In the opposing corner is the Community Financial Services Association of America (CFSA), based in Alexandria, Virginia. The payday lender trade group, founded in 1999, said on July 7 the tribal/payday lender affiliations “are solely a practice of some Internet-based lenders who choose not to license themselves in the states in which they operate, but rather rely on the law of the sovereign nation.”
CFSA said its “best practices require that all our member companies that offer payday advances through the Internet must be licensed in the state in which the customer resides and that they comply with all applicable state laws.” This “ensures strong consumer protections wile preserving access to short-term credit.”
A study done earlier this year by the Washington, DC-based Center for Public Integrity alleged that Internet-only lender/tribal arrangements were “rent-a-tribe” arrangements to get around state rules and potential lawsuits, an update from earlier “rent-a-bank” arrangements in states that had fewer restrictions on this kind of lending.
In addition to announcing Richard Cordray as nominee for CFPB head, the new consumer protection bureau also released its progress report.
CFSA couldn’t agree more with what Elizabeth Warren wrote in her blogpost that announced the progress report:
Americans are looking for an honest marketplace. They want to know the costs up-front, so that they’re not blindsided by hidden fees, interest rate changes, or payment shocks. A properly functioning market relies on consumers’ getting the information necessary to make the best decision for themselves and their families. Consumers have the power to drive markets, but only if they’re provided with the basic information that lets them choose products that meet their needs and reject those that do not.
To learn more about CFSA’s mission to promote strong consumer protections when using payday advances, click here.
CFSA BEST PRACTICE #1: FULL DISCLOSURE
A member will comply with the disclosure requirements of the state in which the payday advance office is located and with federal disclosure requirements including the Federal Truth in Lending Act. A contract between a member and the customer must fully outline the terms of the payday advance transaction. Members agree to disclose the cost of the service fee both as a dollar amount and as an annual percentage rate (“APR”). A member, in compliance with CFSA guidelines where they do not conflict with applicable federal, state or local requirements, will further ensure full disclosure by making rates clearly visible to customers before they enter into the transaction process.
Earlier in the year, when the CFPB launched its Web site, CFPB Director Nominee Richard Cordray went on the record to discuss how the agency would work with state attorneys. Get a recap by viewing the following video below:
Despite getting “sidestepped” as some in the media are portraying, Elizabeth Warren sung praises of CFPB Head Nominee Richard Cordray. Released earlier this morning, Warren said the following of Cordray in a White House blogpost:
“Rich will be a strong leader for this agency. He has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as Attorney General of Ohio, and throughout his career. He was one of the first senior executives I recruited for the agency, and his hard work and deep commitment make it clear he can make many important contributions in leading it. Rich is smart, he is tough, and he will make a stellar Director. I am very pleased for him and very pleased for the CFPB.
…
The agency has stepped out in the right direction. The work is good. But this agency needs to have its full powers right now, and that means we need Rich in place as Director. Today, I’m celebrating — but I’m not taking my eye off those who want to cripple this agency. We got this agency by fighting, we stood it up by fighting, and, if takes more fighting to keep it strong and independent, then we can do it.”
Earlier this afternoon, and after much speculation over the weekend, President Barack Obama nominated former Ohio AG Richard Cordray to head the Consumer Financial Protection Bureau (CFPB).
Obama and Cordray were joined in the Rose Garden by Elizabeth Warren, widely considered the architect of the bureau. Though consumer groups wanted her to be named its leader, Warren was strongly opposed by Republicans and would have faced a difficult path to confirmation. And now the question remains: Will Cordray receive the same treatment, given that Senate Republicans have refused to confirm any nominee without changes to Bureau.
“Richard has helped stand up the bureau’s enforcement division over the past six months. He took this job, which meant being away from his wife and twins back in Ohio, because he believes so deeply in the mission of the bureau,” Obama said at the White House.
Elizabeth Warren recently sat down with the New York Times’ DealBook to discuss the attacks on the bureau, the delay in naming its director, and her dog Otis. Click here to watch the interview.
There are ‘No Plans for Bans‘, according to yesterday’s House Committee on Oversight and Government Reform hearing.
As the Wall Street Journal reports, White House adviser Elizabeth Warren said yesterday that the CFPB isn’t seeking to ban certain financial products, addressing Republicans’ questions about the scope of the consumer-watchdog agency set to open its doors this time next week.
Here’s a play-by-play of Warren and and Rep. Dennis Ross:
Ross: “Can you name any product, service, or transaction, not already illegal that is unfair, deceptive, or abusive within the meaning of the Dodd-Frank Act.”
EW: “Congressman, can I start by saying we have not been in effect for a year…”
More commentary about the accuracy of being in effect for a year…
EW: “Congressman, I can recall no product … I have had no discussions with my team about a particular product.”
Ross: “Don’t you think that’s one of the most important things though? It’s a power to ban…”
EW: “…Congressman, I appreciate the advice. But actually, no. I think that what we should be doing is concentrating on places where we can best make changes in the marketplace.”
Ross: “So then it would be okay if we just revoked the power?”
EW: “…We have priorities. And our first priority in rulemaking is around TILA/RESPA forms. We are trying to reduce regulatory burdens at the same time that we’re trying to increase the understanding for consumers so that they can make good product choices.”
Rep. Dennis Ross yields his time to Rep. Trey Gowdy, who then asks Warren about whether or not the CFPB should ban payday lenders:
Gowdy: “Payday lenders have a bad reputation for taking advantage of people, no one should expect to be treated well by them. Do you know who said that?
EW: “Probably me.”
Gowdy: “So that would be one group that should be banned?”
EW: “Congressman, there’s a lot of space between banning a product and making a product clearer to consumers.”
…
Gowdy: “So you do not think payday lenders should be banned?”
EW: “The statue is unambiguous and we have no authority to engage in usury caps.”
Gowdy: “That wasn’t my question. Do you think payday lending should be banned.”
EW: “Congressman, payday lending is one of the areas that will be under our jurisdiction.”
Gowdy: “Do you think it should be banned Professor Warren?”
…
Gowdy: “Should they be banned?”
EW: “Or to make better. We have a whole agency and we have a whole process to work on this. We have a lot of different tools available at the Consumer Financial Protection Bureau. One of the advantages we have is that it’s possible to work on multiple fronts at once.”
