ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

NEWS: September 1, 2015

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CFPB is Example of Government Overreach and Bureaucratic Bungling: Op-ed by Ben Carson, GOP Presidential Candidate
I have often said it is the natural tendency of those who achieve power in government to never give it up, and to keep expanding it absent a conscientious effort to say enough is enough.

Today we have a gigantic, bloated government that is far larger than our Founding Fathers would ever have permitted. And it keeps growing, in both spending and bureaucracy. It is one of the primary reasons why we find ourselves with a national debt surpassing $18 trillion.

One of the latest massive expansions came early in the Obama years when a Democratic Congress passed the Dodd-Frank banking law and gave birth to an entire new agency called the Consumer Financial Protection Bureau. The CFPB is the ultimate example of regulatory overreach, a nanny state mechanism asserting its control over everyday Americans that they did not want, did not ask for and do not need.
Don't get me wrong. Protecting consumers is important. But that protection begins with consumers exercising their own self-reliance, carefully making good choices and understanding the consequences. And when those consumers run into unscrupulous vendors, there are already plenty of strong remedies available to them from the courts and the Better Business Bureau, to the Federal Trade Commission, the FDIC and numerous state and local consumer protection agencies, including state attorneys general.

Despite those many protections, Democrats in Congress still insisted on creating a new government agency with many overlapping responsibilities to those regulators already in existence. During that creation process and the five years since, the folly of bureaucracy has been on full display. The CFPB spent royally on itself, even building a headquarters more expensive per square foot than a casino resort. And rather than help other Americans, the agency has inflicted problems on its own employees, with rampant reports of discrimination, hostile workplace and low morale.
But the ultimate reason why I oppose the creation of new bureaucratic machines is that once started they know no limits in usurping Americans' liberty. The CFPB has gone looking for problems to solve that don't exist or that already have good solutions on the table. And in that process, bureaucrats begin dictating lifestyle choices. CFPB has done little to rein in the Wall Street banks which, along with complicit federal regulators, caused the very financial crisis and massive consumer abuses it was designed to combat. Rather, the bureau is devastating Main Street with regulatory costs.

Read Ben Carson's entire statement at WASHINGTON TIMES

Payday Loans are a Right: Op-ed by K. Marques Mullings, the executive vice president of Howard Stirk Holdings
Some want to do away with them, calling them predatory. Some consider them just another loan product available in the financial market. I consider them a right, a right afforded to participants of a free capitalistic society.

According to CheckIntoCash.com, payday loans are designed to be a less stringent alternative to bridge cash flow issues due to unexpected expenses or holiday expenses such as Christmas. Most payday loan providers do require applicants to be 21 years of age, have a steady income and a bank account for a minimum of 90 days. Payday loans do not require a credit check and in many cases do not require borrowers to use their Social Security numbers. So why do so many oppose the option of using a payday loan?
The people who oppose payday lending do so under the guise of predatory lending, often citing the fact that interests rates can be more than 300 percent. According to the Consumer Financial Protection Bureau's report released March of 2014, 58% of payday loan customers are also receiving government assistance - a fact which seemingly substantiates the argument that payday loans are compounding these individuals' financial hardships.

As a former banker both pre- and post-housing market meltdown, I have firsthand experience of how much more difficult it has become to be approved for lending. Approvals are not only difficult for the borderline applicants, but also difficult for those with decent cash flow and FICO scores. The increased scrutiny of applicants by the underwriters working for traditional lenders, like banks, essentially locks a large segment of people out, thereby precluding them from obtaining traditional financial assistance.
The concept of supply and demand is one of the most fundamental principles of the free market underpinning the U.S. economy. When there is a void in the market, the free market allows room for businesses to supply the demand. According to the Federal Reserve Board, since the late 90's, use of payday lenders has risen five-fold to the tune of $50 billion. When banks lock the consumers out, the market will address the need if the demand is high enough. The staggering numbers prove the demand is there and the demand was supplied with payday loan services. Read entire article at WASHINGTON TIMES

Flexwage offers creative alternative to payday loans
We have all been there. The car breaks down. Or the roof leaks. Maybe your teenager does something stupid and costly.

Murphy's Law being what it is, such pleasant surprises do not often happen on payday or just before. They often come in the middle of the cycle, far away from the next cash infusion.

The lucky among us can dip into savings or ask relatives for help. Many do not have that luxury, leaving them to resort to credit cards or payday loans and their punitive charges. This problem is especially acute for the millions of unbanked and underbanked Americans without overdraft protection.

