ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

Consumer bureau faces uncertain future

The future of the Consumer Financial Protection Bureau is up in the air, as a court challenge and incoming administration could completely upend the 5-year-old agency.

With all of Washington in a state of upheaval, the uncertainty is perhaps no greater than at the CFPB, where it is unclear who will be running the agency in the months to come, or even what the overall bureau will look like.

That's leaving both advocates and critics completely unsure of what 2017 holds for the high-profile and controversial agency.

"We are in uncharted territory," said Mike Litt, consumer program advocate for the U.S. Public Interest Research Group. "We certainly support Director Cordray finishing his term. We don't believe President-elect Trump will be able to fire him. But if he tries, we will fight him."

With Republicans eager to overhaul the Dodd-Frank Act, and the agency fighting a legal battle over its status as an independent agency, there are any number of paths the CFPB could take in the months ahead.

The agency's first and only director, Richard Cordray, has a term that technically does not expire until the middle of 2018. Some of Obama's financial regulators have already announced plans to step down as Trump takes power, but Cordray is currently vowing to ride it out, in no rush to hand the reins to the GOP. Read the story at THE HILL

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.

Congress is likely to try to tackle comprehensive tax reform and the tax exemption could receive a fresh look from tax legislation writers. Read the article at CREDIT UNION TIMES

The CFPB is casting a critical eye on overdraft fees charged by banks - despite facing an uncertain future in the Trump administration.

The Dodd-Frank-enabled consumer protection group has long been making noises about limiting the fees banks can charge consumers for overdrawing their accounts - and now it seems it will drop a new set of governing rules later this year.

Consumer advocates have long noted that overdraft fees have quietly become a surging source of income for banks. Some observers said that revenue from overdraft fees now outpaces that from pawn shops, payday lenders and tax-refund anticipation checks put together. These advocates argued that banks have essentially found new ways to make consumers foot the bill in the face of profit-dropping low interest rates.

"[Overdrafts] allow customers to spend money they don't have - then punish them for it," noted Josh Reich, cofounder and CEO of Simple, an online bank based in Portland, Ore. The seven-year-old bank has never allowed account balances to go below zero and never will.

"Big banks are preying on people when they need financial help the most," he claimed.

And some big banks have made some pretty big bucks on overdrafts.

Read the entire story at PYMNTS.COM

CFPB Fines Equifax, TransUnion For Misleading Consumers

The Consumer Financial Protection Bureau said Tuesday (Jan. 3) that it has fined TransUnion and Equifax amid allegations that the two companies misled consumers about "the usefulness and actual cost" of the credit scores that had been sold, according to a release by the bureau.

The CFPB also said that the two firms had set up recurring payments for credit products. As a result, TransUnion and Equifax have been ordered to pay $5.5 million in fines to the CFPB, with another $17.6 million to go toward restitution to consumers. In addition, according to the release, TransUnion and Equifax must represent costs and benefits tied to the scores in a truthful manner. Both firms had been marketing the scores provided to consumers as being the ones that lenders use in their credit decision processes. The scores were not, in fact, typically used to make credit decisions. And as for the free or low-cost programs advertised, consumers were automatically enrolled in recurring payment programs. The CFPB also said that Equifax violated the Fair Credit Reporting Act, where, until the beginning of 2014, consumers opting to receive a free credit report had to first view advertisements. PYMNTS.COM

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