ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

Congress Should Overturn Any Forthcoming CFPB Rules, Industry Groups Say by Kate Berry

Banking and credit union trade groups are urging Congress to consider repealing any upcoming Consumer Financial Protection Bureau rules governing arbitration, payday lending, debt collection and prepaid cards by using its authority under the Congressional Review Act.

The law gives Congress the chance to reject any rule that is finalized in the waning days of an administration.

The groups also again asked Congress to pass a bill that would create a five-member commission for the agency, replacing its current single director structure.

The CFPB's "sole director leadership model is fragile, uncertain, and leads to instability at the bureau," the groups wrote in a two-page letter to Senate GOP and Democratic leaders. A commission will "safeguard consumers and increase credit accessibility."

The letter was signed by the heads of the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America and the National Association of Federal Credit Unions.

The letter also mentioned a district court ruling in a controversial case, PHH Corp. v. CFPB, that found in October that the bureau's single-director structure is unconstitutional.

Though the CFPB has appealed the case, the trade groups said that ruling "makes it even more apparent what a whipsaw effect the single director model presents, inhibiting the ability for financial institutions to plan for the future, which in turn limits economic growth and hurts consumers." NATIONAL MORTGAGE NEWS

SOUTH DAKOTA: 400 jobs lost to payday lending measure

Only a gun range and radio station remain of the entertainment emporium that was Chuck Brennan's Badlands Pawn, Gold and Jewelry.

That was the latest news in the ongoing saga of Initiated Measure 21, the interest rate-capping ballot question that's shut down the payday industry in South Dakota.

Badlands Motor Speedway is up for sale, and all 11 of Brennan's Dollar Loan Center stores are closing.

That's left a lot of people out of a job. The businesses represented 400 jobs in total, Brennan said, half of which were full-time.

That accounts for each employee at loan offices statewide, Badlands Pawn full-timers who sold everything from watches to corned beef sandwiches and another 200 part-time seasonal workers who tended to the speedway during warmer months.

Supporters of the measure expected a shutdown and consistently said the industry did more economic harm than good for the community.

But Brennan thinks there's more job- and tax-related damage coming than payday loan opponents might recognize. Dollar Loan Center, after all, was just one payday lender.

"The tax impact to the state is staggering from Measure 21 and will be felt for a long time," he said. "Employer/employee taxes, sales tax, bank franchise taxes, local and state taxes, licensing fees, all of the 138 locations that were paying rent and those taxes, etc."

With Brennan's businesses, the job loss could sting a little harder. His shops paid above-market wages to draw talent from other employers in a city starved for labor, and he leveraged his businesses' entertainment focus as a selling point. Read the entire article at ARGUS LEADER

As New Congress Convenes, Credit Unions Paint Target on CFPB

As congressional Republicans attempt to loosen federal regulations, credit union trade organizations are urging them to paint a target on one particular agency: the CFPB.

With the 115th Congress convening this week, both trade groups outlined their legislative goals for the next two years.

"Congress should enact legislation to clarify that credit unions are exempt from CFPB rules unless the CFPB demonstrates credit unions are causing consumer harm," CUNA President/CEO Jim Nussle, said in a letter Monday to members of Congress.

NAFCU agreed, but said that the agency should use the authority it already has to exempt credit unions from its rules.

"NAFCU will continue to press the CFPB to use its authority under Section 1022 of the Dodd-Frank Act to exempt credit unions from its regulations," the trade group said in its own legislative wish list.

And while the CFPB received a tremendous amount of criticism from both groups, NAFCU made it clear that its top legislative priority is ensuring that credit unions retain their tax-exempt status.

"While no member of Congress has proposed eliminating the exemption, this issue could get a fresh look with new eyes under a new Republican administration and Republican-controlled Congress," NAFCU said. Read the entire article at CREDIT UNION TIMES

How does alternative credit data fit into Fintech 2.0? by Sean Albert

Peer-to-peer lending, automated investing and new forms of retail banking defined Fintech 1.0. The movement expanded consumer choice, but it did not dismantle and rebuild the financial services industry. However, that's just what Fintech 2.0 may do.

According to Santander InnoVentures, Fintech 2.0 promises to reshape the infrastructure on which financial services operate by extending data usage and establishing fluid processes devoid of hitches. With respect to information, how will alternative credit data fit into Fintech 2.0?

Understanding Fintech 2.0

Data management, real-time analysis and system interoperability lies in the center of Fintech 2.0. Santander InnoVentures envisioned scenarios in which financial institutions (FIs) continuously gathered data from lenders' smart devices to continuously identify opportunities to offer services relevant to borrowers' needs.

Traditional methods of obtaining trade financing are notoriously slow. First, the FI has to pre-screen the business obtaining a letter of credit. Once the company receives the services (or goods) it purchased, the FI must conduct a manual assessment of those services and verify their quality - usually through a paper-based process.

The Internet of Things (IoT) would turn traditional trade financing on its head. Smart devices and software would capture buyer-seller transaction data and product condition information in real-time, enabling them to increase verification and automatically fill small contracts.

The aforementioned scenario is just one of many examples of how Fintech 2.0 will transform the financial services infrastructure. Here's how alternative credit data will fit into the movement.

Read the article at MICROBILT

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