CFPB: A Potential Danger Not Only to Payday Loans but to Every American Citizen

Not many Americans are aware of the Consumer Financial Protection Bureau. That is indeed a scary notion for the American citizens because the federal agency which was established in 2010 is slowly trying to take control of their lives by hitting them where it hurts the most – their wallets. The federal agency’s unreasonable fight against helpful financial products like payday loans and their providers, the payday moneylenders has already financially hurt millions of underprivileged American citizens, who are not considered worthy enough for a membership in the traditional banks –  the major defaulters behind the financial collapse of 2008, ironically one of the reasons behind the inception of the Consumer Financial Protection Bureau.

People need to be aware of the fact that the federal bureau which has been publicized as. ‘the watchdog of American Economic practices’ is actually more than a mere watchdog. It is an agency which holds the most power and minimal accountability. It is the first time in the history of Washington bureaucracy that such a level of unquestionable authority and power had been meted out to one organization. One could argue that it serves as a picture-perfect illustration of the political left’s treacherous belief that the ends at all times validate the means.unsecured-loans-can-be-easily-obtained-through-payday-lenders-direct-6516

The federal agency did actually start off as an organization with an imperative mission. But it was strategically and quite conveniently designed by Democrats to dodge checks and balances. No other regulatory agency in the history of the country has held such allowances, even the ones who are accountable for consumer and investor safety. The strange, unique and faulty design is precisely why a panel of three federal judges declared that the Consumer Financial Protection Bureau is organizationally unconstitutional.

In its current arrangement, the federal agency is an insult to the Constitution. It is an affront to checks and balances and any other due procedure. That is why there has been a roaring support for the Financial CHOICE Act. This act can vicissitude the Consumer Financial Protection Bureau from an unconstitutional and in many ways un-American agency of non-elected officials into a constitutional and responsible civil administration agency that imposes consumer protection regulations developed by the Congress.

The Consumer Financial Protection Bureau’s present director, Richard Cordray, irresponsibly disregards the due procedure protections that have always been profoundly entrenched in our country’s legal system ever since it gained independence in 1786. This exploitation may produce headlines, but it might ultimately fail to attain justice. The Dodd-Frank Act gives the highly controversial director extremely wide-ranging powers to control consumer credit goods, still, Cordray continually ignores the law and the resolve of Congress by tip toeing around existing laws.

In the court’s verdict that stated that the Consumer Financial Protection Bureau’s structure was unconstitutional, the judges discovered that Cordray singly re-explained the law and then fundamentally shaped his personal law. Adding to that, the court also stated that Cordray had overlooked the ruling of restrictions to rationalize imposing an enormous penalty on an American corporation. This is a disgraceful defilement of due procedure rights.

In this argument, it must be remembered that rightful consumer protection places control in the hands of citizens, not well-off Washington officials and bureaucrats. Rightful consumer protection encourages competition and options, ensuring that every consumer has an access to honest and advanced markets that are dynamically regulated for scams and trickery. The Financial CHOICE Act holds the hardest penalties in for anyone committing financial scams, anyone caught engaging in insider trading or other forms of deception. Unlike the CFPB, it doesn’t aim to abolish helpful products like payday loans, but it aims to catch the real perpetrators.

AFSA in Favor of Services like E Payday Loans

The executive vice president of the American Financial Services Association more commonly known as the AFSA, Bill Himpler turned his attention to the Consumer Financial Protection Bureau’s extensive supervisory reach over the consumer credit business which is regulated by respective states. This industry largely consists of payday money lenders who make products like e payday loans available to customers in desperate need for quick cash. These customers generally belong to the poorer sections of the society and have no affiliations with established traditional banks. Hence, they are forced to turn to services like this which serve as their last hope in many situations.

Bill Himpler also spoke about the need for Congress to modify the Consumer Financial Protection Bureau’s actions. He said that an approval needs to be given by the Congress on its budget and he also mentioned the need to amend the federal agency’s structure. These opinions were meted out the day after the Consumer Financial Protection Bureau’s official semi-annual visit to the United States House, as Himpler accompanied three other specialists in attesting to the subcommittee of House Financial Services on Financial Institutions and issues concerning consumer credit services in a sitting entitled, – The Examination (thorough analysis) of the Federal Financial Regulatory System (FFRS) and Prospects for Reform.

