ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

CFPB's Cordray asks Trump to veto rollback of arbitration rule

Let it not be said that Richard Cordray, director of the Consumer Financial Protection Bureau, has shied away from tackling long-shot causes.

On Monday, six days after the Senate gave final congressional approval to overturn the consumer watchdog's rule against forced arbitration, Cordray sent President Trump a letter urging a presidential veto of that vote.

The rule was aimed at blocking banks, credit card issuers, and other financial firms from requiring consumers to resolve any disagreements through arbitration, rather than allowing them to band together and pursue potential class-action lawsuits.

"Many have told me I am wasting my time writing this letter - that your mind is made up and that your advisors have already made their intentions clear," wrote Cordray. "I urge you to heed the views of the American Legion, the Military Coalition, and millions of Americans by vetoing the congressional resolution disapproving the arbitration rule."

Cordray's timing may have been a bit off.

The Trump White House was likely busy. The first indictments came down Monday in special counsel Robert Mueller's investigation of whether anyone close to Trump took part in the Russian government effort to influence the outcome of the 2016 election that sent the New York businessman and former reality TV star to the White House.

Left unmentioned was public speculation that Cordray, a former Ohio attorney general, might seek the state's governor post in 2018 - and how the battle over the arbitration rule might help his image as a consumer champion. Read more at USA TODAY

GOP in uncharted territory rolling back rules through resolutions

Republicans are not only ending Obama-era regulations, they are hoping to slam the door on future regulatory actions in an unprecedented campaign that could have an impact for years to come.

The GOP Congress has repealed 14 rules from the Obama administration and one new rule from the independent Consumer Financial Protection Bureau (CFPB) since President Trump took office.

Regulations that have been rolled back include regulatory actions that limited the state's ability to drug test for unemployment benefits, created new reporting requirements for potential government contractors who have violated labor laws and protected consumer rights to settle disputes with financial institutions in court.

Under the procedure that Republicans are using, a federal agency is barred from issuing a "substantially similar" regulation in the future without an act of Congress.

Whether the GOP can rule out future action, however, remains to be seen. The whole process, based on the 1996 Congressional Review Act (CRA), is uncharted territory.

The legislation, which gives Congress 60 legislative days to repeal a rule after it's finalized, has only been successfully used once prior to the Trump administration - in 2001 - to dump an ergonomics rule from the Occupational Safety and Health Administration.

No agency has ever tried to challenge a resolution of disapproval passed under the CRA, so there's no precedent on what's considered a "substantially similar" rule.

Amit Narang, a regulatory policy advocate at Public Citizen's Congress Watch division, claimed the law is vague and shouldn't be seen as a roadblock to future rulemakings. Read more at THE HILL

From the editor: More CFPB noise and dealer victories. by Nick Zulovich

ORLANDO, Fla. - Twice now in roughly the past month, the Consumer Financial Protection Bureau largely became the conversation topic when a collection of dealers gathered, and raucous sounds filled a hotel venue.

In September, a fire alarm triggered a brief evacuation as a CFPB representative was in the midst of a segment during the National Policy Conference hosted by the National Independent Automobile Dealers Association. Then earlier this week during the Fall BHPH Conference orchestrated by the National Alliance of Buy-Here, Pay-Here Dealers, noise began to echo inside the hotel venue literally just hours after a razor-thin vote margin in the U.S. Senate squashed the CFPB's rule to ban arbitration.

A few minutes after the collection of BHPH dealers and industry service providers cheered when NIADA's Steve Jordan - who was moderating a panel discussion about regulatory developments and relayed the Senate vote implications - hotel staff nearby began using equipment that emanated noise similar to when a forklift or large truck is moving in reverse.

Because he had to pause for a moment since nothing else could be heard, the ever-clever Jordan quipped, "That's not a panic alarm. That's the CFPB backing up and taking stock of their position," drawing a round of laughter as the equipment noise suddenly stopped.

If the CFPB representative who attended NABD's event was in the room at the time, that individual likely wasn't smiling about the situation. Vice President Pence broke a 50-50 Senate deadlock on Tuesday night about the time Game 1 of the World Series concluded - giving the industry a victory some leaders might contend would surpass the Los Angeles Dodgers taking the opener of the Fall Classic. Read more at AUTO REMARKETING

Don't bank on a return of this payday loan alternative

If you've been awaiting the return of a popular payday loan alternative, don't hold your breath.

Don't bank on a return of this payday loan alternative

Deposit advances once were offered by banks like Wells Fargo and Fifth Third Bank. Like payday loans, they covered folks who needed quick cash in emergency situations and charged high interest rates in return.

When strict guidelines made deposit advance loans virtually impossible to sell, banks dropped them in 2014.

Fast forward to 2017. One regulator has tossed out its guidance, allowing national banks to bring deposit advances back from the dead. But a new payday lending rule could keep them from making a comeback.

Missed out on all the drama? Here's a quick look at what transpired. And if you can't get a deposit advance loan, you can find lines of credit and personal loans at banks and credit unions.

Deposit advance loans vs. payday loans

Deposit advances were small, short-term loans. They were repaid within weeks when banks pulled funds from an upcoming direct deposit.

