small businesses thrive and allow money to be reinvested in local businesses and neighborhoods where it is needed most.

Small-Dollar Loans Offer a Valuable Service; Banks and Credit Unions are No Substitute. Banks, credit unions, and credit card companies are generally unwilling to offer small-dollar loans to individuals because they do not view the product as profitable. To date, almost all attempts to create small-dollar loan alternatives have either been charity-based, required government subsidies, were unavailable to the general public, or were unprofitable or unsustainable.

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Retail apocalypse: 4,810 closures in first three months of 2019

So far 2019 hasn't been particularly good for the brick-and-mortar retail Opens a New Window. industry.

Following a brutal bloodbath last week Opens a New Window. , where popular retailers Gap, JCPenney, Victoria's Secret and Foot Locker Opens a New Window. all announced store closures of more than 465 locations in less than 48 hours, the apocalypse has far from simmered this week.

Since Monday, more retailers joined the list adding an additional 1,000 store closures, bringing the total tally to more than 4,810 so far this year, according to Coresight Research.

Discount chain Dollar Tree Opens a New Window. announced this week it plans to shutter up to 390 of its Family Dollar stores nationwide this year and convert about 200 more into Dollar Tree locations instead.

Abercrombie & Fitch Opens a New Window. later followed, revealing it plans to close up to 40 locations over the next year.

Then bankrupt clothing retailer Charlotte Russe confirmed it will close all of 416 stores and begin liquidation sales. Read more at FOX BUSINESS

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US households see biggest decline in net worth since the financial crisis

Americans' net worth fell at the highest level since the financial crisis in the fourth quarter of 2018 as sliding stock market prices ate into the household balance sheet.

Net worth dropped to $104.3 trillion as the year came to an end, a decrease of $3.73 trillion from the third quarter, according to figures released Thursday by the Federal Reserve. The fall amounted to a drop of 3.4 percent.

Much of the slide came due to Wall Street's woes, as the stock market suffered a precipitous decline that started in October and briefly reached bear market status. Equities skidded as investors began to fear that the Fed would keep raising interest rates even as economic conditions began to deteriorate.

By the time the market drop ended in late December, households saw $4.6 trillion worth of equity value deteriorate. The decline was offset somewhat by a $300 billion increase in real estate value. The overall move was the second-highest quarterly dollar drop since the Fed began tracking the statistic. Read more at CNBC

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MICHIGAN attorney general joins coalition to protect consumers from payday lender abuse

LANSING, Mich. (WXyZ) - Michigan Attorney General Dana Nessel Wednesday joined a multi-state coalition to protect consumers from payday lender abuse.

Nessel urged the Federal Consumer Protection Financial Bureau to take immediate action to address the ways short-term payday and title lending model leads to abuses in payday lending.

"My office has a responsibility to act when Michiganders are at risk of deceitful and abusive business practices," Nessel said. "By delaying these protections, more consumers risk becoming victims of predatory and misleading tactics by payday lenders, and that's more than enough reason for Michigan to step in and speak out."

CFPB announced a new rule in 2017 that would help protect borrowers and ensure they would have the ability to repay loans while also prohibiting lenders from using abusive tactics when seeking repayment. The rule went into effect in early 2018, but compliance was delayed until Aug. 19, 2019 to give lenders time to develop systems and policies. CFPB has now proposed to further delay compliance until Nov. 19, 2020 - more than three years after the regulation was finalized. The CFPB is also reviewing another rule that would altogether rescind this one.
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Data provider, MicroBilt, improves decisioning tool for growing alternative credit marketplace

KENNESAW, Ga., Feb. 8, 2019 /PRNewswire/ -- Alternative credit data pioneer MicroBilt recently announced the launch of iPredict Advantage, the next iteration of its powerful automated decisioning tool for lenders.

Built on an improved algorithm that takes in traditional and proprietary alternative credit data, iPredict Advantage boasts +10% added predictive value over the original iPredict which was launched in 2000. Unlike conventional credit decisioning tools, iPredict Advantage also includes bankruptcies, liens, judgments and evictions data in its consumer assessment.

"By combining traditional credit reporting with our PRBC Alternative Credit database and civil records data, we're able to provide lenders with a more comprehensive picture of a consumer's creditworthiness," said Sean Albert, SVP/CMO at MicroBilt. "This delivers a win-win benefit. For the business, it often means opening the doors to customers they might have otherwise rejected due to thin traditional credit files. For consumers, it means access to the credit market where they didn't have it before."

iPredict Advantage factors in over 165 data attributes in calculating the potential risk of a loan applicant and returns a risk score, loan history, credit inquiry attributes, and consumer stability indicators. It is particularly relevant to the sub-prime lending space which has grown significantly in recent years and is increasingly vital to businesses and consumers.
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Federal Reserve signals no interest rate hikes in 2019

The Federal Reserve voted to keep the benchmark federal funds rate steady during its second policy meeting of the year on Wednesday, also signaling that there will be no hikes for the remainder of 2019.

In a move that was widely expected, policymakers at the U.S. central bank unanimously agreed to leave interest rates unchanged at a target range of 2.25 percent to 2.5 percent in light of global economic and financial developments, as well as muted inflation.

"The Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes," the Fed said in a statement released following the two-day meeting.