By providing a memo, the subcommittee specified that providers of economic facilities are usually subject to a variation of supervisory and administrative requirements. This court hearing was made ready to inspect the influence the regulations and procedures have had on financial corporations and their consumers from federal monetary agencies, especially the-

  • Federal Reserve System – the fundamental banking system of the country.
  • The Office of the Comptroller of the Currency
  • The Federal Deposit Insurance Corporation
  • The Consumer Financial Protection Bureau
  • The National Credit Union Administration

Legislators and policymakers noted the court hearing was also about to inspect chances for reform of these other major federal financial agencies. The factor kept in mind was the target of refining transparency, answerability and due procedure of structured officials and bodies and their customers.

Himpler pointed out that though many are absorbed on the vast size of such financial institutions deeming them too large to bomb, American Financial Services Association was worried about the financial institutions which were deemed too trivial to prosper under the burden of Consumer Financial Protection Bureau’s extensive regulations.

Himpler stated that the American Financial Services Association strongly believed that short term or long-term credit must be made available to every citizen who has the capability of managing it. He said that such facilities should not be restricted only to the rich and wealthy or to the upper middle-class people who can afford a high credit score. In written testimony, Himpler said that he was not sure that the Consumer Financial Protection Bureau made it apparent enough to show that it shared this ideology of his. He further added that the federal agency was showing indications of being believers in the theory that credit must only be made available to those debtors who do not show any signs of risk. Former acting assistant secretary for financial institutions at the Treasury Department, Amias Moore Gerety said that residents and taxpayers should be the fundamental consideration when assessing variations to our governing system.

The American Financial Services Association’s position on the Consumer Financial Protection Bureau made it clear that they were embodying what had been on the minds of many Americans. The federal agency’s fight against services like e pay day loans and their providers the payday money lenders is against the interests of millions of American citizens who do not have access to traditional banks.

This entry was posted on November 9, 2017, in Payday Loans.

Alabama Consumer Credit Task Force’s Unfair Fight against Payday Advance and Payday Lenders

Max Wood is the owner of numerous car title loan and payday advance loaning stores in Montgomery and other parts of Central Alabama. He also operates most of them on his own. After the Consumer Financial Protection Bureau waged a mission to destroy the likes of Max and other payday money lenders across the country, he stated that he had grown used to the countless obstructions state policymakers and lobbying politicians had tried to generate over the years in order to get him and other local payday money lenders out of business.direct_payday_loans_pros_cons1

But even Max, a person who is used to witnessing irresponsible regulations being set up is shocked at the Alabama administration’s most recent effort to command policymakers, under the course of the now ex-Governor Robert Bentley.

Bentley is a Republican. He resigned just a while back after facing scandal, in a directive delivered the previous June, called for the foundation of the Alabama Consumer Credit Task Force.

Max Wood had said that the Alabama Consumer Credit Task Force was a party-political act, designed to harm the payday money lending industry.

During the time of Alabama Consumer Credit Task Force’s inception, Robert Bentley claimed that the complications involved in consumer credit and money lending along with the possible harm it could cause to customers apparently had augmented over the years and customers supposedly had to often come across additional charges and levies that were camouflaged in such a way as to deliver no clear direction about the minutiae of the credit products and the actual procedure of the deal.

The task force which was allotted to function under Robert Bentley’s command was to include at the very least thirty-three members from different state agencies, legislative groups and special interest and trade associations along with any supplementary appointments the governor considered compulsory and of immediate requirement.

The task force assembled by the ex-Governor was given the task of studying and identifying areas for detailed revision over the next six to seven months. The task force was expected to report its discoveries, conclusions, and recommendations to Robert Bentley by 30th January of that year. The recommendations which were given to Bentley, could in accordance with Bentley’s command, take the shape of regulatory or constitutional reforms.

At long last, a body of 35 people was called to the task force. Out of the 35 called, only three of them were representing the industry. This was perceived as a matter of disgrace and humiliation of those operating in the short-term money lending business, including Max Wood.

