At a glanceWednesday, September 11, 2019

Collection Industry News At A Glance - September 11, 2019
Wednesday September 11, 2019
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Student loan experts sound alarm on ‘trillion-dollar blackhole’

Student loan experts warned the House that the student debt crisis is now a “trillion-dollar blackhole” and was hurting the financial system.   “Every 28 seconds, another borrower defaults… like kerosene on a fire, student debt is … tearing our country apart,” stated Seth Frotman, former student loan ombudsman and the executive director of the Student Borrower Protection Center. “We cannot continue to be lobbied into believing that the companies getting rich off the misery of millions of Americans are not part of the problem… [and] the trillion-dollar black hole in our financial markets.”

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Warren, Colleagues Ask Collapsed For-Profit ECA Not To Sell Student Debt to Collectors

Senator Elizabeth Warren (D-MA), Rep. Bobby Scott (R-VA), and other members of Congress have written to the collapsed for-profit college chain Education Corporation of America (ECA) and its court-appointed receiver asking that ECA not sell its outstanding student loan debt to a financial firm that would seek to collect payments from former students. The letter, sent yesterday, argues that the proposed sale of these student loans to debt collectors “is an unconscionable assault on the financial lives of former students, who have already suffered enough.”

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Americans are piling on credit card debt, despite recession warnings

One analyst’s estimate this week that “real” debt could be nearly 2000 percent of GDP attracted plenty of attention, but analysts who study consumer spending habits say there’s a real debt risk much closer to home: The amount and pace at which American consumers are racking up credit card debt. “As far as American's finances are concerned, the current situation is not too encouraging,” said Jill Gonzalez, senior analyst at personal finance platform WalletHub. “We started the year owing more than $1 trillion in credit card debt, and although we paid off a large chunk in the first quarter, that could be a sign that more debt will be taken on by consumers."

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Director Kraninger’s Speech at Innovation Policies Launch Event

Good morning! Thank you for the introduction. It’s great to be here in Atlanta today. One reason I’m in town is to open a new Bureau regional office. This will be our fourth regional office located outside of D.C. and by having a presence here in Atlanta, we will be better able to protect consumers. It also gave me an opportunity to make a major announcement outside of Washington, D.C. and include key partners from a different part of the country.    As you know, the mission of the CFPB is to protect consumers. You may typically think of this mission as consisting of regulation, supervision, enforcement, and education. These tools are all provided in the Dodd-Frank Act, and I’m determined to use the Bureau’s capabilities to carry out our mission. 

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CFPB and State Regulators Launch American Consumer Financial Innovation Network

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (Bureau), working in partnership with multiple state regulators, launched the American Consumer Financial Innovation Network (ACFIN), a network to enhance coordination among federal and state regulators to facilitate financial innovation.   The Bureau invited all state regulators to join ACFIN, and the initial members of ACFIN are the Attorneys General of: Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah. 

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Next steps for housing finance reform focus of Senate hearing

The Senate Banking Committee's hearing Tuesday focused on housing finance reform efforts revealed a commitment to ensuring credit unions' access to the secondary mortgage market. NAFCU has consistently shared with lawmakers, the administration and other stakeholders the importance of preserving this access.    “Congress, as well as the Administration, must work hand-in-hand to protect taxpayers and the safety and soundness of the housing finance system,” said NAFCU President and CEO Dan Berger. “First and foremost, a legislative solution is necessary and crucial to ensuring credit unions receive guaranteed access to the secondary mortgage market and fair pricing for their paper, and we appreciate the Senate Banking Committee’s commitment to these key issues. 

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Wells Fargo, Bank of America, Quicken Loans, others want DTI requirement eliminated from QM lending rules

Four of the largest mortgage lenders in the country are leading a coalition that is calling on the Consumer Financial Protection Bureau to make to changes to the Ability to Repay/Qualified Mortgage rule.   Specifically, the group, which includes Bank of America, Quicken Loans, Wells Fargo, and Caliber Home Loans, wants the CFPB to do away with the QM rule’s debt-to-income ratio requirement.

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Increased FCU loan limits would remove barriers to member service

CUNA strongly supports legislation that would provide the NCUA board the flexibility to increase federal credit union loan maturity limits, it wrote to the House Financial Services Committee Tuesday. The committee conducted a hearing on student loan debt, and CUNA’s letter highlights the ways credit unions could support student borrowers if certain barriers were removed.

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5th Circuit holds FHFA structure unconstitutional. Boost for Supreme Court challenge to CFPB?

