ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

CFPB: Consider the Future Post-Obama. by Sutherland Asbill & Brennan LLP

The election of Donald Trump and the new administration means a changed political reality for the Consumer Financial Protection Bureau (CFPB). The President-elect is expected to replace Director Richard Cordray as head of the CFPB soon after taking office. Looking further ahead, the Republican majority in Congress will likely revive legislation aimed at changing the CFPB's structure to a bipartisan commission and subjecting its budget to the congressional appropriations process.

The agency, however, will probably survive. Despite Trump's promises to "replace" Dodd-Frank, an attempt at wholesale repeal is unlikely. Repealing legislation likely would not survive a Senate filibuster, and redistribution of the rulemaking, supervisory and enforcement authorities now concentrated in the CFPB would involve significant frictional costs.

The impact of the election results on the CFPB's current regulatory agenda is less clear. Trump's e lection, and the overwhelming reelection of congressional Republicans, can be interpreted as public support for a more limited government and general dissatisfaction with the growth of the administrative state. As the CFPB reviews its current rulemakings, the payday lending rule, initially proposed on June 2, merits particular concern. As currently drafted, the proposed rule is broadly preemptive of existing consumer lending laws in 36 states.

The proposed rule, which covers payday loans, title loans and certain installment loans, contains a detailed set of borrower suitability requirements, presumptions and restrictions on loan frequency. The primary focus is on preventing extended periods of indebtedness on covered loans. The CFPB has posited that payday borrowers often roll over or renew their loans multiple times because lenders do not underwrite based on an ability to repay and typically require repayment in a single pay cycle. The proposed rule offers lenders two options for making account-secured, short-term loans: (1) confirm that the borrower can repay the loan in full and on time and still meet basic living expenses and major financial obligations; or (2) cap the loan amount at $500 and limit the borrower to two rollovers with a mandatory one-third principal payoff on each rollover.1 The second option is available only with respect to borrowers who do not have an outstanding short-term covered loan and have not been in debt on short-term loans for more than 90 days in the previous 12 months.
Read the entire story at JDSUPRA

GOP, Business Groups Launch Campaign to Constrain CFPB

Agency was created by 2010 Dodd-Frank Act, which president-elect's transition team has said it wants to dismantle

WASHINGTON-Republican lawmakers and business groups are crafting plans to rein in the federal government's consumer-finance watchdog in the wake of Donald Trump's presidential victory.

The trade group for credit unions has demanded that the Consumer Financial Protection Bureau immediately "cease its pending rulemaking" affecting its members, seeking to give the new administration a chance to cast a more skeptical eye on the proposals than the current Democratic White House would provide. The agency has "stifled" the industry's ability to serve its customers, Jim Nussle, head of the Credit Union National Association, said Friday.

"I am encouraged that the Trump administration seems eager to combat this regulatory overreach, and I look forward to working with them in those efforts," Texas GOP Rep. John Ratcliffe told The Wall Street Journal Monday. Mr. Ratliffe last year sponsored legislation jointly with a fellow Texas Republican, Sen. Ted Cruz, to abolish the agency, which was created by the 2010 Dodd-Frank Act and championed by Massachusetts Democratic Sen. Elizabeth Warren.

Read the entire article at the WALL STREET JOURNAL

National Auto Lenders Selects FactorTrust to Provide Customers Alternative Credit Data

NAL Seeks to Increase the Accessibility of Loans to Consumers While Reducing Risk to Its Customers

ATLANTA--(BUSINESS WIRE) -- FactorTrust, The Alternative Credit Bureau, announces National Auto Lenders (NAL) as a new customer of the company's services. By selecting FactorTrust, NAL validates the need for using alternative credit data during the underwriting process.

Non-prime auto loans have seen a steady increase in recent years due to growth in the number of non-prime customers, a willingness to take on more risk, and a general lowering of auto loan interest rates. As the market segment has grown, so has the competition. Today's lenders have a need for faster decisions, new data sources and automation in order to best manage credit quality. FactorTrust's non-prime credit risk and consumer data, and risk models helps those lenders stay competitive.

"It's imperative for lenders to be able to utilize information that provides them with a better understanding of who their consumers are. There is a massively underserved population of underbanked consumers that, when taking alternative credit data into account, deserve credit options. With our tools, NAL can access unique, proprietary data and auto finance risk scores on non-prime consumers not available to them elsewhere and not reported to the Big 3 bureaus. This more accurately evaluates a borrower's credit risk, helping lenders better understand a consumer's ability to repay while maintaining a pricing advantage," says Greg Rable, CEO of FactorTrust.

FactorTrust's data shows that the 113 million U.S. consumers with FICO credit scores under 700 today indeed are striving for a better financial standing and should be recognized as CreditClimbers - consumers determined to improve credit scores in order to advance their situation and access more credit options. Every time a CreditClimber does something positive, they deserve to improve their credit score, according to Rable. "We've seen people improve their credit scores - at every scoring level - by having alternative credit data factored in during the underwriting process. More data is better for both the consumer and the lender."

Read more at BUSINESS WIRE

Donald Trump: The Consumer's President by Brian J. Wise

President-elect Donald Trump is not your typical politician, and that is great news for America's consumers.

The cycle of cronyism in Washington, D.C., has bred a culture of perpetual regulatory expansion at the executive agencies that fill the massive stone, steel, concrete, and glass structures throughout our nation's capital. These buildings house individual bureaucrats who create and enforce a twisted web of regulations that drive up consumer costs and have severely restricted consumer choice and freedom.

It's ironic that the man who made a fortune filling skyscrapers with tenants over the course of his career in real estate may leave a legacy of empty federal buildings in Washington. But President-elect Trump has an opportunity to initiate history-making regulatory reform in D.C. Winning as an outsider non-politician and coming to Washington with a promise to shake things up and do away with business-as-usual, Mr. Trump is uniquely poised to "drain the swamp" of unnecessary and burdensome regulations that plague America's corporations, small businesses, and consumers, and limit growth.

Over the last eight years, President Obama's administration has created more than 21,000 new regulations. This has translated into an increased burden of more than $100 billion on American consumers. Many of those rules came from the Consumer Financial Protection Bureau, a newly minted agency created by the Dodd-Frank Act.

Under the guise of protecting consumers, this unaccountable agency has seen fit to create reams of new rules dictating the smallest details of financial transactions, and performed heavy-handed shakedowns of American businesses to advance the President's political agenda. The agency is now mired in scandal with allegations of rampant racial, gender, and LGBT discrimination, even as President Obama and congressional Democrats like Keith Ellison and Maxine Waters continue to defend it. Read the entire article at THE DAILY CALLER

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