Max said that the majority of the task-force members were opponents of the payday money lending industry. The group of 35 people included members of activist groups, individuals, and institutions who directly competed the short-term money lenders and overall consisted of people would be against payday advance providers said, Max. He complained about the absence of any local operators or pay day money lending business representatives and any consumers who engaged in taking payday loans. He went on to say that instead of establishing a fairground for a fair approach, the task force was loaded with all the people who fundamentally hated their industry.

Many money lenders who felt cheated like Max would say that it was karma to see Bentley resign from his post as governor on April the 10th, effective instantly. He pleaded guilty to two charges of malfeasance associated with campaign finance laws. Despite the likes of Consumer Financial Protection Bureau and Alabama Consumer Credit Task Force doing everything to stop services like payday advance, its popularity among consumers is the only factor strengthening the case of payday money lenders like Max.


Strange and Long Trip of Payday Loan Providers Through 2017

An air of uncertainly loomed over the short-term lending industry, especially payday loan as it became clear that the CFPB was going to finally release their proposed list of regulations for the short-term lending industry as a whole. The regulations brought about some real changes – strict analysis of borrower’s ability to repay loans, individual loan payments per day must be limited to a level that did not cause any financial trouble, lenders need to allow borrowers to reborrow instantly and in the event that there is insufficient funds to repay the loan, lenders can make an attempt to directly debit payments from the accounts of the borrowers.Banks Being Scrutinized By Regulators for Payday-Like Loans

The new regulations did not go further.

Supporters of the regulations argue that the rules are only an attempt to protect the consumers from getting caught in the debt trap. Critics, however, are of the opinion that it restricts the customers’ access to credit and funds. Caught in between both the groups is payday lending consumers.

Who is a typical payday loan borrower?

Non-PaymentAs per the Pew Charitable trusts, typical payday lending customers are white women between the ages 25 and 44. Payday lending providers helps millions of Americans find a quick solution to their financial bind. It offers them access to credit and they can use that money to take care of their pressing needs before the next paycheck.

In the absence of short-term lending, where will the customers go?

It is difficult for high-risk customers to obtain loan from traditional financial institutions. There is often pressure on banks and other large financial organizations to wiggle their way out of having to offer any kind of loan to risky borrowers. Even though Richard Cordray, director of CFPB, thinks that small banks and credit unions will be able to offer loans at reasonable rates, it is not entirely true. The high rate of defaulters often makes these agencies pull the plug on offering loans. To them, short-term lending is unprofitable and too risky.

Some supporters of CFPB even suggested that Post Officers can act as short-term, low-cost lenders. However, there are strong arguments against Post Offices functioning as banks. This is because it has never been the purpose of the Post Office. So, consumers practically have nowhere to go if the payday lending industry is forced out of business.

Some options for payday lenders to consider

There are innovators who offer software solutions that can help payday lenders to tie into their POS and verify the borrowers’ status, amount, loan term and interest rare as per the state usury laws. This technology exists in 16 states and in such states, there is no abuse of the system.

Alternatives to payday lending have been dreamed of, such as Cumulus launched in 2016 at the Innovation Project. But, nobody knows how these solutions are going to function in the brand new regulatory system.

One thing is for sure that payday day lending is a very simple issue, but it does not have a simple solution. This is because lending to a class of borrowers with a history of not repaying loans is not easy. So, it is no feasible to offer them short-term loan at low rates of interest.

The payday lending industry heavyweights are of the opinion that destroying small-dollar loans would cause millions of Americans a lot of problem. They might not even be able to manage their day-to-day expenses. Payday loan is something that a lot of Americans depend on. In a utopian world, it would have been easy to give our small-term loans at very low interest, but it is not realistic.

Mr. Cordray, It’s Time to Step Down to Let Payday Loans Online Providers Breathe

CFPB or the Consumer Financial Protection Bureau is a controversial agency and continues to remain polarizing. The US Court of Appeals for the District of Columbia recently declared that the structure of 1 director followed by the bureau is unconstitutional. In light of the criticisms and the voters’ desire for a modification of the status quo, CFPB need to refrain from pushing regulations about payday loans online providers before the president’s enters his office.cfpb

It is common trend for federal agencies to implement some last-minute regulations when a new administration takes over the government. These regulations are usually rushed and supported by low quality assessment of the benefits and expenses. Since CFPB’s regulation can influence the financial well-being of tens and thousands of Americans, they should take time and act in good faith.

