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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
NEWS: March 22 NEWS is brought to you by AFSPA Endorsed SUPPLIERS AFSPA: 4,683 Members Strong! |
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Citizens should be free to make financial decisions by The Oklahoman Editorial Board
ONE reason government can quickly become overreaching is the impulse to "protect people from themselves." While that motive is understandable in some circumstances, it can fuel a regulatory state that limits individual freedom and impedes progress.
An example of this can be seen in opposition to House Bill 1913, by Rep. Chris Kannady, R-Oklahoma City, which would create the "Oklahoma Small Loan Act." Under the bill, payday lenders would be allowed to provide unsecured loans of no more than $1,500 for periods no greater than one year and charge interest rates of 17 percent per month.
For most Oklahomans, such loans are bad deals. As the Oklahoma Policy Institute notes, the interest rate translates into an annual percentage rate of 204 percent. "Borrowers could be charged cumulative interest of $2,108 on a 12-month, $1,500 loan," OK Policy writes in advocating against passage of the bill.
Yet even if HB 1913 becomes law, no one is forcing anyone to take out one of these high-interest loans. And the bill would require lenders to provide customers with a written explanation, "in clear, understandable language," of all associated fees and charges. Also, lenders could not ban prepayment of a loan.
Lenders are subject to state investigation. A determination of fraud can result in loss of licensure and repayment of all fees to borrowers. Civil and criminal penalties may also be pursued against a lender.
Just because a loan may not be a good deal doesn't mean those who take out such loans are ignorant, as polling conducted last year by Global Strategy Group and The Tarrance Group for the Community Financial Services Association of America demonstrated.
The nationwide survey involved 1,000 payday loan borrowers, including oversamples of 321 black payday loan borrowers and 300 Hispanic payday loan borrowers.
More than nine in 10 borrowers polled agreed that payday loans can be a sensible decision when facing unexpected expenses. The poll found 96 percent of borrowers said they had found payday loans useful, with 66 percent saying such loans were very useful. Seventy-five percent were likely to recommend payday loans to friends and family.
Read more at THE OKLAHOMAN
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Short-Term Lenders Hope For A Long-Term Future
What is short-term lending's long-term future?
That's the question on most segment watcher's lips as 2017 gets up and running - and as millions nationwide await the final ruling from the CFPB.
If the rules pass as present, long-term might be something of a huge misnomer, since, by even the CFPB's own in-house estimates, some 85 percent of the nation's currently operating short-term lenders
would be knocked out of business. And while some consumer advocacy groups would doubtlessly cheer that result as a great leap forward in protecting the underserved and disadvantaged from the so-called predators that roam the outskirts of the financial systems margins, the consumers they protect probably would have a very different reaction.
And a reaction that looks very much like panic as defined by overdraft fees, late fees, the inability to cover an emergency car repair, electricity shut downs and possibly even lost jobs. That's because as the panel of experts assembled at Innovation Project 2017 last week at Harvard pointed out, the consumer who makes use of short-term lending:
Likes them,
Needs them and
Has no other legitimate option available.
But unfortunately, the millions of consumers who like payday lending and use it responsibility won't see their short-term debts disappear, even if the CFPB decides that 85 percent of their current solutions providers could disappear overnight.
So what comes next?
That was the question on deck for panel moderator and Principal at Continental Advisors, Paul Purcell, Advance America CEO, Patrick O'Shaughnessy, Enova EVP, Kirk Chartier and Illinois Secretary of the Department of Financial and Professional Regulation, Bryan Schneider, last week as they debated the future of short-term lending in the near and far term.
So how did that war gaming look?
The Problem
Despite the fact that various members of the panel are short-term lenders - Advance America as the largest storefront lender and Enova as the largest online lender - no one made a case that abuses have not occurred within the industry, or that their sincere hope is to live in a regulation-free environment.
The problem - various panel members noted - is that various regulators, at times (and more recently, most of the time), seem to be caught in something of a time warp and are thus fully dedicated to regulating the worst excesses of the industry, circa the year 2010. Those regulations as currently proffered, they said, dictate the products on offer, which in turn limits the degree to which they can be innovated.
Which at the most basic level hurts customers, because the reality is that people who use short-term lending products actually need them. The reason these loans are taken out is to cover a bill that is due - or is about to be due - and for which there is no other legitimate alternative.
Read more at PYMNTS.COM
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Survey finds consumers don't know about the Consumer Financial Protection Bureau
That's bad news for the CFPB, which is in the cross-hairs of the Republican Congress
Most consumers haven't heard of the Consumer Financial Protection Bureau, which may be bad news both for the CFPB and the consumers it works to protect.
The financial services industry has been hell-bent on abolishing or weakening the agency, which was established in 2011 to work as a "cop on the beat" protecting consumers from the abuses that played a prominent role in the financial crisis of 2008.
Since the Republican takeover of Congress and the White House, the CFPB's days appear to be numbered, and a recent CreditCards.com survey provides little encouragement, finding that only 1 in 8 U.S. adults have a favorable view of the CFPB.
The vast majority (81%) say they haven't heard enough about the agency to make a determination; 4% view it unfavorably. Consumer advocates and many state attorneys general have spoken up for the embattled agency, but without massive financing for a public education campaign, there's little hope of stirring up enough voters to dissuade Congress from gutting the CFPB.