(Reuters) - The en banc 5th U.S. Circuit Court of Appeals ruled Friday that the structure of the Federal Housing Finance Agency is unconstitutional under separation of powers doctrine because the agency’s lone director is insufficiently accountable to the president. The 5th Circuit’s ruling arguably creates a split in the federal circuits over the constitutionality of independent agencies headed by directors who can’t be removed without good cause. Both the 9th and D.C. Circuits, as you may recall, have found the structure of the Consumer Financial Protection Bureau, which parallels the FHFA’s structure in most regards, to be constitutional.

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U.S. Bank Acquires talech, Gains Digital Capabilities as It Transforms Its Business for the Future

MINNEAPOLIS--(BUSINESS WIRE)--Sep. 9, 2019-- U.S. Bank has acquired talech, a Palo Alto-based software company that helps small and medium-sized businesses simplify operations and make better decisions through an integrated point-of-sale system. This acquisition is one of the many ways U.S. Bank is increasing its digital expertise to provide value when and where customers interact with technology.

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Fed Chair Jerome Powell: Consumers are not “clamoring” for central bank backed cryptocurrencies

spoke about central bank digital currencies and Facebook's proposed Libra stable coin-like digital currency." data-reactid="16" style="margin: 0px 0px 1em; color: #26282a; font-family: 'Helvetica Neue', Helvetica, Arial, sans-serif; font-size: 15px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: #ffffff; text-decoration-style: initial; text-decoration-color: initial;">At a forum in Switzerland sponsored by the Swiss Institute of International Studies, Federal Reserve Chair Jerome Powell spoke about central bank digital currencies and Facebook's proposed Libra stable coin-like digital currency.  In response to a question asking whether central banks are missing out on the opportunities presented by digital currencies, Powell states that while the Federal Reserve is following digital currencies, it is not something the central bank is "actively considering."

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Student loan forgiveness program has denied 99 percent of applications despite $700 million from Congress, report says

The vast majority of applications for a student loan forgiveness program are still being rejected, even after Congress set aside $700 million to temporarily expand it, according to a federal report. The Government Accountability Office said Thursday that the Education Department has created a "confusing and inefficient" process that could cause borrowers to miss out on the program. It urged the agency to simplify the application process.

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State Attorneys General to Announce Bipartisan, Multistate Investigation into Business Practices of Large Tech Firms

Tech giants Facebook and Google are facing more scrutiny into their business practices. A multi-state antitrust investigation, led by New York State Attorney General Letitia James, is focusing on "Facebook’s dominance in the industry and the potential anticompetitive conduct stemming from that dominance," she said Friday. Other states involved in the bipartisan initiative, says James, who is a Democrat, include the attorneys general of Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee, and the District of Columbia.

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CFPB Symposium: Behavioral Economics

The Consumer Financial Protection Bureau will host the second of its symposia series on September 19, 2019 at 9:00 AM at the Bureau's headquarters, 1700 G St. NW, Washington, D.C.    The symposium will feature two panels of academic and policy experts in the fields of behavioral economics and behavioral law and economics. The first panel will be on “Methodological Foundations of Behavioral Economics,” and the second panel will focus on “Behavioral Law & Economics and Consumer Financial Protection.” 

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Consumer Financial Protection Bureau Files Suit against Certified Forensic Loan Auditors, Andrew Lehman, and Michael Carrigan, and Proposed Settlement with Carrigan

Washington, D.C. — Today the Consumer Financial Protection Bureau (Bureau) filed a complaint in federal court in the Central District of California against Certified Forensic Loan Auditors, LLC (CFLA), Andrew Lehman (Lehman), and Michael Carrigan (Carrigan). The complaint alleges that CFLA and Lehman have engaged in deceptive and abusive acts and practices and have charged unlawful advance fees in connection with the marketing and sale of financial advisory and mortgage assistance relief services to consumers. CFLA is a foreclosure relief services company incorporated in California and headquartered in Houston, Texas. Lehman is CFLA’s president and CEO. The Bureau’s complaint alleges that Carrigan, who was the company’s sole auditor, provided substantial assistance to CFLA and Lehman. Concurrent with the complaint, the Bureau and Carrigan filed a proposed stipulated final judgment and order to resolve the substantial assistance claims against Carrigan. 

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Meet The Regulators at DCS2019 and Prospective Vendor Meetings Too

Meet The Regulators at DCS2019! Three terrific regulators take the stage for our Meet The Regulators panel! Parul Desai of the Federal Communications Commission joins Gandhi Eswaramoorthy of the CFPB and Joe Sciarrotta of the Office of the Arizona Attorney General. Parul is the Deputy Chief, Telecommunications Consumers Division of the Enforcement Bureau of the FCC. Joe Sciarrotta is the Division Chief Counsel – Civil Litigation Division, of the Arizona Attorney General’s Office. K. (Gandhi) Eswaramoorthy is the Program Manager for Debt Collections within the Consumer Lending, Reporting and Collections Markets Division for the CFPB. They will each address issues of importance to them, as well as be available for a Q&A session.  Prospective Vendor meetings also for registered attendees.