For instance, the proposed regulations on payday lending and arbitration have sparked a lot of public interest. 1.4 million comments have been received by the payday rule, which ranges from legal and economic analysis to people’s personal stories about how they quite terrified about losing access to important products and services.

The CFPB needs some time to carefully consider and reply to genuine concerns highlighted by the commenters. The staff of the bureau will really need to work 24/7 to be able to sift through, review and analyze the 1.4 million comments internally before the new administration takes over the reins of the government. Scrutinizing the comments of the arbitration rule is going to take some more time. The bureau’s proposed rule on arbitration and payday lending is going to influence significant change in the financial services market and affect so many consumers, along with their accessibility to credit. The bureau should give it the attention and time that it needs.

CFPB need to exercise control to get the rules right and to maintain legitimacy. Originally, the bureau did not have any accountability to the president and the Congress. Its structure was recently held as an independent agency by the decision of a federal appeals court. The court even said that the director of the CFPB is the single most powerful official in the entire US government, next only to the president.

The problem was addressed by the court and it gave the president the power to sack the director for various reasons other than neglect of his duty. The president has the authority to oversee the work of the CFPB and fire the director, just like for any other agency.

The CFPB also need to avoid taking aggressive actions for the interest of legitimacy until the new president decided on who he wants as director for the bureau. The future of CFPB is uncertain, and therefore, any new rules will be viewed as an invalid attempt to dictate policies. This can lead to the rules being overturned by the new administration and can cause even more uncertainties in the industry.

Instead of putting the financial industry under whipsaw policy, the bureau and its director need to step away from the pen. CFPB should spend some time to work through the information that it has received as response for its proposed rules. This way, the new administration will be able to make better, informed decisions. The major goals of the bureau is to protect the customers and promote innovation and access in financial products and that does not change. The best way for the bureau at this moment is to wait before inaugurating and announcing the final policy regarding payday loans online industry. They need to really take the time to evaluate and assess the whole situation.

Pitfalls That Force Consumers to Apply for E Payday Loans

Attorney General Eric T. Schneiderman’s office partnered up with the federal Consumer Financial Protection Bureau (CFPB) in filing a complaint in a federal district court against an influential immense debt gathering system that executed their plans from Buffalo. These schemes are the main reason why people who don’t engage in financial malpractice fall into debt and have to resort to means like e payday loans.

The CFPB alleged that the perpetrators had dishonored the ‘Fair Debt Collection Practices Act’. Eric T. Schneiderman and the CFPB also asserted that the offenders dishonored the Dodd-Frank Wall Street Reform along with the Consumer Protection Act, which forbids prejudicial and misleading acts in the consumer monetary market. Their grievance also alleged recurrent deceitful acts and dishonest acts or in defilement of New York law. The offenders were clearly violating the New York state debt-collection laws too. Precisely, the CFPB and the Attorney General accused that the perpetrators MacKinnon and Gray (the ringleaders) along with their chain of debt collection companies had committed these malpractices:payday-online

Exaggerated consumer arrears which distorted sums consumers owed. The perpetrators had altered to consumers the amounts they actually owed by adding of amounts they never owed and weren’t indebted to recompense. The illegal corporations did not have a lawful right to gather these amounts from the customers. Explicitly these companies – Northern Resolution Group, Enhanced Acquisitions and Delray Capital had illegitimately tagged an additional amount of $200 to every consumer debt-account they had attained, irrespective of the fact that appropriate state law or the fundamental agreement between the consumer and the initial issuer allowed such dues or costs. Many cases showed that this evil arrangement went on to inflate the sums owed by appending on the extra unofficial charges and levies to the amounts outstanding. Many hoarders cited consumers balances that surpassed 600% of the actual debt amount.

