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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
NEWS: October 12, 2016 NEWS is brought to you by AFSPA Endorsed SUPPLIERS |
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Consumer Financial Protection Bureau structure ruled unconstitutional
A federal appeals court Tuesday declared the structure of the federal Consumer Financial Protection Bureau unconstitutional, a decision that marks a major setback for one of the signature safeguards created after the U.S. financial crisis.
The agency's leadership - a single director loosely accountable to the president and only removable for good cause - violates constitutional and historical precedents applied to federal regulators, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled.
The decision overturned a $109 million CFPB enforcement action against PHH, a mortgage lender that filed the legal challenge. The court also ruled the consumer agency made errors in a 2015 proceeding that concluded PHH illegally referred consumers to mortgage insurers in exchange for kickbacks.
However, the judges denied the mortgage firm's call to shut down the CFPB. Instead, the ruling directed an amendment of the statute that created the agency.
The change would give the president power to remove the CFPB's lone director at will, as well as exert direct supervision and direction over a watchdog that has had unprecedented authority over home finance, student loans, credit cards and banking practices.
Enforcement actions ordered under that authority, carried out by CFPB Director Richard Cordray, have drawn praise from consumers and advocates. But congressional Republicans have criticized the regulator over what they contend was excessive power granted when the CFPB was created in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Tuesday's court ruling cited "consistent historical practice" under which independent federal agencies such as the Securities and Exchange Commission have been headed by multiple commissioners or board members that serve as internal checks on authority.
"In light of the threat to individual liberty posed by a single-Director independent agency ... we therefore hold that the CFPB is unconstitutionally structured, Judge Brett Kavanaugh wrote in the majority opinion.
The CFPB disagreed with the decision, and left open the possibility of seeking a review by the U.S. Supreme Court.
"The Bureau believes that Congress's decision to make the Director removable only for cause is consistent with Supreme Court precedent, and the Bureau is considering options for seeking further review of the Court's decision," the regulator said in a written statement.
Noting that the court allowed the agency to continue its oversight functions, the CFPB said the other orders in the decision "will not dampen our efforts or affect our focus on the mission of the agency."
Hailing the court decision, PHH said in a statement "we are hopeful that the Court's opinion will provide greater certainty to the entire mortgage industry regarding the industry's reliance on long-standing regulation as to how to conduct business."
Regarding the decision ordering the CFPB to review the enforcement action against the mortgage company, PHH said it would "continue to present the facts and evidence to demonstrate that we complied with (the Real Estate Settlement Procedures Act) and other laws applicable to our former mortgage reinsurance activities."
Read the article at USA TODAY
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National Association of Federal Credit Unions statement on Consumer Financial Protection Bureau's payday lending proposal
WASHINGTON, DC (October 7, 2016) - National Association of Federal Credit Unions (NAFCU) President and CEO Dan Berger issued the following statement regarding the Consumer Financial Protection Bureau's payday lending proposal in conjunction with the submission of its comment letter to the bureau.
"The CFPB's payday lending proposal would severely hamper credit unions' ability to continue offering responsible products such as PAL loans and must be withdrawn," said Berger. "NAFCU supports unregulated entities being regulated in this area, but credit unions' prudential regulator, the National Credit Union Administration (NCUA), already established short-term, small dollar loan regulations."
"NAFCU joins with the majority of the members of Congress and reemphasizes its call for the bureau to use its Dodd-Frank authority to entirely exempt credit unions from this rule. Consumers need more of the responsible loans that credit unions provide; unfortunately, without a credit union exemption, this rule will likely deprive members who need these loans the most."
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2017 CFSA Conference & Expo
Registration is NOW OPEN!
February 28 - March 2, 2017
La Quinta Resort & Club
La Quinta, CA 92253
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Meeting the Challenge
With significant changes coming in the small dollar lending industry, it's more important than ever to keep up with marketplace developments. CFSA is committed to advancing our industry towards responsible and innovative credit options for consumers. The 2017 CFSA Conference & Expo is the premiere event in the small dollar lending industry!
Registration for this important Conference is now open. Discover the innovation that's happening today and take part in the industry's only event that's advancing critical business strategies and solutions for tomorrow's consumer credit marketplace.
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Payday loan outlets have their defenders
LOS ANGELES - Residents of L.A's less-affluent neighborhoods may encounter fewer payday lenders in local strip malls pending the outcome of a federal rule proposed in July by the Consumer Financial Protection Bureau (CFPB).
CFPB's small business advisory review panel and loan industry officials expect the tighter operating requirements on the industry would lead to a "substantial reduction in loan volume," essentially eliminating many of the stores.
"By their own statistical evidence, they are saying around 75 percent of loan volume would be eliminated," Dennis Shaul, chief executive officer of the Community Financial Services Association of America told The Wave, quoting Clarity of Services, an industry credit bureau and research organization.
"In effect, no one who earns less than $40,000 could access a payday loan under the rule," he added.
