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Financial Reform CFPB’s First Move with a Director in Place: Confront ‘Nonbanks’

From TIME, January 5; by Brad Tuttle

One day after President Obama appointed Richard Cordray as director of the Consumer Financial Protection Bureau over the objections of Senate Republicans, the bureau announced the launch of a new “nonbank supervision program.”

What’s a “nonbank”? That’s the CFPB’s term for a lender that doesn’t have a bank, thrift, or credit union charter. Mortgage lenders, payday loan operations, debt collectors, and consumer reporting agencies are all considered “nonbanks.”

For Banks, Little Progress on Loans to the Unbanked

From American Banker, September 22; by Kevin Wack

Please note, this publication requires a subscription to access the full article.

Despite years of encouragement by their regulators to provide small-dollar loans to people without access to traditional forms of credit, banks largely remain reluctant to enter the field.  At a congressional hearing on September 22, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency could point to little progress on the issue since 2009.

…”At some level, restrictions that are too tight on providers could make it unviable to offer small-dollar loans to the underserved, causing regulated companies to exit the market,” testified Melissa Koide, vice president of policy at the Center for Financial Services Innovation. “Conversely, placing too little emphasis on consumer protections leaves open the door for unaffordable and abusive products.”

Credit Union Times: Senate Panel Approves Cordray Nomination to Head CFPB

October 6, 2011–On a party line vote, the Senate Banking Committee today voted to confirm former Ohio Attorney General Richard Cordray to be the first director of the Consumer Financial Protection Bureau.

Guzman Issues Statement on Cordray Nomination to CFPB

On October 6,  2011, The U.S Senate Banking Committee voted to advance Richard Cordray’s nomination to serve as the first director of the Consumer Financial Protection Bureau (CFPB). In response, Gerri Guzman, CRC Executive Director, issued the following statement:

CRC is a consumer group advocating for greater access to credit.  CRC supports the CFPB’s mission to deliver strong consumer protections while preserving and expanding credit options.  We will work with Mr. Cordray, if confirmed, and the CFPB on issues that are important to our members, such as improving financial education, offering protection from bad actors, ensuring clarity for all bank and non-bank products, and most importantly, protecting and expanding their options in accessing all forms of credit.

Are Payday Loans Better Than Overdraft Fees?

From MainStreet, September 1; by Matt Brunell

If you’re in the habit of running out of money and bouncing checks, a new study suggests that you might be better off going to a payday lender.

The study from Moebs $ervices, an economic research firm, found that consumers who bounce a check get hit, on average, with a $28 non-sufficient funds fee by their bank. That’s compounded by an average $30 penalty assessed by many retailers. Some banks let you avoid the embarrassment of a bounced check by offering an overdraft service, but the study found that those cost you an average of $34 per check.

CRC Statement on Release of Short-term Credit Ballot Initiative in Missouri

“This ballot initiative is an ill-advised assault on all forms of consumer credit that, if passed, would hurt Missourians by eliminating their only real credit options and forcing them into more-expensive and credit-damaging alternatives,” said Consumer Rights Coalition (CRC) Executive Director Gerri Guzman. “CRC will consult our more than 10,000 members in Missouri to get their input on how they wish to engage in this potential ballot initiative.”

Gerri Guzman is executive director of Consumer Rights Coalition (CRC). CRC is a consumer-based, non-profit organization dedicated to ensuring that Americans will continue to have access to a variety of credit options. CRC has more than 200,000 members across the nation.

Could Restrictions on Payday Lending Hurt Consumers?

A new study released by the Federal Reserve Bank of Kansas City finds: “Restricting payday lending could deny some consumers access to credit, limit their ability to maintain formal credit standing, or force them to seek more costly credit alternatives.”

Loan options: Overturning a bad ban

 From a Union Leader editorial, April 25, 2011:

In 2008, as the economy was tanking, Democrats in the Legislature passed, and Gov. John Lynch signed, a bill that outlawed payday lending in New Hampshire. The Democrats thought it was terrible that people could get short-term loans that carried very high interest rates. They never said what the alternative to not getting those loans would be.

Consumers won with defeat of payday lending restrictions

From the Lexington Herald Leader, April 11, 20011:

During the recent session of the General Assembly, self-appointed consumer activists once again tried to deny Kentuckians options in the short-term credit market by pushing a bill to force payday lenders out of the state. Fortunately, there were enough bipartisan free-market advocates in the legislature to defeat this infringement on consumer rights; but the activists swore to return with the same bill next year.

WILLIAMS: Cash-flow quagmire in America

Are banks and state governments unwittingly colluding to prevent millions of Americans from being able to afford to pay their bills or profitably run their small businesses?

Tip of the Week

The Consumer Financial Protection Bureau (CFPB) has launched an inquiry into checking account overdraft programs to determine how these practices are impacting consumers. They are asking consumers to provide comments on their experiences with overdraft protection. Has it helped? Has it hurt? Are the fees clear or confusing?
Make your voice heard on overdraft fees by submitting a comment today!

The consumer voice

by Gerri Guzman

New Proposal Granting Upfront Credit Card Fees

The New York Times reported last month that the Consumer Financial Protection Bureau introduced a proposal that would make it easier for credit card issuers to charge fees before borrowers’ accounts were officially open. A card with a $300 credit limit could be subject to a $95 processing fee, as well as a $75 annual… Read more…