These organizations also went on to deceptively portend legal action. The corporations misleadingly threatened consumers with lawful acts that the hoarders had no purpose of taking. In actuality, they never mentioned a case for trial. In one case, the businesses stressed one consumer by telling their victim that she didn’t even have the time to get legal representation as she was going to be arrested the day after. Some cases have shown the companies falsely accusing consumers of acting criminally. The companies also had fibbed to their customers, making claims of their arrest to burden them to pay additional amounts which they told them were part of their debts. These misleading practices could also have exaggerated the comparative precedence consumers gave to opposing financial obligations.

The organizations also mimicked law-enforcement administrators, government agencies, and officers of the high court. These fraudsters conducted falsified calls and emails to make it show as if their customers were being communicated by government officials. The businesses used call-faking skills to show their customers that the collectors were actually calling from real government agencies. These agents would conduct bombardment of calls to consumers and their families, portraying themselves to be government officials with powers to arrest the customer for being unable to pay the full amount of the debt.

The Consumer Financial Protection Bureau is a newly formed agency. It is dedicated to helping consumers in various finance markets by making highly effective regulations through consistent just enforcement of those rules. The agency alongside Attorney General Schneiderman demanded that the court should levy heavy penalties on the fraudulent company and its associates for their demeanor. They also called for compensation for the victims, many of them who were deeply hurt financially and were barely managing to live off by attaining further debts and e payday loans. There is a high need to be aware of such fraudsters in today’s world.


Payday Advance – a Thing of the Past Now That The CFPB Is Gone!

Encouraging no hassle, a federal court had condensed the United State of America’s most influential and self-regulating supervisory agency to one of the most ardent receivers of political notions. The agency which was at the root of increasing financial malpractices like the upsurge in both availability and acquisition of payday advance and other such financial loopholes that the average man was forced to get into.

The U.S. Court of Appeals which falls under District of Columbia adjudged that the Consumer Financial Protection Bureau, shaped as a portion of the 2010 Dodd-Frank financial modification struggle, did not obey a Constitution based on checks and balances. In simpler terms, the leader of the CFPB had excessive control and the agency had lavish levels of freedom from any supervision which was frankly un-American at its core.

Banks Now Trying To Compete With Payday LendersThe rather newly formed agency saw a lot of heads turn, especially the common folk who needed economic reform but the structure of the agency was deemed undemocratic and quite rightly so. The organization had been intended to unify the supervision of consumer economic foods such as loans, credit cards. These amenities had previously been spread among numerous agencies, of whom all failed. The CFPB’s readiness to charge fines and recover reimbursement for consumers in several types of financial swindles had initially made it a champion for consumer supporters and a worry for fiscal lobbyists and the politicians, chiefly Republican, who supported them.

The judgment, in a case that upturned a $109 million imposition charged by the CFPB against loan and mortgage creditor PHH, arose, incongruously, just as the agency had achieved one of its major successes. The chief executive of Wells Fargo, John Stumpf had resigned following fines by CFPB and other controllers. To sort out the discoveries that the financial organization might’ve deceitfully opened new financial records for consumers in order to achieve sales targets.

The court ruling was an impediment for Senator Elizabeth Warren, who has been accredited for incepting the idea of an agency like the CFPB. She was also likely to have become its first director. She discharged the court ruling on as a minor and insignificant, “tweak” on the hypothesis that the agency would ensure occupying its role as it has before by directors chosen by Democratic presidents. That hypothesis might have been too superficial.cfpb

In the court ruling, the pleas panel constituting of three members settled 2-1 that the agency’s edifice dishonored the Constitution’s, “separation of powers” facility due to the fact that the agency wasn’t adequately answerable shockingly, either to the president of the country or even to the Congress. The system also lacked the built-in checks and balances of the dual-party commissions followed by other prominent independent agencies. For example, the SEC, has five administrators, two chosen from each party and a chairperson habitually allied to the party occupying the White House. Other major agencies, too, have similar structures. The CFPB instead has a lone leader with extensive. The director can be fired only by the president that too after presenting a viable cause. That director is established by the Senate or else Congress has diminutive influence in the agency’s business. Even the money is not handled by Congress but comes directly from the Federal Reserve. The CFPB being technically a unit of the Federal Reserve allows a little or no control over the banks.

