NEWS: Democrats ban some corporate donations

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NEWS: November 9

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DNC creates new restrictions for corporate donations

The Democratic National Committee (DNC) on Saturday passed a resolution banning donations from corporate contributors whose areas of interest come into conflict with the DNC's stated values.

The resolution, which was introduced by California member Christine Pelosi, passed unanimously. Christine Pelosi is the daughter of House Minority Leader Nancy Pelosi (D-Calif.). Christine Pelosi has introduced similar resolutions before that were shot down over concerns about which industries the measures would target.

The move was celebrated on Twitter by progressive members of the Democratic Party who have been pushing to reduce corporate influence in the party.

An online petition created by MoveOn member Sandy Phillips indicates that the resolution was designed to target "gun, tobacco, payday lender, and other corporate donations counter to our values."

"Thnx Pelosi for taking a stand. Admire that you have always been for eliminating these positions of cronyism," wrote Rep. Ro Khanna (D-Calif.) on Twitter.

The resolution's strength in the DNC is unclear. Hours after the resolution passed, Pelosi warned that DNC officials were whispering that the vote is not legally binding, allowing DNC Chairman Tom Perez to ignore it. Pelosi issued a call on her Twitter account, challenging Perez to uphold the vote of DNC members. Read more at THE HILL

Payday lenders, with major business before Trump, to hold conference at Trump Doral

WASHINGTON - National charities and industry associations are ditching Trump properties like Mar-a-Lago for annual galas and conferences, but at least one association with business before the White House is set to visit Trump National Doral for its annual conference.

The Community Financial Services Association of America, an interest group that represents the payday loan industry, is hosting its four-day annual conference in April 2018 at Donald Trump's 90-hole golf resort 12 miles west of downtown Miami.

Payday loans are a form of high-interest credit usually taken out by low-income people who aren't able to borrow from traditional banks. Many consumers access the loans online, and critics say the loans can be predatory.

Last month, the Consumer Financial Protection Bureau, a federal agency responsible for consumer protection in the financial sector, finalized a rule that requires payday lenders to determine up front whether people can afford to pay their loans, a decision that was criticized by the Community Financial Services Association of America.

"The CFPB's misguided rule will only serve to cut off their access to vital credit when they need it the most," association CEO Dennis Shaul said in a statement in October. "The rule is not only misguided, it's hideously complex for loans of a few hundred dollars."

The CFPB, established by Congress in the aftermath of the 2008 financial crisis, has long been a target of Republicans, who charge that the agency creates burdensome regulations for industry groups. The CFPB was proposed by liberal Massachusetts Sen. Elizabeth Warren, which further rankles Republicans.

Florida Sen. Marco Rubio is a co-sponsor of a bill proposed by Texas Sen. Ted Cruz that would eliminate the CFPB. Read more at MIAMI HERALD

Wall Street Is Fighting a CFPB Deal Over Billions in Defaulted Student Loans

Faulty practices by debt collectors spur calls for a massive audit. But America's securitization industry warns there may be consequences for future borrowers.

It seemed like the kind of case regulators had resolved countless times before: Debt collectors are accused of using flawed documentation and lawsuits to collect unpaid loans. A fine is levied, a promise to reform is made, and everyone moves on.

Not this time. A maelstrom of banks, insurers, debt collectors, and hedge funds enveloped the U.S. Consumer Financial Protection Bureau when it tried to settle allegations of shoddy collection practices on billions of dollars in student loans. A novel settlement proposal between the regulator and a private equity firm meant to clear up the matter has Wall Street warning of expensive consequences for future student borrowers.

In the runup to the financial crisis, private student loans-like mortgages-were eagerly extended to people who were ill-prepared to repay them. The loans, like mortgages, were quickly bundled into securities to be sold at a premium. Then, in 2008, the bottom fell out.

Fast-forward a few years. Debt collectors working for National Collegiate Student Loan Trusts, a group of 15 investment vehicles and one of the nation's largest owners of private student debt, were accused of squeezing millions of dollars out of debtors using deceptive legal documents. A paper trail submitted to regulators stretched back years, and a resulting CFPB investigation focused on whether laws had been broken. Read more at BLOOMBERG

CFPB's Arbitration Rule Came in with a Roar, Leaves with a Whisper. Jenner & Block LLP

On Wednesday, November 1, during a closed meeting, President Trump quietly signed into law House Joint Resolution 111, thereby voiding the Consumer Financial Protection Bureau's (CFPB) arbitration agreements rule.[1] That rule, which we wrote about in more detail here, was promulgated in July, and, starting in early 2018, would have precluded providers of a variety of consumer financial products and services from including class action waivers in their contracts with consumers.

Under current law, providers of most consumer financial products are free to preclude their customers from pursuing claims on a class basis.[2] This practice has been criticized as unfairly limiting the legal recourse available to consumers-the CFPB's rule was aimed at addressing this concern, but the rule came under fire for, among other things, potentially increasing the risk of frivolous litigation.[3] In order to prevent the CFPB's rule from going into effect, House of Representatives member Keith J. Rothfus introduced Resolution 111, and the House passed the Resolution by a vote of 231 to 190 in late July.

Last week, the Senate passed the Resolution by a vote of 51 to 50, with Vice President Pence breaking the tie.[4] President Trump then signed the Resolution, over a plea from CFPB Director Richard Cordray on Monday to instead veto the Resolution.[5] Cordray reportedly wrote, in part, "I think you really don't like to see American families, including veterans and service members, get cheated out of their hard-earned money and be left helpless to fight back," and "I know that some have made elaborate arguments to pretend like that is not what is happening, [b]ut you are a smart man, and I think we both know what is really happening here."[6] Read more at LEXOLOGY

CFPB reports more auto buyers are choosing riskier, longer-term loans

Forty-two percent of auto loans issued over the last year will require at least six years to repay, marking a sharp increase since 2009 when just 26 percent of auto loans had six-year repayment terms, the Consumer Financial Protection Bureau (CFPB) reported on Wednesday.

The CFPB's report found that the higher number of six-year auto loans contributed to a downturn in the number of five-year loans as six-year loans were more popular among borrowers with lower credit scores. The average credit score of six-year loan borrowers was 39 points lower.

"The move to longer-term auto loans is opening up more risk for consumers," CFPB Director Richard Cordray said. "These loans are more expensive and can result in consumers continuing to owe even after they are no longer driving their car. Consumers should know before they owe and shop for the best deal based on costs incurred over the life of the loan."

Consumers buying more expensive cars are more likely to select longer repayment terms, the CFPB report found. The average five-year loan amount was $20,100, the average six-year loan amount was $25,300 and the average seven-year loan amount was $32,300.