ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

CFPB Would Lose Powerful Legal Weapon Under Republican Plan

The Consumer Financial Protection Bureau could find its enforcement powers crippled under a Republican proposal to curb the bureau's power to attack unfair, deceptive or abusive acts or practices.

The CFPB would lose its authority to target behavior deemed unfair, deceptive or abusive - a catch-all legal tool used in more than two-thirds of all CFPB enforcement actions - under a memo circulated last month among House Republicans. The proposed addition to legislation overhauling the Dodd-Frank Act goes further than the bill approved by the committee last year, which would have only stripped the bureau's authority over abusive acts or practices.

The House Financial Services Committee did not respond to a request for comment on which approach Chairman Jeb Hensarling (R-Texas) may take in the newest version of the bill expected to be released in coming weeks, nor did the CFPB respond to a request for comment on its potential impact.

Lawyers and consumer protection advocates said that stripping the CFPB of its power to attack abusive practices would limit the agency's assault on illegal practices while a broad repeal of power to bring so-called UDAAP cases would make the agency a shadow of its former self.

"That would have a very dramatic impact, particularly in the enforcement area, where many of the agency's actions have relied on UDAAP authority," said Quyen T. Truong, a partner in the Washington offices of Stroock & Stroock & Lavan and a former CFPB assistant director and deputy general counsel. Read more at BLOOMBERG

ARIZONA: Lending industry persuades Senate panel to advance bill permitting 164% interest loans

Nearly a decade after Arizona voters outlawed "payday loans," the lending industry is trying to get its foot back in the door with a new type of high-interest consumer loan.

And they're getting the help of Republican legislators.

Legislation approved by the Senate Appropriations Committee would legalize what proponents have dubbed a "Consumer Access Line of Credit," which would provide for revolving loans of up to $2,500.

But the most significant provision of HB2496 is it would permit lenders to charge what proponents call a "daily transaction fee" of 0.45 percent per day, a figure that computes out to an annual percentage rate in excess of 164 percent. By contrast, state law caps interest on most other loans at just 36 percent a year.

The 6-4 vote along party lines in the Republican-controlled committee sends the measure to the full Senate. The House has never considered the measure.

Sen. Debbie Lesko, R-Peoria, said the elimination of payday loans has left a need.

"

There are people out there that don't have good credit," she said, making it difficult for them to get money in an emergency situation, like ensuring that the power doesn't get turned off.

"They have no other options," Lesko continued. "They don't have family here that can lend them money." Read more at ARIZONA CAPITOL TIMES

ALABAMA law firm starts petition demanding payday loan reform

An Alabama law firm launched a petition Wednesday calling on state lawmakers to pass a bill to put more stringent regulations on payday lenders.

Bond & Botes, which has offices statewide, says payday lenders "skillfully set" traps for borrowers that see them taking out loans with interest rates and fees far higher than traditional loans and that Alabamans are being disproportionately hurt by these lenders.

"We believe that payday loan reform would be a significant, positive step for the citizens of Alabama," firm partner Bradford Botes said. "Our state does not have a good track record on this issue; interest rates for payday loans can be more than 450 percent, among the nation's highest. By population, we also have a higher concentration of payday lenders than any other area of the United States.

The firm's petition, found on Change.org, is directed at Senate President Pro Tempore Del Marsh, Sen. Slade Blackwell who chairs the Banking and Insurance Committee, Senate Majority Leader Greg Reed, and Senate Minority Leader Quinton Ross. Read more at ALABAMA TODAY

OKLAHOMA: Payday loan bill passes House with 17 percent per month interest rate

EL RENO, Okla. - Last week Rep. Chris Kannady (R-Oklahoma City) submitted the Oklahoma Small Loan Act, creating a new payday loan of 17 percent per month for Oklahomans, and it passed.

Highlighting some of the benefits, Kannady made claims that House Bill 1913 would take care of the most vulnerable; push the federal government out of the way so we can do the right thing; cut interest rates cut in half; and provide protection for families in need.

"These people have no other alternatives, well, I take that back they do," Kannady said. "They can sell drugs, they can get into prostitution, and they can get into all other activities, sell off all their assets to take care of their family. Do we want to ignore the situation as it stands or do we want to lead?"

According to Rep. Mickey Dollens (D-Oklahoma City), these loans are just another way to stack our prison system with new inmates whose only crime was to make a payday loan.

He talked about how in a time when we are trying to keep violent offenders out of prison, what is the reasoning behind this.

"What it comes down to, there are other loan options, this kind of flex loan it is the only loan on the books that you can get a felony for not paying on time." Read more at RED DIRT REPORT

Tensions escalate at House hearing on constitutionality of the CFPB

Well, this is awkward.