The Consumer Financial Protection Bureau was never meant to live up to what the people thought it would achieve. Its complexity proved to be a burden on businesses forcing the reduction of jobs and increase of activities like payday advance which harm the masses in a highly negative manner. The current government knows about this and is acting strongly to fix this. That might be a glimmer of hope for our economy.

Jobs Aplenty, No More Need for Payday Loans Online, Thanks To Donald Trump

President Donald Trump has been rendering most of his anti-elitist campaign orotundity into policy declarations. This aggressive attitude towards breaking of shackles can prove to be a great thing for people who deal with money, people who engage in high quantity fiscal operations, payday loans online, etc. This is because the next shackle in contention for Trump’s dismissal is the Dodd-Frank Act. The heinous act must be gotten rid of as it has made the shifty Wall Street banks a superior danger to the country’s macro economy and especially the common man.direct_payday_loans_pros_cons1

Ever since the government answered for the 2008 financial catastrophe, the big banks, the culprits have gotten bigger in terms of financial power while meek community fiscal organizations have died out at a frequency of one every day. This hard-hitting truth of modern American society was posted on Trump’s official transition website. The statement went on to speak about the fact that taxpayers have remained on the edge despite having bailed out the banks and other financial firms who were considered to be immutable due to their sizes in 2008. The statement also said that Trump’s team of Financial Services Policy Implementation would be looking forward to the dismantling of the Dodd-Frank Act replacing it with original policies, ones that will actually encourage economic growth and create jobs.

Adding to the promise of annulling the Dodd-Frank Act, the statement on his website also outlined numerous policies that he had spoken a lot about in his campaign. They included demands for a suspension of new policies so that the present measures could be revised. The statement also spoke at length about a tax-code refurbishment. It declared the president’s plan to be seen from a broader view as meeker, more reasonable and pro-growth.

The decision to get rid of Dodd-Frank Act is not expected to be received as good news for Senator Elizabeth Warren. Even the staunch Trump critic had nothing bad to say about Trump’s motives. She said that she would be eager to work with the arriving administration to ratify economic and banking policies as long as Trump did not change the existing rules. In remarks arranged for an AFL-CIO labor alliance occasion in Washington, she quoted matters they agreed upon, with the need to limit Wall Street impact in government. The reinstatement of the Glass-Steagall Act restricts banking actions and reform trade agreements. She said that when the time comes for President Trump to take on these issues by implementing new policies keeping in mind his goal of increasing the economic safety of middle-class families, she would happily join in. Warren a Massachusetts Democrat promised to put aside their problems of the past and work with the president to achieve their mutual goal.

The new government’s strategies for a much-needed financial revamp needs certain regulations. However, this could pull from a suggestion which came out previously this year. The proposal was by Representative Jeb Hensarling who is a Texas Republican. He leads the House Financial Services Committee. He had an idea of a bill which was dubbed the ‘Choice Act’. The bill demands the tearing up of the fundamental parts in Dodd-Frank Act. It includes a facility that authorizes the government to pull to pieces banks or financial organizations who have failed in their endeavors. The Texas Republican also wishes to do discard the Volcker Rule limitations on banks’ dealings and investments. His plans also include formulating ways to deteriorate the influence of the Consumer Financial Protection Bureau.

Anyone familiar with financial terms like payday loans online or macro or micro economics should be able to understand the importance of what Donald Trump is doing. Under him, the future looks bright for USA’s stagnant economy.

Sudden Harsher Restrictions On E Payday Loans and Their Effects On the Masses

Situations and moments are very fickle; no one has the slightest of the notion what is going to happen the next moment. While everything may seem like near perfect this very moment, the next moment might welcome about a completely new accident that no one thought about. This was exactly what happened when the news about the newest changes in regulation in the lending of loans was inflicted by the Consumer Financial Protection Bureau (CFPB). While it seemed like a “good” change for some who already have their impending luxuries, this definitely came out as a shock for the people who depend on the e payday loans. These new restrictions were talked down upon by maximum of the citizens who vividly depend on the payday loans in times of need.Banks Are Offering Payday Loan Type Services

What Are Payday Loans?

