One of the common elements in the CFPB’s growing regulatory interest over prepaid cards and payday lending is the challenge the bureau faces in balancing strong consumer protections from excessive fees or high interest rates, on the one hand, and maintaining consumer access to such products, on the other.During a hearing last week before the House Financial Services Committee, CFPB Director Richard Cordray felt political pressure to strike the perfect balance in both lending sectors. Ranking Member Maxine Waters, D-CA, came out strongly in favor of cracking down on lenders that service the payday market, otherwise referred to as small-dollar lending. “Do you think there is any way we can bring payday lending under control anytime soon?” she asked ...

Issuers of open-end credit cards would get a one-year break from the Truth in Lending Act/Regulation Z requirement to forward their credit card agreements to the CFPB on a quarterly basis for posting in a public database on the agency’s website, under a proposed rule the bureau issued recently. The proposal would temporarily suspend card issuers’ obligations to submit agreements to the bureau for a period of one year (i.e., four quarterly submissions), in order to reduce burden while the bureau works to develop a more streamlined and automated electronic submission system. Other requirements, including card issuers’ obligations to post currently offered agreements on their own websites, would be unchanged under the proposal. “The bureau recognizes that its proposed temporary ...

The CFPB could issue its long-awaited payday loan proposed rule as early as July, according to Isaac Boltansky, an analyst with Compass Point Research & Trading in Washington, DC. “We expect the CFPB to initiate a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel in the days ahead, which will serve as the starting gun for a rulemaking process we expect to last through 2015,” Boltansky said in a recent client note. “Given the contentious and complicated nature of the small-dollar rulemaking effort, we estimate that the proposed rule will be released this summer with the final rule release possibly slipping to 2016.” More specifically, he expects the SBREFA panel to convene at least by the end of February. From ...

A dozen Republican members of the U.S. Congress wrote to the bureau last week to suggest five key principles it should follow in adopting rules for payday loans and other short-term lending. First, all rules or regulations for the short-term lending industry should be based on large-scale data analysis and tested research, “not anecdotal or agenda-driven rhetoric.” The bureau also ought to consider the potential impact on small businesses and not impose excessive compliance costs that lessen their ability to provide access to credit to consumers, the House Republicans said. Third, the CFPB also must keep in mind the effects its rules might have on consumers in rural areas and avoid overzealous regulations that can disproportionately harm rural or underserved ...

The CFPB is likely to throw its weight around just as much this year as it did last year, only its focus and intensity will be more diverse in terms of the industries that will be affected. Back in 2014, much of the regulatory concern among lenders had to do with the bureau’s ability-to-repay rule with its qualified mortgage standard, and to lesser extents its rules on mortgage servicing and loan originator compensation. Make no mistake. The mortgage industry is still in the CFPB’s crosshairs. The biggest payload to be delivered in this regard in 2015 is the long-awaited and much discussed integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. That rule ...

Loopholes in the current Military Lending Act rules are allowing lenders to offer high-cost consumer loans to military families by skirting the 36 percent rate cap – in some cases, charging more than 300 percent – as well as sticking them with excessive fees for the products they use, according to recent comments and a report by the CFPB. The MLA is implemented by the Department of Defense, and is enforced by the bureau and other federal regulators. The CFPB filed a comment letter in support of the DOD’s recent proposal to broaden the scope of the MLA rules to cover deposit advance products, and more types of payday, auto title and installment loans. Currently, the MLA rules provide service members and ...

After a rough first quarter in which consumer complaints filed with the CFPB rose by 29.1 percent (mostly because of credit reports), the second and the third quarters have seen double-digit declines, 14.8 percent in 2Q14 and 14.6 percent in 3Q14, according to a new analysis by Inside the CFPB. Of the nine categories of gripes tracked, seven showed declines, all by double digits, with the money transfer sector leading the drop-off, down 28.4 percent from the second quarter. Debt collection criticisms slid 20.5 percent, followed by mortgages (17.6 percent), bank accounts (15.4 percent), student loans (14.5 percent), credit cards (12.1 percent) and credit reports (10.0 percent). The two rough spots were grievances about consumer loans, which were up 28.4 percent [with two exclusive data charts] ...

In a case that highlights the sensitivity of personal financial information and the firms that trade in it, the CFPB convinced a federal judge last week to freeze the assets of the Hydra Group, an online payday lender, and to put a receiver in place to stop an alleged illegal “cash-grab scam” at the business.According to the bureau, the Hydra Group used information purchased from online lead generators to access consumers’ checking accounts to illegally deposit payday loans – usually $200 to $300 – and withdraw fees ranging from $60 to $90 without consent. The organization then allegedly used falsified loan documents to claim that the consumers had agreed to the phony online payday loans. The CFPB’s lawsuit alleges that Richard ...

Commercial banks and thrifts reported a modest decline in their non-mortgage ABS investments during the second quarter of 2014, although several key sectors showed growth, according to a new analysis and ranking by Inside MBS & ABS. Bank call reports show that the industry held $171.2 billion of non-mortgage ABS in portfolio as of the end of June. That was down 0.8 percent from March, marking the second straight quarterly decline after bank ABS holdings hit a record $173.8 billion at the end of 2013. Bank holdings of auto loan ABS actually increased...[Includes one data chart]

New issuance of non-mortgage ABS dropped slightly during the second quarter of 2014 from the robust levels recorded in the first quarter of 2014, according to a new analysis and ranking by Inside MBS & ABS. A total of $49.14 billion of non-mortgage ABS were issued during the April-to-June cycle, an 8.0 percent decline from the first quarter of 2014. But new issuance remained...[Includes three data charts]