The CFPB has outlined their first draft of regulations to rein in payday loans. The proposal gives lenders two underwriting options designed to limit unsustainable debt. Under the first option, the lender would need to verify customers’ ability to repay by assessing income, other financial obligations and borrowing history. Under the second option, the lender would forgo those checks and accept safety limits on the loan products, including a $500 cap on loan size. Under this option, lenders would also be prohibited from rolling over loans more than two times during a 12-month period. The... Read more

The House Financial Services Committee approved 11 regulatory reform bills for community banks and credit unions last week with bipartisan support. The legislative package includes bills intended to streamline privacy notifications and check-clearing as well as a measure to keep privileged information shared between state and federal regulators confidential. The panel also passed bills that would refigure how the CFPB calculates certain points and fees under its "qualified mortgage" rule, require the CFPB to hold open meetings, create a small business advisory board at the... Read more

According to a report by Pew Charitable Trust, nearly two million American’s spent a total of $3 billion at auto title storefronts across the country to borrow money against the value of their cars. Predatory auto loans can be even more dangerous than payday loans because they are much larger; the typical auto title loan averages $1,000 and comes with an annual percentage rate of about 300%. The typical auto title loan represents nearly 50% of a borrower’s gross monthly income. Pew proposes several... Read more

A bipartisan attempt to regulate payday lenders in South Dakota has been halted, the latest in a series of state-level efforts to be dismantled by payday industry lobbyists. The South Dakota bill was led by conservative state legislator Steve Hickey and former Obama campaigner Steve Hildebrand — ideological opposites unified against predatory lending. Despite being deeply involved in the crafting of the bill, payday industry lobbyists suddenly turned against the effort, which was killed in committee. When Hildebrand and Hickey tried to revive their effort with a ballot initiative, State... Read more

The House Financial Services Committee has renewed its look at regulatory relief for small financial institutions, pressing bankers and credit union representatives for details about their compliance burdens. “We are losing more than one [community bank] a day and they are not perishing of natural causes,” said Rep. Jeb Hensarling (R-Texas), chairman of the committee. “The sheer weight, volume, cost, complexity and uncertainty of federal regulation is a burden that is killing them off,” he warned. Although Democrats have said they are wary of any relief that undermines Dodd-Frank and have... Read more

Mission Valley Bancorp plans to close an underused branch in Valencia, California at the end of the month with the intention of replacing it with a new, streamlined “branch of the future” nearby. Chief Executive Tamara Gurney said the decision to close the branch reflects changing technology in the banking industry. “A branch of 4,000-square-feet is probably twice the size of what the branch of the future will look like. Some of them are down to kiosks of 1,000-square-feet now, because we don’t need big vaults and people don’t use safe deposit boxes like they used to,” she... Read more

A campaign of concentrated financing by Southern Bancorp is showing positive outcomes in Helena-West Helena, Ark. Southern Bancorp has loaned about $14 million to fund renovations and new construction on 17 properties in downtown Helena-West Helena over the past 10 years — about $2 million of that in the past two years alone. The city’s development strategy has included financing new business and schools as well as tourist sites that celebrate the city’s rich civil war and blues heritage. “It’s hard to keep up with all the stuff that’s going on,” said Dominik Mjartan,... Read more

A new study by the Carsey School of Public Policy at the University of New Hampshire finds that CDFI lending accomplishes its mission of filling market gaps for key underserved low-income populations. The authors found that CDFIs deliver between two-thirds and ninety percent of all loan volume to borrowers living in CDFI Fund-designated investment areas. The report said that CDFIs provide borrowers that may not qualify for loans from mainstream sources with loan terms and interest rates that are comparable to mainstream products, but tend to entail less risk to borrowers. Among the study’s... Read more

Rep. Randy Neugebauer (R-Texas) has announced plans to introduce legislation that would replace the CFPB’s director position with a bipartisan, five-member commission appointed by the president. Republicans argue that the agency has stifled economic growth with too many regulations and lacks accountability. But Democrats have raised concerns that a commission would politicize the agency and reduce its power. House Financial Services Committee Chairman Jeb Hensarling (R-Texas) offered support for the proposal, which failed to gain traction when Democrats controlled the upper chamber in the... Read more