For a very brief idea about what this entails, Payday loans are the small amount of money that is sanctioned to be loaned to a certain person on a higher rate of interest for a shorter time frame. It has been seen on a lot of occasions that the date of returning the money is often set on the borrower’s pay day but this rule is not applicable all the time. The borrower even has to pay an advance check with the said day when the money is to be returned.

The amount of money that is mostly lent via the payday loans doesn’t exceed $500 and the rate of interests are often under a close margin from $15-$100 depending on the amount of money that is loaned.

What Are the Implications of the Restrictions?

The newest set of regulations and restrictions that are inflicted on the entire lending system of money has affected the payday lending schemes and companies the most as per the calculated statistic made by Competitive Enterprise Insitute. These are those sudden assurances that help people guide through a sudden turmoil but these sudden restrictions are surely going to leave people in a pickle.unsecured-loans-can-be-easily-obtained-through-payday-lenders-direct-6516

The payday loan market is a big and widespread one. According to several reports, over 12,000,000 citizens of America opted for this way out during their times of need. The newest restrictions on these cash advances are sure to leave people in a financial liability in times of severe need. People without proper rainy-day savings or even a credit card won’t be able to easily appeal for these now that the restrictions have been tightened.

  • The most common people who seek out for these quick cash advances are either women or young citizens with an annual wage varying from $30,000-$35000. The quick cash was an easy and a quicker way out but several reports have now claimed that it is most likely that the women and the African-Americans are the ones who are going to suffer the wrath of these restrictions the most.
  • It is not just the borrowers who are going to be affected but even the payday loaners because it has been estimated that there will be a cut shortage of 3/4th of the total payday lending market. It is most likely possible for over 20,000 payday loaners might end up leading an unprofitable organization which is definitely a blow for them as well.

The only argument put forth by the CFPB is that people often “overuse” the advantages that the payday loan schemes bring them. They even expect these sudden restrictions on the regulations are more likely going to increase the free market interaction with the consumers and the sellers which are nothing but a far-fetched notion.

This sudden demarcation on the e payday loans seems to just affect a certain part of the area which is unjustifiable. If the aim of this is to bring about the changes as mentioned by the CFPB, then the effects of the same should be similar for every strata and race which definitely looks like a big question mark at the moment.

Obama Administration Accused by Payday Lenders of Last-ditch Effort with Operation Choke Point

The Obama administration is being accused by short-term lenders of attempting a last-minute effort to crack down on their industries by using Operation Choke Point. This has caused an emergency situation where businesses are not able to perform their basic functions, such as paying their employees.

Following a loss of more than dozens of banking relationships over the past few weeks, payday lenders asked for emergency relief from the program of the government from a federal judge in the District of Columbia. The program has been severely criticized for incorrectly targeting businesses that are legitimate.cfpb

CEO of Community Financial Services Association of America (CFSA), a trade association representing about nine thousand short-term lenders, Dennis Shaul, said that immediate relief is more important than ever. He believes that some members of the CFSA will be coerced to dramatically retrench their operations and others might have to shut down altogether without an injunction against Operation Choke Point.

The Justice Department designed Operation Choke Point in 2012 for attacking telemarketing, Internet, mail and other such mass market scam against the end-users by restraining swindlers’ access to the banking system.

The Justice Department believed that by partnering up with federal regulators including the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, they will be able to crack down on scams by utilizing federal regulators to pressurize the banks out of offering their services to businesses that are fraudulent.
However, critics of the program including several Republicans in Congress said that the program was being used to put financial pressure on legal industries that the Obama administration did not like, payday lenders and firearms sellers.
The Justice Department was contacted by the Daily Signal for an update, but they did not respond.

In April, a former official of President Barack Obama’s Justice Department said that the program has unintentional, but collateral consequences on the US consumers and banks. The complaints regarding the program damaging legal business owners have not stopped since then.

Operation Choke Point: A Shadow Campaign

A spokesperson for Advance America, the largest payday lending agency, Jamie Fulmer, said that the program is a shadow campaign against the businesses that abide by the law. To eliminate short-term lending, backdoor tactics are being utilized by regulators.

