Today's Headlines

    States to Feds Back Off on New Fintech Bank Plan

    Wall Street Journal, Telis Demos & Rachel Witkowski (January 11, 2017)

    The Office of the Comptroller of the Currency (OCC) soon will begin considering special applications to allow financial technology companies to obtain national banking charters. The idea, according to the OCC, is to bring fintech firms under the supervision of the federal government and allowing them to make loans while pre-empting specific state laws.

    In response, some larger states plan to challenge the OCC’s plan. “Fintech may be a catchy new word, but the concept of online finance isn’t new,” said Maria Vullo, superintendent of the New York State Department of Financial Services, in an interview.

    State regulators argue that their laws are a protection against abusive lending practices. Regulators fear that payday loan companies will argue that they are fintech firms and use charters as an end run around state laws.

    Fintech advocates argue that that dealing with dozens of state laws hurts innovation and that national banking licensing can help more agile startups perform well in the space.

    In its proposal, the OCC argued that state laws would still apply in many cases and that consumer protection was a critical part of its mission. 

    House Passes REINS Act

    AFSA Staff

    Last week, Politico reported that House Judiciary Committee Chairman Bob Goodlatte (R-VA) is working closely with the incoming Trump administration to pass regulatory change legislation.

    On January 3, Goodlatte introduced the Regulatory Accountability Act, a package of bills that would eliminate judicial deference to agencies and increase notification requirements.

    On January 4, the House passed the Midnight Rules Relief Act, which would permit Congress to rollback en masse any regulations finalized by the Obama administration in the final 60 days of his administration.

    On January 5, the House passed the Regulations from the Executive in Need of Scrutiny (REINS) Act by a nearly party-line vote of 237-187. The bill would require congressional approval for "economically significant" regulations passed by executive agencies. “Economically significant” is defined as any regulation that would have an impact of more than $100 million. If the regulation failed to pass Congress and be signed by the President in 70 days, it would be null and void.

    Republicans and proponents of the legislation argue that the bill will return oversight to Congress and increase accountability and transparency before major rules take effect. House Speaker Paul Ryan (R-WI) argues that the act will ensure that the government "gets it right."

    Opponents, mainly Democrats, argue that the bill would undermine the important bureaucratic and consumer protection agencies and hamper the ability of those agencies to enact rules that are already authorized by statute.

    AFSA supports the REINS Act and will continue advocating for its passage in the Senate. 

    Dems Name Reps. to House Financial Services; Letter Urges Cordray’s Ouster

    AFSA Staff

    House Financial Services Committee Ranking Member Maxine Waters (D-CA) announced the appointment of four freshmen Democrats to the House Financial Services Committee to replace members who have joined other committees or left office. Reps. Josh Gottheimer (NJ), Vicente Gonzalez (TX), Charlie Crist (FL), and Ruben Kihuen (NV) are the newcomers. Crist is a former Governor of Florida.

    House Financial Services Democrats sent a letter to President-Elect Donald Trump warning him against removing Consumer Financial Protection Bureau (CFPB) Director Richard Cordray for cause before his term expires in 2018. "Any attempts to remove Director Cordray are without historical precedent, and intended solely to distract the Director and the Bureau from its important work," the lawmakers wrote. "We urge you not to bow to [special interests] demands to initiate costly, meritless litigation, and we stand ready to oppose any efforts you make to do so."

    Republican Senators Ben Sasse (NE) and Mike Lee (UT) sent a letter to the Trump administration urging them to fire Director Cordray, emphasizing unconstitutionality of the Bureau's structure and its lack of accountability. Under Director Cordray's tenure, the CFPB has "advanced an overreaching regulatory agenda through enforcement actions instead of rulemakings-circumventing a process designed to provide notice and ensure that divergent perspectives are heard on regulatory issues," the letter stated.

    The House Steering Committee has announced Rep. Tom Graves (R-GA) as chairman of the House Appropriations Committee's Financial Services Subcommittee.

    Many Congressional Democrats view themselves as the CFPB's last line of defense, so AFSA expects them to continue to push back on Cordray's removal, as well as changes to the Dodd-Frank Act. However, new House Financial Services Committee members, Crist and Gottheimer, are members of the New Democrats Coalition - a group of moderate, pro-growth lawmakers, which indicates they may be receptive to AFSA's priority of CFPB reform.

    AFSA is encouraged by Senators Sasse and Lee's letter to the Trump Administration, indicating that the Senate will also focus on CFPB reform this year. AFSA also has a good relationship with new Appropriations Financial Services Subcommittee Chairman Rep. Tom Graves, which may be helpful during the budget reconciliation process.

    CFPB Releases Debt Collection Survey

    AFSA Staff

    Today, the Consumer Financial Protection Bureau (CFPB) released a debt collection survey, which was the “first-ever national survey of consumer experiences with debt collectors.” The CFPB said in a release that its survey found that nearly one in four consumers “felt threatened” by debt collection efforts.

    In conjunction with the survey, the bureau is also releasing a study on potential risks in the online debt marketplace and holding a field hearing in Washington, D.C. Additionally, the CFPB has gathered what it is calling “consumer debt collection stories,” narratives from consumers detailing their experiences with debt collectors. 

    “The Bureau today casts light on troubling problems in the debt collection industry,” said CFPB Director Richard Cordray. “More than one-in-four consumers report feeling threatened by a debt collector, and a majority of those contacted about debt say the calls persist even after requests to stop. The Bureau is working to clean up abuses in this industry, and to see that all consumers are treated with fairness, decency, and respect.”

    The report outlines a number of different findings. A few of them include:

    ·         A debt collection company or creditor about a debt contacted nearly 70 million Americans in the previous 12 months;

    ·         Three quarters of consumers report that debt collectors did not honor a request to cease contact;

    ·         More than 50 percent of consumers reported an incorrect contact for at least one debt;

    ·         One in seven consumers contacted about a debt report being sued and nearly 40 percent report that they were contacted more than four times per week.

    The full report is available via the CFPB’s website. AFSA is attending the field hearing and will keep members aware of any important developments.

    Former Rep. Neugebauer Discusses Importance of Credit Access with President-elect

    AFSA Staff

    Yesterday, President-elect Trump met with former Congressman Randy Neugebauer (R-TX), who is among those under consideration to head the Consumer Financial Protection Bureau (CFPB) if Trump removes current director Richard Cordray. “We discussed ideas about how to ensure consumers have access to credit and innovative financial product choices,” said Neugebauer. Neugebauer also told The Financial Times, “what Trump knows is that access to credit is extremely important. So I think he’s going to be sensitive to an agenda that says, you know what, we may have wound these regulations up so tight that we’re not able to get credit out to the people that can create jobs.”

    Neugebauer, the previous chairman of the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee, has long been a critic of the CFPB’s regulatory overreach and a strong proponent of CFPB reform. During the last Congress, Neugebauer was responsible for introducing a bill to replace the director with a bipartisan, five-member commission.

    AFSA has worked with Neugebauer during his time in Congress and is encouraged by his conversation with President-elect Trump about the importance of ensuring access to credit.