ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

Short-Term Lenders File For Emergency Relief from Illegal Operation Choke Point Program

Last Wednesday, November 23, the Community Financial Services Association of America (CFSA) and Advance America filed an emergency request for preliminary injunctive relief with the U.S. District Court for the District of Columbia.

The emergency filing asks the Court to put an immediate stop to the illegal federal campaign known as Operation Choke Point. CFSA and Advance America are co-plaintiffs in a case, CFSA et al. v. Federal Deposit Insurance Corp. et al., No. 1:14-cv-00953, which is pending discovery before the same court.

The emergency filing results from a stepped up government campaign of strong-arm tactics against banks forcing them to end business relationships with payday lenders. Members of CFSA, including Advance America, are now reaching a crisis stage; they have lost dozens of long-standing, essential banking relationships -- including major terminations in recent weeks -- and have been turned away from scores of other financial institutions.

The emergency filing contains the following:

Main Motion

Memo

Declaration from Dennis Shaul, Chief Executive Officer, CFSA

Declaration from Christian Rudolph, Chief Financial Officer, Advance America

Declaration from Ed Lette, President and CEO, Business Bank of Texas

Proposed Order

The following is a statement from CFSA CEO Dennis Shaul:

"The need for immediate relief is more urgent than ever. Our largest member very recently had its final national banking relationship terminated. This effectively cuts off our member's access to basic banking services for more than 1,200 of its stores and affects even its ability to pay employees and vendors. Without an injunction against Operation Choke Point, I firmly believe some CFSA members will be forced to curtail their operations dramatically and others will have to shut down all together."

The emergency court filing declares:

"This is a case of federal regulatory officials arrogating to themselves the illegitimate power to deprive Americans of their good names, their livelihoods, and their constitutional rights. As alleged in our complaint, for over three years leading officials at the Defendant Agencies-the Office of the Comptroller of the Currency ("OCC"), the Federal Deposit Insurance Corporation ("FDIC"), and the Board of Governors of the Federal Reserve System ("the Board")-have been carrying out a back-room campaign to coerce regulated banks to terminate the accounts of customers in industries that are disfavored by the Defendants. Defendants have acted without statutory authority, without observing the formal procedures required by law, and without providing the affected parties with any notice or opportunity to defend themselves, their livelihoods, and their good names."

Although the Defendants' campaign of regulatory intimidation has already destroyed some smaller businesses, Advance America had, until now, been able to find national banks willing to continue doing business. The situation has become life-threatening. Immediate judicial intervention is thus needed if irreparable harm is to be averted."

Additional Background Information

On June 6, 2014, CFSA and Advance America filed a lawsuit against the federal government seeking to end Operation Choke Point and the improper regulatory overreach to shut down lawful industries. Fifteen months later, the Court ruled it has jurisdiction to entertain the suit brought against the defendant federal agencies and that the Due Process Clause of the Fifth Amendment protects against the sort of government misconduct that CFSA and Advance America has alleged. Since the initial ruling, the parties in the case have been awaiting further ruling from the Court before discovery proceedings may ensue.

In September 2015, the FDIC in spector general confirmed that FDIC officials had used their regulatory leverage to coerce banks to close the accounts of law-abiding companies - specifically short-term lenders. The IG report established beyond question that these FDIC regulators were covertly pressuring banks to choke off these lenders' access to banking services in a deliberate attempt to drive an entire industry out of business.      CFSAA.COM

Financial gap between women, men narrowing

The financial wellness gap between women and men is still wide, but it is narrowing, according to the latest research from Financial Finesse.

The widest differences are in cash management, managing debt and investing, says Cynthia Meyer, a financial planner with Financial Finesse. The narrowest differences are in life insurance, estate planning and college planning.

In its Gender Gap in Financial Wellness Research report, Financial Finesse points out that women are making positive changes to their finances and closing the gap with men across the generations.