The impact of the rule on payday loan volume and number of storefronts in L.A. is not available, but according to a 2009 City Council Housing, Community, and Economic Development Committee report on creating a banking development district program, "the city has nearly twice as many "alternative" financial service provider storefronts (check cashing outlets and payday lenders) than banks and credit unions."
If approved, the CFPB's rule would require lenders to determine whether borrowers can afford to repay their payday, vehicle title and similar installment loans. It would place restrictions on a lender's attempts to recover loans through debiting customer bank accounts.
Under the Dodd-Frank Act, "making a loan without reasonably determining that a borrower will be able to repay it would be identified as an abusive and unfair practice."
Credit unions, community banks, industry and consumer rights advocates, the clergy and customers like Evelyn, a Jefferson Park resident, have flooded the CFPB with "more than half a million comments," Bureau Chief Richard Cordray said.
Many more are expected before the comment period closed Oct. 7.
Shaul "projected more than 1 million customers will voice opposition to the proposal."
Read the entire article at WAVE NEWSPAPERS |
CFSA Projects More Than One Million Customers Voice Opposition to CFPB's Restrictive Payday Lending Rule
CFPB Must Clear Massive Backlog
Alexandria, Va., October 5, 2016 -The
Community Financial Services Association of America (CFSA) anticipates that more than one million concerned Americans will have spoken out against the CFPB's proposed short-term credit rule during the comment period that ends October 7.
In late September, Director Cordray said the CFPB had received over 500,000 comments on its rule proposal - a record-breaking number - and it appears that this number has doubled by the end. The CFPB now faces a massive backlog of public comments that must be uploaded to the Regulations.gov comment portal and reviewed before the Bureau can begin deliberations on the proposed rule.
The CFPB now faces a massive backlog in its comment portal. Presently, only 89,919 comments are publicly accessible on the Bureau's Regulations.gov comment portal. According to Director Cordray's estimates, this indicates a backlog of at least 410,000 comments that the CFPB must account for. Using CFSA's projection of at least one million customers having voiced opposition to the rule, the backlog would be more than 910,000.
Once the CFPB addresses this comment backlog, it is also required to carefully review all comments prior to any further deliberations on the proposed rule. The Bureau has said it will do this, according to a statement that notes it will "carefully consider all comments it receives as it moves towards crafting a final rule."
In an effort to monitor the CFPB's progress in addressing the backlog and examine the overwhelming number of customer comments opposing the CFPB's proposed rule, CFSA has launched CFPBCommentWatch.com. This website will serve as a tool for stakeholders and the media to easily monitor the CFPB's progress in clearing the backlog of public comments and uploading all comments for public viewing, as well as to ensure that the Bureau listens to the outpouring of customer voices on this rule.
This update is an example of the type of information CFSA members receive, which we hope you will find useful.
HAVE QUESTIONS?
Should you have any questions about the content of this memo, please
contact CFSA Chief Operations Officer Charles Halloran at charles@cfsaa.com
or
888.572.9329
The Community Financial Services Association of America is the only national organization dedicated solely to promoting responsible regulation of the small-dollar lending industry and consumer protections through CFSA's Best Practices. As such, we are committed to working with policymakers, consumer advocates, and CFSA member companies to ensure that small-dollar loans are a safe and viable credit option for consumers.
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A defense of payday loans: They help 'the little guy'
Columnist: Only a few consumers abuse payday loans; don't punish everyone.
Why does it seem that every time something is actually working for the little guy, some government bureaucrats try to take it away from us? It makes you wonder if they understand that there are real people out here, with real problems, who sometimes need real help to make ends meet.
I suppose I sound angry, but what I'm really feeling is worried. Every now and then I need a little extra cash to make it to my next paycheck, and now the federal government is trying to take away my best option for meeting this need.
When necessary, a payday loan is a great source of quick cash. My work as a Notary Public doesn't give me the kind of status to walk into a bank and get a short-term loan on the spot. I'm always careful about when I take out a payday loan, because I know I'll have to pay it back with a small fee. I don't do it often, but sometimes priorities make it necessary. The last time, it was two weeks to payday, and if I didn't get car repairs right away, I wouldn't have been able to get to work - meaning I wouldn't have gotten paid.
Florida law protects people like me. It makes sure we can't be tempted to get more than one payday loan at a time, because it would be next to impossible to keep up with the payments. It makes us wait at least 24 hours after repaying a loan before we can get another. We can't borrow more than $500, and the fee is never more than 10 percent of the loan amount.
But now some elites in Washington want to adopt new rules that will have the effect of shutting down my payday-loan store, and thousands like it across Florida and the nation. The so-called Consumer Financial Protection Bureau says consumers are gullible, and the payday-loan industry traps them in debt. They must think we're all idiots.
They want to punish the hard-working people who are paying their bills the best way they can, all because some malefactors abuse or game the system. I personally resent the fact that they want to restrict, curtail, stifle and police the avenues by which I can make ends meet and fulfill my financial obligations on a monthly basis. Read the article at ORLANDO SENTINEL |
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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
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