It marks a stark turn from its December meeting three months ago, when Fed Chair Jerome Powell suggested there could be as many as two interest rate hikes this year and one in 2020. Now, policymakers forecast one rate hike in 2020 and none in 2021.

In recent months, Powell and the Fed have appeared to take a more dovish approach to interest rates amid concerns about slowing global growth -- a result of a more than year-long trade war between the U.S. and China and uncertainties about Brexit.
Read more at FOX BUSINESS

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Three Ways ACH Payment Processing Helps Lenders

As a lender, you want to provide your customers with reliable, secure, and rapid service that speaks their language. It's critical to select a payment processing partner that not only understands the needs of your lending business but one that intimately knows the challenges and provides the tools to effectively solve these problems and reach your goals.Through accelerated funding, lower processing costs, and more effective risk management, ACH payment processing enables lenders to scale more quickly and streamline business operations to maintain and build a trusted client base.

ACH payment processing with Payliance provides the ability to focus less on technological challenges and more on how to grow your business to help borrowers achieve their financial goals.

Accelerate Loan Funding
Perhaps the biggest pain point that borrowers face is the lag time to electronically receive the funds they borrowed. ACH provides the option for a lender to fund loans electronically in the same banking day. Borrowers can have funds in their bank account by 5 pm the same day.
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The Great Debate: Are Cashless Stores Discriminating?

As more and more Americans demand convenience and speed in their everyday lives, it makes sense that debit and credit cards - which have boosted these features for many consumers and businesses - have become hugely important to commerce in the U.S.

But some lawmakers have suggested that retailers like Amazon that have been quick to adopt contactless payment options - requiring that customers use only mobile apps and credit or debit cards to shop their businesses - may inadvertently disenfranchise low-income families. The debate - which pits retail innovators such as Amazon against lawmakers looking to maintain access to goods and services for all members of society - has been picking up steam.

Philadelphia this month becoming the first major city to ban cashless stores and, just this week, New Jersey joined the fray when Governor Phil Murphy signed a bill banning cashless retail stores and restaurants across the entire state.

Experts believe the trend could gain momentum across the U.S. as council members in New York and elsewhere lull similar measures - expressing concerns over the future of millions of Americans who don't have banking or mobile access. Read more at FOOTWEARNEWS

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How to prevent spear phishing attacks: 8 tips for your business

Spear phishing attacks continue to increase in popularity among cybercriminals, and businesses must take steps to protect against them or risk seeing sensitive information stolen, according to a Tuesday report from Barracuda.

Spear phishing attacks are particularly dangerous because they are designed to get around traditional email security like spam filters, the report found. They typically do not include malicious links or attachments, but instead use spoofing techniques and zero-day links that, combined with social engineering tactics, are unlikely to be blocked.

Of the 360,000 spear phishing email attacks examined by the report over a three-month period, the most common type of attack by far was brand impersonation (83%). Brand impersonation attacks attempt to impersonate a well-known company to gain a target's credentials and take over their account. These attacks have also been used to steal personally identifiable information like credit card and Social Security numbers. Microsoft and Apple are the most commonly impersonated brands used in these attacks, the report found.

Business email compromise (BEC)-also known as CEO fraud-is the second most common spear phishing attack type (11%), the report found. Cybercriminals use these attacks to imperseonate an executive and request a wire transfer or personally identifiable information from finance department employees or others. While BEC attacks make up a relatively small percentage of the total, they have caused more than $12.5 billion in losses since 2013, according to FBI statistics cited in the report. Read more at TECH REPUBLIC

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Small business sentiment rebounds after five months of declines

Small-business Opens a New Window. owners' confidence in the U.S. economy Opens a New Window. improved slightly in February, breaking five consecutive months of declines and rebounding from the partial government shutdown, according to the National Federation of Independent Business.

The small-business lobby said its optimism index rose to 101.7 last month, from 101.2 in January, but fell short of economists' expected 103 reading, according to a Wall Street Journal survey.

The NFIB survey is a monthly snapshot of small businesses in the U.S., which account for about half of private-sector jobs.

Economists look to the report for a read on domestic demand and to extrapolate hiring and wage trends in the broader economy.

"Small business owners are thankful to have the government shutdown in the rear-view mirror but need more certainty about the future," NFIB Chief Executive Juanita D. Duggan said in a statement. Read more at FOX BUSINESS

Alternative Credit Reporting

Lenders continue to lower FICO requirements for new homebuyers

The nation's major banks are continuing to walk away from FHA-backed mortgages, according to the Urban Institute's Housing Finance Policy Center February Chartbook.

And not only are nonbanks stepping in to take over the space, overall, they are continuing to ease access to credit.

"Bank and nonbank FICO scores reveal that nonbanks brought the Agency median FICO down four points to 726 between November 2018 and January 2019," the Urban Institute said in an email.

The average agency FICO score for banks is high at 745, compared to 713 at nonbank lending institutions. Both show FICO requirements on the way down, but it's more pronounced at the nonbanks. Why?

Nonbanks are also more accommodating for increasing debt-to-income ratios, even as mortgage rates overall inch upward, driving up monthly mortgage payments for borrowers.

"The median LTV for nonbank and bank originations are comparable, while the median DTIs for nonbank loans are higher," the report states. Read more at HOUSING WIRE

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