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SGA Publishes Lending Zoning Ordinances White Paper
AFSA’s State Government Affairs Department published a white paper on zoning ordinances which attempt to restrict borrowers’ exposure to payday and title loan businesses, but are sometimes written so broadly that they have significant unintended consequences on other sources of small dollar credit, such as traditional installment loans. AFSA’s paper identified 257 ordinances across the United States that restrict payday and auto title lending, a quarter of which either have a definite or potential effect on installment lending businesses. The paper details several threads that are common throughout the ordinances, including moratoriums on new businesses, limits on the number of businesses permitted in a municipality, and restrictions on how far these businesses can be from each other and areas like schools and churches. The paper also outlines new and moving state legislation that either authorizes municipalities to impose restrictions or preempts these local ordinances.
SGA also performed a substantial update to its regularly updated lending establishment zoning ordinance tracking chart in conjunction with the paper’s release.
New Member Welcome
AFSA welcomes new active members Crossroads Equipment Lease & Finance, Dealer Funding, Southern Loans, Blackhawk Finance and ML Credit Holdings, as well as new business partners The Plateau Group and Neo.
Bank of America to Pay $772 Million Over Credit-Card PracticesThe Wall Street Journal (04/09/14) Zibel, Alan
Bank of America reached a settlement on April 8 dealing with allegations brought by the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC). The regulators charged that Bank of America “both deceived consumers and unfairly billed consumers for services not performed.” The company agreed to pay $727 million in refunds to customers and a $45 million penalty. This settlement marks the fifth of its kind against a major bank over credit card-related products, such as identity theft protection and debt cancellation.
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Cordray Reiterates CFPB Rulemaking ProcessSubPrime Auto Finance News (04/07/14)
During a recent speech at the American Bar Association, Consumer Financial Protection Bureau (CFPB) director Richard Cordray reiterated the bureau’s focus on regulatory action as well as rulemaking, including a new program called regulatory implementation. Cordray pointed to the small business administration as an example of how the process is designed to work, including the creation of small business review panels that are meant to inform the bureau on the effects their regulations have on the business community.
GOP Wants CFPB Merged with Other RegulatorsHousingWire (04/08/14) Garrison, Tarry
The April 8 House Financial Services Committee hearing on the Consumer Financial Protection Bureau (CFPB) and the economic impact of its policies quickly led to a heated exchange. The hearing was meant to focus on all regulators, but ended up focusing almost exclusively on the CFPB. Committee Chairman Jeb Hensarling (R-TX) noted that the CFPB should be using cost-benefit analysis when considering rulemaking.
U.S. Consumer Bureau Details Diversity Efforts after ComplaintsReuters (04/04/14) Stephenson, Emily
In response to concerns over the management and oversight of its employees, including some charges of discrimination and harassment, the Consumer Financial Protection Bureau (CFPB) is stepping up its training programs and teaching managers to spot harmful behavior. The bureau emphasized that they took the allegations leveled against it very seriously and that steps were being taken to make corrections.
Chicago, Federal Housing Finance Agency End Vacant-Buildings DisputeChicago Tribune (04/08/14) Podmolick, Mary Ellen
Vacant homes backed by Fannie Mae and Freddie Mac will have to register with the city of Chicago, but will not have to pay the registration fee, according to an agreement reached on April 7. A U.S. District Court decision by Judge Thomas Durkin in August that properties backed by the GSEs were exempt from the ordinance had been holding up implementation. The Chicago ordinance requires vacant property owners, including banks and financial institutions, to register their property and pay a $500 fee. A $1,000 penalty is imposed for each infraction. The city countered that exempting properties backed by Fannie and Freddie would create a disparity in the mortgage market and in the city’s efforts to rehab homes.
Subprime Surge Helps March Used Sales SoarSubPrime Auto Finance News
March used car sales rebounded strongly after a subpar February, in part due to a large number of subprime consumers investing their tax refunds in new vehicles, according to CNW Research. For the first time this year, used car sales surpassed three million units, a 50 percent gain on the previous month. Sales at independent dealerships also topped one million. Sales to consumers with FICO scores below 550 increased by nearly 57 percent from February to March and used car sales overall increased 2.7 percent year over year.
April 10, 2014
AFSA Newsbriefs is a weekly executive summary of AFSA initiatives and consumer credit articles. AFSA Newsbriefs is free for members. Send an email to firstname.lastname@example.org to subscribe.
The American Financial Services Association, or AFSA, is the national trade association for the consumer credit industry, protecting access to credit and consumer choice. The association encourages and maintains ethical business practices and supports financial education for consumers of all ages.