Generally, deposit advances were only available to existing bank customers, says David Pommerehn, associate general counsel at the Consumer Bankers Association. Though they were compared to payday loans, he says they weren't as risky.

"In many ways, the deposit advance products were far more safe than payday products in general," Pommerehn says. "They were well-liked by consumers that used them." Read more at BANKRATE

CFPB to Keep Auto on the Agenda in 2018

LAS VEGAS - While auto finance fell down on the Consumer Financial Protection Bureau's priority list in 2017, that doesn't mean it will not be a regulatory focus going into 2018.

Specifically, the CFPB's agenda is to "understand the complete lifecycle of an auto loan - before the loan is made, all the way through when the loan is paid off or goes into repossession," said Calvin Hagins, deputy assistant director for originations in the office of supervision policy at the CFPB.

"[In 2018,] we will be looking at institutions based on risk, and trying to do exams where we conducted a servicing review already - whether it was this year or will be in 2018, or what we've done in origination exams - so that we have the whole picture together," Hagins told attendees at the 2017 Auto Finance Summit last week.

In particular, compliance management systems (CMS) will remain a top focus next year. The CFPB expects institutions to have a process in place for their CMS, regardless of whether or not the bureau "shows up," Hagins said.

"The degree of CMS will vary based on risk in the institution as well as the complexity of operations," he said. "... The objective here is to not have a one-size program for every institution."

Additionally, the CFPB will continue to use information or issues gathered from other regulators and consumer complaints to use as "red flags" and "indicators for things we should consider," Hagins said.

In the CFPB's annual report which covers its fair lending activities in 2017 and priority focus areas in 2017, mortgage and student loan servicing are listed as a top focus. Scrutiny on mortgage lending could filter to auto in many cases, Hagins said at AFS. Read more at AUTO FINANCE NEWS

50 state snapshot of student debt: A nationwide look at complaints about student loans

We have handled more than 50,000 student loan related complaints describing servicing breakdowns, debt collection hurdles, and "debt relief." These complaints help us to recognize and work to stop industry practices that harm consumers and can serve as the first step in a process that halted industry practices harming some of the most vulnerable individuals, saved hundreds of millions of dollars for tens of thousands of student loan borrowers, and strengthened aspects of the student loan repayment process to protect millions of consumers.

Student loan borrowers collectively owe more than $1.4 trillion in student loan debt.

We've released a state-by-state snapshot showing how this debt is spread across the country. It also breaks down the complaints we handled from student loan borrowers in every state.

Read the full report

Repealing the CFPB's Arbitration Rule a Win for American Consumers

Reigning in the administrative and protecting economic freedom at the same time

This afternoon President Trump is expected to sign a bill passed by Congress, with Vice-President Michael Pence as the deciding vote, that overrules a July 2017 regulation created by the Consumer Financial Protection Bureau to forbid mandatory arbitration clauses in contracts relating to financial services products.

Despite outcry from some on the left, ranging from Senator Elizabeth Warren (D-Mass.) to class-action trial lawyers to CFPB Director Richard Corday, the override bill is another major step towards restoring Congressional oversight of the administrative state. Furthermore, it also ensures that Americans retain the freedom to contract as they see fit, especially concerning items as fundamental to daily life as financial services products (credit cards, banking accounts, mortgages and other loans, etc.).

Congress passed the CFPB-override bill last week through the Congressional Review Act (CRA), a Gingrich-era bill that allows Congress to block regulations created by administrative agencies within a brief time-window. Prior to the Trump Administration, Congress only exercised this power once since its creation in 1996, that one time being all the way back in 2001. However, since President Trump took office, the CRA has been successfully utilized almost a dozen and a half times. Read more at THE AMERICAN SPECTATOR

So What If You Can't Join a Class Action?

You're not missing much. The Consumer Financial Protection Bureau is wildly exaggerating the harm of banks' arbitration clauses.

Breathes there a man with heart so dead that he has not wanted to sue his credit card company? Well, apparently there are -- in the Senate of the United States.

Last week, they narrowly voted to overturn a ruling by the Consumer Financial Protection Bureau which would have banned banks from using forced arbitration clauses to prevent consumers from banding together in class actions and suing the heck out of their financial institution.

The left was not pleased.

"Wall Street won and ordinary people lost," said Richard Cordray, the head of the CFPB.

"This bill is a giant wet kiss to Wall Street," said Senator Elizabeth Warren, adding: "Bank lobbyists are crawling all over this place, begging Congress to vote and make it easier for them to cheat consumers."

At first blush, this rule sounds hard to defend. How could anyone -- even Republicans -- want to deny consumers their day in court against giant banks that would, if allowed, undoubtedly turn us upside down and shake us until the last few cents fell out of our pockets?

We Americans love the idea of our "day in court." We are a litigious people, and always have been, and we love the idea that before the majesty of the law, we are all, at last, perfectly equal: the president of Citibank, and the ordinary HVAC installer who's struggling to make his credit card payments. When anyone starts tinkering with our right to sue, we are apt to get pretty testy about it. Read more at BLOOMBERG

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