NEWS: Sen. Cotton Starts Process To Reverse CFPB Arbitration Rule

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NEWS: July 13

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Report shows seniors tapping into payday loans

A growing number of cash-strapped California seniors are turning to high-interest payday loans, according to a report from the California Department of Business Oversight.

Sometimes referred to as a "cash advance" or a "deferred deposit transaction," a payday loan is a short-term loan where someone borrows a small amount of money at a very high rate of interest. The borrower typically writes a post-dated check in the amount they want to borrow, plus a fee in exchange for the cash.

The report reveals that the average annual percentage rate charged for payday loans last year was a whopping 372 percent, up from an average of 366 percent in 2015. The average APR on credit cards, by contrast, ranges from about 12 percent to about 30 percent.

Nancy McPherson, the Pasadena-based state director for AARP California, said the payday loan industry is adding yet another challenge for Californians who are already saddled with high housing costs, high gasoline costs, high taxes and a myriad of other expenses.

"Many people in California are struggling because of the high cost of housing," she said. "We understand that people need access to capital - that's a given. But it shouldn't be done this way. It makes a person's financial situation worse by charging such high fees. It's predatory lending."

Seniors, many of whom are living on fixed incomes, are now the largest group of payday loan borrowers in California, according to the report. Californians 62 and older accounted for 23.4 percent of the 2016 total, and they took out nearly 2.7 million loans, a nearly three-fold increase from the previous year. Read more at DAILY NEWS

Sen. Cotton Starts Process To Reverse CFPB Arbitration Rule

Republicans strike back at new U.S. ban on forced arbitration

WASHINGTON (Reuters) - Republicans lawmakers on Tuesday started trying to kill a brand-new U.S. rule prohibiting banks and credit card companies from requiring customers who open new accounts to sign an agreement that they will not join a group lawsuit in the event of a dispute.

The Consumer Financial Protection Bureau on Monday finalized the new rule banning "mandatory arbitration clauses" requiring consumers to forego class-action suits and instead settle disputes in negotiations overseen by arbitrators frequently hired by companies.

The rule immediately ran into fierce opposition by Wall Street and Republicans who control both Congress and the White House. They have long criticized the consumer agency, which is run by a Democrat, Richard Cordray.

Senator Tom Cotton, a member of the Banking Committee, has already announced he is drafting a resolution to kill the rule. His fellow Republican Senator Pat Toomey, chair of the subcommittee on financial institutions and consumer protection, said he is considering a similar step.

Republican lawmakers plan to eliminate the rule, using a law that allows Congress to undo new regulations with simple majority votes in both chambers and a signature from the president.

Analysts and consumer advocates have said the agency's rule may survive the Congressional challenge. Still, the U.S. Chamber of Commerce is contemplating a legal challenge and Trump administration officials are also looking at ways to kill the rule. Read more at REUTERS

If the Consumer Financial Protection Bureau is dying, at least it's going out with a bang

Defying the deregulatory push from the Trump administration and the GOP-controlled Congress, the Consumer Financial Protection Bureau rolled out a much-needed rule this week that bars banks and other financial services companies from forcing customers to take disputes to arbitration instead of banding together to sue.

At least, that's what the rule will do if it's allowed to go into effect in a few months as scheduled. Some Republicans in Congress, however, are already readying legislation to cancel the rule preemptively and stop the agency from ever adopting anything like it. But that may be the least of the bureau's problems at the moment. The House has passed a bill (HR 10) that would all but gut the bureau, removing crucial regulatory tools and enforcement powers as well as ending its independence.