In a lawsuit filed in 2014 against the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the Federal Reserve for their participation in the program, the CFSA and Advance American are co-plaintiffs.
The chief financial officer for Advance America, Christian Rudolph, said that at least twenty-one banks have sent the organization notifications for termination since 2013.

When requesting an emergency injunction against the program, he said that recently the terminations of the bank have reached a point where it has significant begun to restrain the ability of Advance America to carry out its business operations and it is on the verge of being refused to even hold a bank account.

Payday loans are typically small-dollar, 2-week loans that are meant to be given back when end-users receive their paycheck. Payday lenders usually charge a fee of $15 for every $100 borrowed.

Critics are worried that borrowers are going to struggling with repaying the loans leading to higher fees and eventually leaving the consumers in a cycle of debt. Supporters are of the opinion that industry offers a much-needed service to the Americans in financial bind or lack accessibility to the bank. They even argue that paying late fees on a credit card or the costs of bounced checks are much higher.

The case, Federal Deposit Insurance Corp. VS CFSA, is still going on and last year, the court granted it to move forward on the basis that the federal government might have breached the clause of the Fifth Amendment.

As per this clause, the lawyers for CFSA argued in court documents that the stigma established by the government against their industry under the program has been deprived of their right to having bank accounts and there selected business line. The negative effects of the program have been spoken out by the victims since the program was launched in 2013. A number of accounts have been documented by the Daily Signal.

But, the bank officials neither confirmed nor denied the theories of the federal regulators.

When a judge was asked for an emergency relief by CFSA and Advance America, however, the lawyers incorporated a written statement from the chairman of the Business Bank of Texas, Ed Lette.

Lette traced out how federal regulators from the Office of the Comptroller of the Currency coerced him to put a stop to a mutually advantageous relationship with a Texas-based payday lender, Power Finance Texas.

An expert in financial regulations at the Heritage Foundation and a critic of Obama’s program, Norbert Michel, said that it is very unusual for bankers to be discussing their problems publicly with their regulators.

The Office of the Comptroller of the Currency does not comment on any open litigation, but they did point to a testimony by Daniel Stipano, the agency’s deputy chief counsel, in 2014. Stipano had said that the agency does not direct banks to matters of individual accounts or even encourage banks to be engaged in termination of customer accounts. In case the bank is unable to manage the risks presented by a customer or the customer is related in any suspected illegal or criminal activity, the agency may direct the bank, via enforcement action to discontinue a customer’s account.

Stipano even confirmed that some of the requests that they had received during 2013 from the Justice Department were associated to Operation Choke Point.night-television-tv-theme-machines

The Program Reaches Beyond Payday Lenders

Payday lenders are not the only industry complaining about the program. The chief operating officer of Western Shamrock, a Texas-based installment loan corporation, Tom Hudgins, said that his industry also felt the pressure. Their sources of funding continue to be pressurized and their banking relationships at the local level continue to be discontinued. Hudgins operates three hundred locations in nineteen different states.

Installment loans are repaid over time and they have been around for much longer than payday loans. It differs from payday loans in the sense that they are fully underwritten and need strict verifications of the customers’ ability to repay the loan.
CEO of Banner Finance, an installment loan business with thirty-seven branch offices in 4 different states, Randy Dalton, said that there have been at least been 3 instances over 2 years where he had had to change banks because of terminations. He said that he has lost some bank relationships that his company had cherished for more than 50 years.

He said analyzing the current situation is of utmost importance and he is scared to think what will happen next.

A New Administration Brings Hope

Both installment and payday lenders agree that they have reasons to be hopeful, regardless of the uncertainties. Even though Donald Trump, the President-elect, has not made any comments on the Operation Choke Point, attempts have been made on multiple occasions by the Republicans in the Congress to terminate the program.

Sens. Ted Cruz, R-Texas, and Mike Lee, R-Utah, presented legislation aimed at deciphering Operation Choke Point, and the 2 are regular allies of Trump’s nominee for attorney general, Jeff Sessions.

The administration of Trump has not said much about the program, except that it is going to change very soon.