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An Industry Where Even Veterans Need Guidance by Julie Sepulveda
Juvenal Chavez has been in the money service business industry for decades and has seen the financial services industry go through many changes. One of the things that he has learned along the way is that, "you cannot do business the way you used to."
Juvenal started his relationship with Capital Retail Solutions, Inc. in the early 2000's by using our check cashing solution. "I quickly realized how effective it was to have a check cashing service that used fingerprinting technology to help fight fraud and that this company knew what was best for my business."
About five years ago, Juvenal was audited. He hired a lawyer and together they drew up an Anti-Money Laundering (AML) Program for all his Bay Area stores. He had been working off of that AML program and thought it was "good enough" until he rebranded his stores and needed to secure new money service business (MSB) bank accounts.
He first applied at a bank that he had been with for many years and had all his business accounts with. He was denied. "I was shocked that they would not take my business."
Still in shock, he called Capital Compliance Experts, a division of Capital Retail Solutions, Inc., to see if he had any options. "I needed someone who was connected and surrounded with the right people to help me get my MSB bank account secured."
After our team reviewed his dated AML program, it was apparent the policies and procedures were no longer relevant to his business and did not reflect the new rules and regulations that the industry demands.
Our team immediately performed a Third Party Independent Review, a plan to address deficiencies, a risk assessment and created a new AML Program from the ground up. "Capital Compliance Experts provided me unique services from specialists who put together the right policies and procedures for my business."
Read more at CAPITALCOMPLIANCE
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CFPB may fall under new executive order to reorganize executive branch
New power put in the hands of the OMB director
It looks like the most recent executive order from President Donald Trump to reorganize the executive branch may apply to the Consumer Financial Protection Bureau.
For now, the regulator remains an independent agency, though on March 13, President Trump signed an executive order granting additional powers to either rework or eliminate "components of agencies, and agency programs."
According to the latest blog by Barbara Mishkin from Ballard Spahr, this new order does appear to apply to independent regulatory agencies including the CFPB.
The first section of the new executive order states:
Section 1. Purpose. This order is intended to improve the efficiency, effectiveness, and accountability of the executive branch by directing the Director of the Office of Management and Budget (Director) to propose a plan to reorganize governmental functions and eliminate unnecessary agencies (as defined in section 551(1) of title 5, United States Code), components of agencies, and agency programs.
After several procedural guidelines, the director of the Office of Management and Budget must submit a proposed plan to the president "to reorganize the executive branch in order to improve the efficiency, effectiveness, and accountability of agencies," the blog noted.
But even though the CFPB may fall under this order, there might not be much that much that the director of the OMB can do.
Mishkin explained, "Since the CFPB was created by the Dodd-Frank Act and much of its internal structure is dictated by Dodd-Frank, any proposal to eliminate or substantially restructure the CFPB could not be implemented by the President unilaterally but would require Congress to amend Dodd-Frank."
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Americans Are Dying With an Average of $62K of Debt
You're probably going to die with some debt to your name. Most people do. In fact, 73% of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to Credit.com by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875.
The data is based on Experian's FileOne database, which includes 220 million consumers. (There are about 242 million adults in the U.S., according to 2015 estimates from the Census Bureau.) Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%).
These were the average unpaid balances: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391.
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Trump and Warren Are on a Collision Course
Why is a so-called populist trying to dismantle America's most effective consumer watchdog?
In his second week in office, Donald Trump huddled at the White House with a group of leading Wall Street executives. Their goal: to unravel Dodd-Frank, the law passed in the wake of the global financial crisis to curb some of Wall Street's most predatory practices. In front of assembled press, Trump pointed to Jamie Dimon, the CEO of JPMorgan Chase, which had been forced by the Justice Department to pay a record $13 billion in 2013 for misleading investors about toxic securities. "There's nobody better to tell me about Dodd-Frank than Jamie," Trump declared. "We expect to be cutting a lot out of Dodd-Frank."
That afternoon, Trump signed a pair of executive orders that pave the way for rolling back many of Dodd-Frank's financial reforms. It was not just a gift to "friends of mine," as the president put it-people, he said, with "nice businesses." It was also the opening salvo in a full-fledged war to destroy the law's most high-profile and effective creation: the Consumer Financial Protection Bureau.
It's no surprise that a Republican president with close ties to Wall Street would target the CFPB. The watchdog has been a lightning rod for Republican outrage ever since Elizabeth Warren first proposed the idea as a professor at Harvard Law School. As soon as the agency was created, Republican lawmakers began trying to curtail its power or eliminate it outright. GOP ads depict the agency as a neo-Stalinist ministry that is the natural enemy of American consumers. "The CFPB supposedly exists to protect you," House Speaker Paul Ryan tweeted after the agency levied a $100 million fine against Wells Fargo for incentivizing widespread fraud against borrowers. "But instead it tries to micromanage your everyday life."
Read more at NEW REPUBLIC
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ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
AFSPA helps our members grow their Alternative Financial Services business by providing them with the best information, research, data, support, relationships and by vetting and presenting the best available product and service providers for the Alternative Financial Services Industry.
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