ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

GOP push to kill key consumer-protection agency poses risks

Donald Trump and Republican lawmakers have made no secret of their desire to remove shackles put on banks by the Dodd-Frank Act, and taking an ax to the Consumer Financial Protection Bureau is one of their top priorities.

But transforming stump speeches that vilified Elizabeth Warren's favorite regulator into actual change is easier said than done for a variety of reasons. They include disagreements among Republicans about how far to go and opposition to blowing up the CFPB from an unlikely source: bankers.

Trump's transition advisers already are evaluating ways to legally fire CFPB Director Richard Cordray, according to people familiar with the matter. If they move forward with such a plan, many Republicans want Trump to replace him with someone committed to dismantling the agency. In Congress, another aggressive tactic being considered is forcing through an overhaul of CFPB funding so lawmakers can starve it of money.

Such scorched-earth strategies pose risks. Some Republican congressional aides and bank lobbyists privately say a hard-line approach on the CFPB will alienate Democrats, jeopardizing any chance of persuading moderates to compromise on a broader overhaul of the Dodd-Frank Act. To make big changes, Trump will probably need the support of at least eight Senate Democrats to overcome procedural hurdles that can be used to block legislation.

"There are all sorts of risks," said Iain Murray, vice president of strategy at Competitive Enterprise Institute, a public policy group that advocates for limited government. "If a change in the CFPB director comes to symbolize the bigger fight over Dodd-Frank, there are going to be trade-offs."

Divisions over the CFPB are one example of a theme that's expected to play out repeatedly next year on policies ranging from taxes to health care: With Republicans in control of Congress and the White House, they'll have to resolve long-simmering disputes within their own party to get things done. Read the article at CHICAGO TRIBUNE

Alternative Credit Data Helps Lenders Expand Small Business Portfolios by Philip Burgess

Acquiring access to credit remains a persistent challenge among financially responsible small business owners. According to a report from BI Intelligence, lenders walked away from approximately $96.5 billion worth of loans in the fourth quarter of 2015.

Banks are often wary of lending to small businesses because such firms typically have sparse financial histories. Finding enough traditional credit information to validate these borrowers' creditworthiness becomes a moot effort - simply put, not enough data exists. However, part of the issue is that business lenders are looking in the wrong places.

Analyzing the risks to lenders

An initial assessment of the data suggests that lenders would have an inherent bias against small business, but this isn't necessarily the case. According to a survey from the National Federation of Independent Buyers, small business owners who had previously obtained lines of credit had the least difficult time renewing those lines. This indicates banks are more likely to lend to businesses they know demonstrate responsible financial behavior.

There's also the fixed cost setting up a loan. Small Business Trends contributor Scott Shane noted that, if the cost of underwriting a loan is consistent, regardless of the amount borrowed, commercial lenders have an incentive to focus on high-value loans. Given that most large businesses take out loans in the millions of dollars, the return on those loans (risks aside) will be larger in the long run. Read the entire article at MicroBilt

5 steps toward improving financial well-being in the New Year

With the start of a new year comes New Year's resolutions. Many will focus on physical wellness, some on organization. Now is a perfect time to take stock of your financial house and work on financial wellness, which will take off a level of stress that can immediately have an effect on your physical well-being.

In fact, seven out of 10 American workers say financial concerns are their most common cause of stress; nearly half say they find dealing with their financial situation stressful.

MassMutual suggests taking five steps toward improving financial well-being which, in turn, will support your physical well-being in the new year:

1. Make a will. A MassMutual survey of Americans between ages 45 and 60 revealed three out of five respondents do not have a will. If you are one of those people, make it a priority in the new year to create a will to ensure your loved ones are protected. It is also important to update beneficiary information and review it annually.

2. Improve your credit score. Boosting your credit score is a lot like going to the gym - it can be painful at first, but is ultimately worth the (financial) effort. Late payments - one of the top "credit busters" - can impact your credit score, so make sure you pay your bills on time each month and pay off balances as quickly as possible (especially on ones with high interest rates).

3. Save more than you spend. Saving money is a time-tested way to improve your financial situation over time. A good rule-of-thumb is to save at least 10 percent of your net income each year.

4. Don't leave your 401(k) behind. The growing use of automatic enrollment in 401(k) plans and shorter job tenures are contributing to an increasing number of inactive 401(k) accounts, according to a U.S. Government Accountability Office report. If the new year brings you a new job, or retirement, be sure to rollover your 401(k) to your new employer-sponsored account or an individual retirement account if you are leaving the workforce. And, if you're not yet contributing to a retirement plan, do so and ensure you save at least enough to enjoy your employer's match if there is one. Don't leave any free money on the table.

5. Establish an emergency fund. Whether it is a job loss, health emergency, or car or home repair, an emergency fund provides a cushion to help you cover unexpected costs without interfering with your financial goals. Include backstops like disability income insurance to protect your income stream should you become seriously ill or injured, and consider life insurance with options that give you access to cash for life's priorities, such as whole life insurance. TERRELL TRIBUNE

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