A federal judge delivered another victory to payday lenders by leaving in place a stay on the compliance date for the Consumer Financial Protection Bureau’s 2017 payday lending rule, American Banker reported. That rule, drafted under former CFPB Director Richard Cordray, had two key components: new underwriting requirements for high-cost, small-dollar lenders, and limits on how often a lender can attempt debiting payments from a borrower's bank account. The CFPB under Trump-appointed Director Kathleen Kraninger already proposed eliminating the underwriting portion. But in a surprising development, U.S. District Judge Lee Yeakel's ruling that a stay of the Aug. 19 deadline will remain in effect means the payment provision will continue to be delayed as well. Yeakel, who did not indicate when he would lift the stay, is presiding over an industry lawsuit in Texas seeking to kill the rule. Once the Trump administration took control of the CFPB, the bureau sided with the plaintiffs in the case and announced its intent to reopen the rule and propose changes. The judge issued the stay in November to give the agency time to formulate a proposal.

Article Tags

Consumer Debt

Predatory Lending

Finance and Banking

Monday, March 25, 2019 - 12:00

CFPB’s Kraninger Reverses Mulvaney Changes to Advisory Board

Submitted by ckanon@abi.org on Fri, 2019-03-22 08:53

The new head of the Consumer Financial Protection Bureau is reversing yet another policy set by her predecessor by giving more sway to a group of committees that advise the financial watchdog, the Washington Post reported. CFPB Director Kathy Kraninger said yesterday that she would lengthen the tenure of members of the Consumer Advisory Board and three other committees to two years, and would allow half of the committees’ existing membership to continue serving. The agency would also increase the number of in-person board meetings per year from two to three. Mick Mulvaney, who ran the CFPB for President Donald Trump on a temporary basis until last December, dissolved the Consumer Advisory Board and other groups, which act as a sounding board for the agency on important economic and financial issues as well as policy. Consumer groups had expressed outrage at the move, saying it stopped important dialogue between the CFPB and outside groups. Kraninger did leave open the question on how big these boards would be going forward. The Consumer Advisory Board had 25 members before Mulvaney reduced it to nine. (Subscription required.)

Article Tags

Consumer Debt

Friday, March 22, 2019 - 12:00

Journal Issue

Bankruptcy Code

Bankruptcy Rule

none

Topic Tags

Consumer Bankruptcy

Consumer Debt

Discharge/Dischargeability

Mortgage

Record Floods Bring New Toll When Farmers Can Least Afford It

Submitted by ckanon@abi.org on Tue, 2019-03-19 09:08

The record floods that have pummeled the Midwest are inflicting a devastating toll on farmers and ranchers at a moment when they can least afford it, raising fears that this natural disaster will become a breaking point for farms weighed down by falling incomes, rising bankruptcies and the fallout from President Trump’s trade policies, The New York Times reported. “When you’re losing money to start with, how do you take on extra losses?” asked Clint Pischel of Niobrara, Neb., whose lowland fields were flooded by the ice-filled Niobrara River after a dam failed. He spent Monday gathering 30 dead baby calves from his family’s ranch in this northern region of the state, finding their bodies under huge chunks of ice. “There’s no harder business to be in,” Pischel added. “But with death and everything else, you’ve got to answer to bankers. It’s not our choice.” Farms filing for chapter 12 protection rose by 19 percent last year across the Midwest, the highest level in a decade. Now, many of those farmers have lost their livestock and livelihoods. The rail lines and roads that carry their crops to market were washed away by the rain-gorged rivers that drowned small towns, forced thousands of evacuations and killed at least three people. Some farmers say they have been cut off from their animals behind walls of water, while others cannot get to town for food and supplies for their livestock. Farm experts said it was too early to quantify the full economic toll of the floods, but Steve Wellman, director of the Nebraska Department of Agriculture, said the disaster could cost the state’s livestock sector $400 million. Farm groups said it would take months or years to recover, and that residents across the region would need emergency federal aid. “You’ve got a generation of young farmers on the verge of leaving; you’ve got a lot of mental health stress out there — and that was before the storm,” said Roger Johnson, president of the National Farmers Union. “You just pile this on top.”

Article Tags

Consumer Debt

Insurance

Tuesday, March 19, 2019 - 12:00

White House Proposes Limits on Student Loan Borrowing as Part of Higher Education Reforms

Submitted by ckanon@abi.org on Tue, 2019-03-19 09:06

The Trump administration has proposed placing limits on federal student borrowing programs as part of a series of initiatives to amend the Higher Education Act, The Hill reported. “We need to modernize our higher education system to make it affordable, flexible and more outcome-oriented so that all Americans, young and old, can learn the skills they need to secure and retain good-paying jobs,” White House senior adviser Ivanka Trump said. A number of the proposals seek to change the borrowing and loan-repayment process. A senior administration official said that the White House wants to institute a limit on loans through the PLUS program, which graduate students and parents of undergraduates use to help pay for college or trade school. The official did not say what the loan cap would be, but that it could vary by program rather than by institution. The administration is also calling for Congress to simplify loan-repayment programs, in part by condensing five income-driven repayment plans into one plan that would cap monthly payments at 12.5 percent of the borrower's discretionary income. The proposals are the first major priorities from President Trump's White House touching on the Higher Education Act, which was last significantly amended in 2008. The recommendations come from the National Council for the American Worker. The Department of Education under President Trump has garnered criticism from some corners for its rollback of Obama-era regulations aimed at protecting borrowers from predatory loan practices, but the White House asserted that the proposed changes to the Higher Education Act would ultimately benefit students seeking to enter the workforce. “We think these are absolutely critical reforms and really the most comprehensive approach to higher ed reform in over a decade,” Ivanka Trump said. “So we’re very excited to work with members on both sides of the aisle to advance these and other important education initiatives.”

Article Tags

Consumer Debt

Tuesday, March 19, 2019 - 12:00

Analysis: Americans Are Going Bankrupt from Getting Sick

Submitted by ckanon@abi.org on Tue, 2019-03-19 09:00

Medical debt is a uniquely American phenomenon, a burden that would be unfathomable in many other developed countries, according to an analysis in The Atlantic. According to a survey published this month in the American Journal of Public Health, nearly 60 percent of people who have filed for bankruptcy said a medical expense “very much” or “somewhat” contributed to their bankruptcy. That was more than the percentage who cited home foreclosure or student loans. (The survey respondents could choose multiple factors that contributed to their bankruptcy.) The finding was only the latest in a long string of statistics suggesting that many Americans who have faced major health scares face significant financial setbacks afterward. A 2016 study found that a third of cancer survivors had gone into debt as a result of their medical expenses, and 3 percent had filed for bankruptcy. According to a Consumer Financial Protection Bureau study from 2014, medical bills are the most common cause of unpaid bills sent to collection agencies. About a fifth of Americans have a medical claim on their credit report, and the same proportion currently has a medical bill overdue. “It’s just life,” says Deborah Thorne, a sociologist at the University of Idaho who co-authored the latest bankruptcy study. “It’s not like they’ve done anything wrong.”

Article Tags

Consumer Debt

Health Care

Tuesday, March 19, 2019 - 12:00

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