The sad thing is that for many people this cash crunch is only temporary. Once payday comes around, the need can be easily taken care of with the wages accumulated over the past few weeks.

What if those wages could be accessed as they are accrued?
That was the question posed by Frank Dombrowski, the Founder and CEO of FlexWage, the company behind the WageBank software platform. WageBank allows employees to access their earned wages between pay periods via a payroll card.

Mr. Dombrowski spent 18 years in commercial banking, with the most recent six and a half at JP Morgan Chase, prior to the creation of FlexWage Solutions in 2009. Read the article at BANKLESS TIMES

How Social Data Might Reinvent the Credit Score
GOOD Magazine - August 14, 2015
Katharine Gammon interviewed FactorTrust CEO for this article.
For people who have less access than a former Ivy Leaguer, FactorTrust might be an option. This credit bureau was developed specifically for those without a financial institution, using a proprietary database of underbanked consumer loan performance and third-party data sources to determine creditworthiness.
FactorTrust CEO Greg Rable says that though "non-prime consumers" have been overlooked traditionally, they are finally able to get some attention through alternatives to the credit score. Rable is quick to add, however, that though social media data is an intriguing way to assess one's social standing and professional connections, regulatory and compliance frameworks simply haven't caught up with these kinds of innovations. Essentially, people who rely too much on the dream of the "social" credit score are as stranded as ever. FACTORTRUST

Debt collectors are evolving to adopt better technology by Philip N Burgess Jr.
The debt collection industry has been faced with numerous challenges in recent years due to new regulations. These increased restrictions were designed to with the intent of easing the process for debtors, but what has actually transpired is the implementation a more difficult approach for collectors.
However, technology developments coupled with the use of data analytics can help debt collection agencies improve their situations - and make things more easy for the consumer, as well.
Thomas J. Miller wrote in an article for Banking Strategies that while the restrictions imposed upon debt collectors may be a hindrance, they were inevitable due to outdated - but extremely prominent - misconceptions of the industry as a bully. He argued that firms today must prioritize compliance with these new requirements in order to understand and navigate them more effectively.
The best way to improve productivity in the debt collection sector is to implement automated systems that can track and analyze debtor information, according to Miller. One of the reasons that prior incarnations of collectors earned such a bad reputation among consumers is that they lacked access to valuable personal data, he said, which in turn forced agencies to increase the volume of calls to any particular debtor in order to gain a better understanding of any progress being made.
Without a data tracking system, innocent citizens can become victimized by inaccurate information. A particularly high-profile example of this occurring was reported by Philadelphia Inquirer contributor Jeff Gelles, involving mistaken identity and persistent harassment by misinformed debt collectors.

Read the entire article at MicroBilt

Study: Property crimes down in counties with payday lending stores
Payday lenders are often knocked for outrageous interest charges - up to 456 percent in Alabama -- but do they provide a valuable service? That's the new question three finance professors at the Harbert College of Business ask in their study, "How Do Differences in State Regulations Affect the Payday Lending Industry?"
Lowder Eminent Scholar James Barth, Lowder Professor John Jahera, Assistant Professor Jitka Hilliard and doctoral student Yanfei Sun analyzed 2013 FBI data and found that property crimes were significantly fewer in counties that have more payday lending stores. The report was accepted for publication in the Journal of Economics and Business. Data from 2,531 U.S. counties revealed an average of 8.5 fewer property crimes (burglary, larceny, motor vehicle theft and arson) per 10,000 people in areas where payday lending stores operated legally.
"Maybe someone has to pay a doctor bill, or has a mechanical problem with a car, and therefore needs a short-term loan to cover the bill or get the car repaired - otherwise a person could be too sick or unable to get to work and then potentially get fired," Barth said. "If people do not get such loans, does it change their behavior in a way that is not beneficial to society? If they need the funds to deal with emergencies, what might they revert to if they can't get loans? Perhaps one sees a car and breaks into it, or breaks into a home, and steals a laptop and sells it to get the funds needed."
Jahera pointed out that HB 531, proposed by Rep. Danny Garrett, R-Trussville, caps payday loans in Alabama at 36 percent, but also noted "there is a mood to prohibit" payday lending altogether. "If we totally ban payday lending in Alabama, there is some suggestion that we could see larceny-type crimes increase," he said

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