Four witnesses on the "constitutionality" of the Consumer Financial Protection Bureau sat before a House subcommittee on Tuesday morning, lending their expert knowledge to help sort through the current state of confusion around the bureau.

The House Financial Services Committee's Subcommittee on Oversight and Investigations dubbed the hearing "The Bureau of Consumer Financial Protection's Unconstitutional Design."

But instead of providing their expertise on the CFPB and its constitutionality, the four witnesses were tossed around between House Republicans who profusely thanked them for coming and House Democrats who condemned the hearing entirely.

Ted Olson, partner at Gibson, Dunn & Crutcher, fielded most of the questions, and attacks, since he is also lead counsel to PHH in its current case against the CFPB.

His role in the PHH case was also a major point of contention during the hearing. Rep. Al Green, D-Texas, used his entire time to emphasize the conflict of interest in Olson being there, even questioning the other witnesses to see what they thought about it.

They, however, didn't have much of an opinion on it and mostly seemed frustrated about why they were even being questioned on it.

On the other hand, Republicans, like Rep. Scott R. Tipton, R-Co., used most of their time to ask Olson questions in order to prove their feelings about the constitutionality of the CFPB.

Read more at HOUSINGWIRE

This Lawmaker Just Gave the Perfect Defense of a Consumer Watchdog the GOP Is Trying to Kill

A Democratic lawmaker slammed opponents of a federal consumer watchdog Tuesday, denouncing them for promoting big business interests while hiding behind a pretense of constitutional concerns.

During a House of Representatives hearing Tuesday over the group's potentially unconstitutional design, Republican lawmakers attacked the Consumer Financial Protection Bureau on multiple fronts. Among other speakers, Rep. Ann Wagner (R-Mo.) blasted the bureau's ability to operate outside of executive and congressional oversight, for instance. (The CFPB is funded by the Fed, which largely insulates the group from political efforts to control it.) "The CFPB has become arrogant in its cloak of unaccountability by pursuing policy and regulating entities outside its authorized scope-to the detriment of consumers," she said at the hearing.

Meanwhile, expert witness Theodore Olson-a high-profile lawyer who represents a mortgage lender that is fighting a CFPB fine for allegedly accepting kickbacks from mortgage insurers-encouraged Trump to fire the CFPB's single director, Richard Cordray. "The president has the constitutional authority to remove the director," he told House lawmakers.

But Democrats were quick to dismiss the ongoing blowback-Tuesday's attacks as well as ongoing Republican efforts to rein in the agency-as moves to protect the interests of big money.

While the mortgage lender's ongoing court case has attacked the agency's structure on constitutional grounds, Rep. Keith Ellison (D-Minn.) suggested that Republicans' fight against the CFPB might be more closely tied to business interests. "This is about protecting a deeply vested, incredibly profitable industry. That's what's happening here," Ellison said. "It's not about the constitution. That's a subterfuge."

Read more at MONEY

Federal Court Nixes CFPB Enforcement Action that Claimed a Payment Processor Ignored Fraud

A North Dakota federal judge tossed out a lawsuit filed by the CFPB against a payment processor because it failed to present sufficient evidence in the case.

On March 17, the U.S. District Court for the District of North Dakota dismissed an enforcement action filed by the Consumer Financial Protection Bureau against a Fargo, North Dakota-based third-party payment firm, Intercept Corporation, and two of its officers, because the CFPB did not provide enough evidence to support its claims. The Bureau filed the complaint last June accusing the payment processor and its two top executives of violating federal law by processing electronic fund transfers on behalf of payday loan companies and other short-term consumer lenders in states where payday loans are illegal. In particular, the CFPB alleged in its suit that Intercept and its owners violated Dodd-Frank's prohibition against unfair, deceptive, and abusive acts and practices (UDAAP) by "processing payments for clients without adequately investigating, monitoring or responding to red flags that indicated some clients were breaking the law or deceiving customers."

In Consumer Financial Protection Bureau v. Intercept Corporation, d/b/a InterceptEFT, et al., No. 16-00144 (D.N.D., March 17, 2017), North Dakota federal court Judge Ralph R. Erickson did not accept the CFPB's arguments and, therefore, dismissed the CFPB's complaint. In granting the payment processor's motion to dismiss, the district court wrote that "[a]lthough the complaint need not contain detailed factual allegations, it must contain 'more than an unadorned, the -defendant-unlawfully-harmed-me accusation.'" Based on this reasoning, the district court concluded that the CFPB's complaint failed to "contain sufficient factual allegations to back up its conclusory statements regarding Intercept's allegedly unlawful acts or omissions." Judge Erickson explained that the CFPB's complaint "simply does not sufficiently identify particular clients whose actions provided 'red flags' to Intercept or how Intercept's failure to act upon those 'red flags' caused harm or was likely to cause harm to any identified consumer or groups of consumers." Read more at ACA INTERNATIONAL

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