Nevertheless, the arbitration rule is a timely reminder of why we need a strong and independent CFPB tackling problems that other financial regulators have ignored. Arbitration is fine as an optional alternative to lawsuits, but banks and other financial services companies have been routinely requiring customers to submit any and all disputes to binding arbitration. They've then used those clauses to stop customers from joining forces in class actions, which makes it pointless for consumers to pursue claims when their losses are smaller than the cost of an arbitrator. In effect, that gives companies carte blanche to cheat and defraud on a wide scale, as long as they don't take very much from any individual. Read more at LOS ANGELES TIMES

Risk Verification. by Walt Wojciechowski

Running a successful business requires both exposure to and mitigation of risks. One particularly risk-prone aspect of operation involves conducting non-cash customer transactions.

However, companies that implement robust risk verification tools can screen someone's banking information before conducting business, providing confidence in accurately assessing the person's ability to pay.

Why do you need risk verification?

Automatic clearing house (ACH) transactions have surged in recent years, and as people continue to make online and cashless payments, these numbers should only continue to rise. According to data from the U.S. Federal Reserve's Payments 2016 Study

U.S. noncash payments, including debit and credit cards, ACH and check payments grew from around 21 billion payments worth $17 trillion up to 144 billion with a value of nearly $178 trillion between 2012 and 2015. This represents an annual rate of 5.3 percent by number or 2.4 percent by value during this three-year period.

Not only has the number of these transactions risen, so too has the speed by which they're processed. As noted by American Banker, whereas banks used to have two to five days to perform a risk analysis of suspicious transactions, this window has shrunk to two hours in some instances.

This is taxing banks' capacity to identify fraudulent transactions in a timely fashion.

Read more at MICROBILT

Officials from the Portland Chamber of Commerce joined Nashville-based financial services

company Advance Financial on Friday, July 7 to cut the ribbon at the company's newest store.

To mark the occasion, the Advance Financial Foundation donated $1,000 to the Gallatin Shalom Zone.

ADVANCE FINANCIAL

Vintage Capital offers to buy Rent-A-Center for $15 a share

Vintage Capital has offered to buy Rent-A-Center Inc for around $800 million, according to a letter seen by Reuters, in a move that would add another rent-to-own company to the private equity firm's portfolio.

Rent-A-Center stock jumped more than 26 percent during after-hours trade following the news.

"While there are multiple avenues we would be eager to explore...today Vintage proposes to acquire 100 percent of the common stock...in a go-private transaction for $15 per share," the firm's managing partner, Brian Kahn, wrote in a June 20 letter to the company's investment bank, JPMorgan Chase & Co .

The company's stock closed at $11.10 on Monday. Shares hit $40.31 in August 2013 and have steadily declined amid a sales and profit slump.

Vintage Capital declined to comment on the letter or the offer.

Rent-A-Center said in a statement to Reuters that Vintage Capital's proposal "significantly undervalues the company" and its strategic plan.

"These initiatives are already delivering substantial progress in key performance metrics, including improved same-store sales and reductions in delinquencies," Rent-A-Center said in the statement. Read more at CNBC

Companies offer "financial wellness" programs as a job perk

At a Waffle House south of Atlanta, Ashly Johnson stacks clean plates above a metal grill after the morning rush to start preparing for lunch hour.

Johnson, 28, recently finished a manager training program with Waffle House, where she learned how to run a restaurant. She's learned how to cook, handle inventory and maintain equipment. The training program also included coaching about personal finances.

"I was spending way too much money on food. I need to cook more," she said.

As a new manager, Johnson's income is in the $40,000 range. The financial coaching program offered by Waffle House guides manager trainees on things like how to get rid of personal debt or save up for emergencies.

"I realized that I go out a lot, and so that I need to cut back," Johnson said. "Sometimes when you're just spending money, you're not really realizing what you're spending your money on or how much money you're spending until you actually look at it all on paper. And I'm like 'Wow. I spent that much money?'"

Waffle House is among a growing number of companies, including The Home Depot and Havertys Furniture, that are offering what are called "financial wellness" programs for employees. The company pays for the program, and it's free to the workers.

Michal Grinstein-Weiss, a professor of social work at Washington University, said these programs have grown since the recession as financial worries have carried over to the workplace.