The Federal Trade Commission announced yesterday that they will be mailing checks to over 110,000 payday loan customers who had been deceived into paying for unrelated prepaid debit cards when applying for loans. The total amount paid out will be approximately $1.9 million.
The FTC alleged that payday loan marketers Matthew Patterson, Mark Benning, Jason Strober, and Swish Marketing, Inc., worked with debit card marketers Jerry Klein, Joshua Finer, and VirtualWorks, LLC, to design the deceptive payday loan application form that triggered a charge of up to $54.95 for a prepaid debit card with a zero balance.
Could Obama miss seeing a CFPB director appointment during his first-term in office? Some think that the Cordray confirmation could be drawn out for weeks, if not months.
“This situation will continue until 2013,” said Mark Calabria, a former Republican staffer on the Senate Banking Committee who is now director of financial regulation studies at the Cato Institute. “Republicans are unlikely to support anyone until all three of their changes are made. Just keeping the agency around is viewed as a major compromise.”
According to American Banker, The U. S. Court of Appeals for D.C. Circuit Court ruled July 22 that the Securities and Exchange Commission did not properly conduct a cost-benefit analysis before finalizing a proxy rule required by the regulatory reform law.
So what does this mean for all other agencies? Well, they could be next.
The decision serves as a stark warning for all federal regulators tasked with writing the myriad of regulations under Dodd-Frank, and gives the industry and others more leeway to challenge new rules in court.
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“The entire Dodd-Frank implementation is at heavy risk because if any of these rules are challenged by the courts, they won’t survive,” said Hal Scott, Nomura Professor and Director of the Program on International Financial Systems at Harvard Law School.
The Consumer Bankers Association’s President Richard Hunt talks to Fox about on why there is no nominee to head the Consumer Financial Protection Bureau.
It’s not too late to provide public comment to CFPB’s proposed list of rules that are currently under the regulatory jurisdiction of other agencies. After considering any public comments, the CFPB will publish a final list in the Federal Register no later than July 21.
Public comments on the proposed list of rules are due by June 30.
Director or not, the CFPB will be up and running come July 21st.
On July 21, the bureau will formally open its doors and will be able to send its examiners into Goldman Sachs, JPMorgan Chase and other financial titans — whether or not it has a director. It can also issue new rules for big banks, examine their books and file enforcement actions, all crucial steps for an agency that was born only a year ago.
“They have almost unlimited ability to go after the banks on consumer issues,” said Jaret Seiberg, a policy analyst at MF Global. “They’re saying, ‘We’re the new sheriff in town.’ ”
Seiberg goes on to say that Bureau’s powers will be “muted” and that it will lack the weight in needs (meaning a director) to oversee some less regulated corners of the finance industry. We’re not too sure we agree with “less regulated.”
Our industry operates currently in 32 states and CFSA is working to be regulated on all 50 states. While the industry does not want to be regulated out of business (as industry critics would like), it has always supported responsible and balanced regulations that protect consumers, while preserving their right to financial options and access to credit.
Over the past decade, most states have created or maintained a regulatory environment that satisfies the robust consumer demand for small dollar, short-term loans. Working with CFSA, state policymakers have balanced the interests of the industry with substantive consumer protections that ensure responsible and informed use of the product. As a result, millions of satisfied consumers have enjoyed the convenience and economic benefits of payday advance services without complaint. In fact, a 2009 analysis of consumers’ use of payday loans found that 88 percent were satisfied with their last loan.
Of course … down at the bottom of the article, Steven Schlein, CFSA’s spokesperson said this:
“We are not participating in the politics of this … We want to see the Bureau staffed with qualified people who will take the short-term lending industry and needs of consumers seriously.”
Senator Richard Shelby, the leading Republican on banking issues, has finally thrown support to one of the White House’s nominees in government agency leadership. In recent months, Shelby’s opposition helped sink the nominations of Peter Diamond to be a governor of the Federal Reserve Board and Joseph Smith to be director of the Federal Housing Finance Agency. But now he’s singing a different tune with the FDIC.
“I believe he is a credible, honest man and I look forward to supporting him,” Shelby told Reuters in an interview about Martin Gruenberg.
The Consumer Financial Protection Bureau opens next month. The new federal agency was created in the wake of the financial crisis, and it’s charged with creating and enforcing consumer financial protection laws. Even before the agency starts operating, there is a great deal of controversy about its reach. Host Michel Martin discusses the CFPB and how it will change things for consumers with NPR business reporter Tamara Keith and Money Coach Alvin Hall.
The stalemate has lasted so long that it would be virtually impossible for the Senate to vet any candidate before the agency opens for business July 21, even if a compromise could be reached. The White House could make a recess appointment during the Independence Day holiday, but Republicans have promised to keep the Senate in session. The CFPB has said it will be ready to start work on the launch date, even if it has no leader and sharply curtailed authority.
One tiny little inaccuracy in the article that we wanted to clarify:
The industry also chafed at the prospect of payday lenders, check-cashers and other financial firms flying under the radar of the new agency unless a director is named, while banks will still be subject to the CFPB under existing regulations.
Not all payday lenders are unregulated. Since the 1990s, states have steadily gained expertise in regulating the payday advance industry. That knowledge has led to broad discretionary power for state regulators to impose new licensing requirements, interpret or enforce existing regulatory requirements in different ways, and issue new administrative rules.
CFSA members are regulated by state law. State regulations are meant to ensure that the payday advance remains a responsible, small dollar, short-term loan product.