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Treasury, HUD release housing finance reform plans

The White House Thursday released the Treasury Department's plan to reform the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, proposing to remove them from federal control. Housing finance reform plans from the Department of Housing and Urban Development (HUD) were also released.

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Credit union regulator to clarify bank acquisition rules

National Credit Union Administration (NCUA) Chairman Rodney Hood said the regulator will propose a rule clarifying credit unions' responsibilities when acquiring banks. The not-for-profit financial institutions have acquired 21 U.S. banks since 2018, compared with 12 acquisitions in the prior five years, according to data from S&P Global Market Intelligence. A leading trade group's report slams the practice, saying many tax-exempt credit unions are diverging from their mission to serve low-income households.

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Citigroup doubles down on credit cards even as U.S. economy softens

NEW YORK (Reuters) - Despite signs that the U.S. economy is slowing, New York-based Citigroup Inc (C.N) is betting big on credit cards. Citigroup, the third-largest U.S. card issuer, according to payments industry publication The Nilson Report, has been among the most aggressive promoters of zero-interest balance transfers. For a small fee, customers can move debt from a rival card onto Citi’s plastic and pay no interest for 21 months. That is currently the longest 0% deal in the industry, according to consumer finance company Bankrate LLC. Rivals offer 15 interest-free months with no fee.

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U.S. banking sector reports $62.6 bln in profits for Q2 of 2019

WASHINGTON, Sept 5 (Reuters) - The U.S. banking sector reported $62.6 billion in profits in the second quarter of 2019, an increase in profit levels from the prior year, according to data from the Federal Deposit Insurance Corporation (FDIC). U.S. bank profits increased by $2.5 billion, a 4.1% jump compared with the second quarter of 2018. The FDIC said the profits were driven by higher net interest income. The FDIC also reported that the number of “problem banks” had fallen from 59 to 56 in the second quarter, marking the lowest level of struggling institutions since the first quarter of 2007. (Reporting by Katanga Johnson Editing by Chizu Nomiyama and Jonathan Oatis)

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FTC Gives Final Approval to Settlement with Auto Dealer Software Company That Allegedly Failed to Protect Consumers’ Data

Following a public comment period, the Federal Trade Commission approved a final order settling charges against an Iowa-based auto dealer software provider that allegedly failed to take reasonable steps to secure consumers’ data, leading to a breach that exposed the personal information of millions of consumers.

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Mobile-first Gen Z doesn’t fear credit cards, debt

As Gen Z starts entering adulthood, financial institutions are beginning to ask what the new generation wants in terms of lending, and how will they choose to access it? For the executives who’ve been busy serving up financial products to millennials, there is an additional question on everyone’s mind — will this new generation be as slow to adopt credit cards and personal loans as millennials, or is it going to be different?

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Fed Beige Book reports modest growth during the summer, despite trade uncertainty

The U.S. economy expanded at a modest pace from June through August, despite looming concerns about the U.S.-China trade war, according to the Federal Reserve.'s Beige Book.     Almost all of the Fed’s 12 districts reported modest growth over the past few months, the Fed said in its region-by-region roundup of anecdotal information known as the Beige Book. The report, prepared by the Federal Reserve Bank of St. Louis, was based on information collected through Aug. 23.

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CFPB Issues New Reverse Mortgage Natural Disaster Guidance

As parts of the Bahamas and Southeastern U.S. are bearing the brunt of Hurricane Dorian, the Consumer Financial Protection Bureau (CFPB) has released a new guide for borrowers of Home Equity Conversion Mortgages (HECMs) who have been affected by natural disasters.

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3 Promising Technologies Making an Impact on Cybersecurity

A few weeks ago, while attending Black Hat 2019, I was invited to participate in a Dark Reading technology panel hosted by editor Tim Wilson. The discussion focused on new types of technologies that can truly improve cybersecurity defenses.

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Learn practical skills and tactics to review: • When to audit, and incorporating remote and onsite • What to audit - work effort, payment, compliance, financials and more • Sampling techniques to increase your effectiveness • How to develop an effective call monitoring scorecard • Audit bias and how to avoid it • What many audit teams miss and how to address • how to use the audit to improve compliance and performance • Remediation techniques and tools Course taught by experienced auditors and consultants: Bev Evancic and Ken Evancic

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Collection and Recovery Solutions 2020

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