"The Gender Gap in Financial Wellness has closed to 8.9 percentage points; a 37% improvement since 2012," according to the research. "While the gap is narrowing, part of the closure is due to men's backsliding, a troubling trend that shouldn't get lost in the efforts to increase women's financial wellness."

Since 2012, men have dropped four percentage points in financial wellness, while women have gained more than one percentage point.

The report looked at the gaps between the genders as it pertains to investing, money management and savings. It also broke out the data by generation. As always, millennials have the most time to make a difference in their future retirement savings. Read more at EBN

Payday Lending's Long, Strange Trip Through 2016

Short-term lending was the star of a melodrama that managed to last the entire year as the ecosystem prepared for - then reacted to - the CFPB's proposed payday lending regulations. Insults were lobbed and malfeasance alleged but also strange moments of accord and agreement on one point: Consumers need access to credit that doesn't come with abusive terms. PYMNTS literally wrote the book on it all - catch a sneak preview of the greatest hits.

THE PROBLEM WITH PAYDAY LENDING

There is neither a shortage of controversial topics in financial services or financial technology nor a shortage of subjects that tend to polarize people.

But short-term lending - in all its many forms, including payday loans, auto-title loans and some installment loans - is especially good at arousing passion in those who debate it. Arguments about payday loans have a habit of quickly devolving from polarized to outright acrimonious pretty quickly - and 2016 has seen that habit get very, very ingrained.

That is because after almost two years of speculation on the subject, as of early January it was clear that Consumer Financial Protection Bureau (CFPB) was finally going to release proposed new regulations for the entire short-term lending industry. Those regulations dropped in June and essentially boil down to four big changes for short term lenders nationwide:

Lenders will be required to establish a borrower's ability to repay.

Individual loan payments per pay period must be limited to a level that would not cause financial hardship.

Payday lenders are not to allow consumers to reborrow immediately or carry more than one loan.

Lenders can attempt to directly debit payments from borrowers' accounts a limited number of times in the event that there are not sufficient funds to cover the loan payment.

Proponents of new regulation have lamented that the rules didn't go further but have spent the year arguing passionately that stringent regulation is absolutely necessary because at their worst, payday loans - and other forms of short-term lending - trap consumers in unending cycles of mounting debt though staggeringly high fees and murky loan repayment conditions. These abuses need to be stopped, and cheerleaders for the new regulations note that stringent rules and enforcement are the best way to get there. Read the entire article at PYMNTS.COM

Step Away From the Pen, Mr. Cordray

The Consumer Financial Protection Bureau is an agency that was born into controversy and remains polarizing. Recently, the U.S. Court of Appeals for the District of Colombia declared the bureau's original structure of one director, unable to be removed without cause, unconstitutional. In light of this rebuke, and the desire from voters for a change from the status quo, the bureau should abstain from rushing regulations before the new president takes office.

As a new administration prepares to take over the reins of government, federal agencies sometimes seek to adopt last-minute regulations. These so-called "midnight regulations" are often rushed through the regulatory process and are supported by lower quality analysis of the costs and benefits. Given the effect the bureau's regulation could have on the financial wellbeing of millions of Americans, the CFPB should act in good faith and take the time to give the public's comments on bureau rule makings the weight and consideration they deserve.

For example, the proposed rules on arbitration and payday lending have sparked great public interest. The payday rule has received 1.4 million comments. These comments range from letters containing extensive economic and legal analysis to personal stories from people terrified of losing access to critical products and services. Many of these comments are from consumers of these products, the very people the bureau was established to protect, concerned about how the CFPB will negatively affect their lives.

The CFPB needs time to consider carefully and respond to valid concerns raised by commenters. To go through the 1.4 million comments in the time remaining before the new administration takes over, the CFPB staff would need to work around the clock and read, review and internalize approximately 850 comments per hour. Reviewing the comments on the arbitration rule would take additional time. The CFPB's proposed rules on payday lending and arbitration would affect substantial change in financial services markets, affecting millions of consumers and their access to credit. It is not too much to ask that the CFPB give these important rules the time and attention they deserve. Read more at INSIDE SOURCES

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