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Wells Fargo has agreed to pay at least $385 million to settle a California lawsuit alleging it signed up thousands of auto loan customers for costly car insurance without their consent, resulting in many having their vehicles repossessed, the Associated Press reported. The bank filed the agreement Thursday in a federal court in Santa Ana. It still needs a judge's approval. Another defendant, National General Insurance, agreed to pay $7.5 million, the New York Post reported. San Francisco-based Wells Fargo confirmed the agreement Friday and called it "an important step in making things right." The bank's statement said that it will be sending checks to affected customers. The 2017 class-action lawsuit alleged that for more than a decade, Wells Fargo tacked on insurance to customers' car loans that they didn't need because they had private insurance. Some 25,000 car owners couldn't meet the additional fees and had their vehicles repossessed, the suit alleged. The bank acknowledged in 2017 that $80 million in unnecessary insurance charges had been added to 800,000 auto loans.

The House voted yesterday to undo the Trump administration’s reining in of the Consumer Financial Protection Bureau (CFPB) and prevent future directors from replicating those efforts, The Hill reported. The bill from Rep. Maxine Waters (D-Calif.), chairwoman of the House Financial Services Committee, passed the chamber along party lines in a vote of 231 to 191, with no Republicans supporting the measure. Called the Consumers First Act, the bill aims to reverse actions taken by former CFPB Acting Director Mick Mulvaney to loosen the bureau’s oversight of financial firms, rollback agency regulations, reorganize key departments and rebrand the polarizing watchdog. Republicans, who have long accused the CFPB of overreaching and being unaccountable, largely favored Mulvaney’s moves to restrain the bureau and came out against Waters’s bill. The White House announced Monday that Trump would veto the bill if it reaches his desk, dooming the measure in the unlikely event it cleared the GOP-controlled Senate.

Over the past year, a spate of suicides by taxi drivers in New York City has highlighted in brutal terms the overwhelming debt and financial plight of medallion owners. All along, officials have blamed the crisis on competition from ride-hailing companies such as Uber and Lyft. But a New York Times investigation found much of the devastation can be traced to a handful of powerful industry leaders who steadily and artificially drove up the price of taxi medallions, creating a bubble that eventually burst. Over more than a decade, they channeled thousands of drivers into reckless loans and extracted hundreds of millions of dollars before the market collapsed. These business practices generated huge profits for bankers, brokers, lawyers, investors, fleet owners and debt collectors. The leaders of nonprofit credit unions became multimillionaires. Medallion brokers grew rich enough to buy yachts and waterfront properties. One of the most successful bankers hired the rap star Nicki Minaj to perform at a family party. But the methods stripped immigrant families of their life savings, crushed drivers under debt they could not repay and engulfed an industry that has long defined New York. More than 950 medallion owners have filed for bankruptcy, according to a Times analysis of court records. The practices were strikingly similar to those behind the housing market crash that led to the 2008 global economic meltdown: Banks and loosely regulated private lenders wrote risky loans and encouraged frequent refinancing; drivers took on debt they could not afford, under terms they often did not understand.

Payday lenders have been mobilizing their customers to push the federal government to ease Obama-era regulations of the industry, according to research by a consumer advocacy group that favors the rules, the Wall Street Journal reported. Since the Consumer Financial Protection Bureau began soliciting public comment on a proposed rule governing small-dollar, high-interest consumer loans, the lenders have organized thousands of customers who have sent in duplicated comments in support of the change, said Allied Progress, the consumer group. The proposed rule, unveiled in February by Kathy Kraninger, the new director of the CFPB under President Trump, has been welcomed by payday and auto-title lenders. It aims in effect to repeal a regulation enacted under President Obama that would have imposed tough new underwriting standards. The 90-day public comment period ends May 15. In a report to be published Tuesday, Allied Progress found that nearly a quarter of the 16,761 public comments submitted as of May 11 contained duplicated language supporting the latest regulatory revision. For example, 2,364 comments said, “As you take a second look at the payday loan rule, please don’t make it more difficult for me to get these loans … Millions of Americans like me rely on payday loans, and the government shouldn’t take away our access to credit.” At least 213 others contained sentences reading: “I needed to replace my hot water tank. Then my appliances needed to be repaired and eventually replaced,” according to Allied Progress. At least 141 comments said, “I borrow to help my child pay for college ... I can borrow a small loan rather than have her grow her student loan.” At least 851 comments said: “Mandatory underwriting would be too costly and time-consuming.” Read more. (Subscription required.) 

In related news, the CFPB is already in the midst of enacting changes to some of its rules, namely the requirements for the data collection and reporting stipulated by the Home Mortgage Disclosure Act and its enforcement practices, but those may not be the only rule changes coming from the CFPB, HousingWire.com reported. The CFPB yesterday announced that it plans to “periodically” review its regulations and may amend or even abolish existing rules. According to the CFPB, the review of its rules is stipulated by the Regulatory Flexibility Act, which establishes that agencies should review certain rules within 10 years of their enactment and consider those rules’ impact on “small businesses.” The purpose of the review is to “minimize any significant economic impact of the rules upon a substantial number of small entities,” the CFPB said. At the end of each review, the bureau will determine whether the rule should stand in its current form, be revised, or rescinded entirely. Read more. 

The Consumer Financial Protection Bureau (CFPB) yesterday unveiled proposed rules for debt collectors that would restrict how often they can call borrowers, while making clear that firms can send unlimited text messages and emails as long as consumers don’t opt out of such communications, the Los Angeles Times reported. The CFPB regulations — the result of a process started under former Director Richard Cordray — would mark some of the first major rule changes for the industry in four decades if they are adopted. Under the proposal, debt collectors would be restricted to seven attempts to call a debtor by telephone in a week, and one actual conversation between a collector and debtor per week; there is also a new process through which debt collectors can leave voicemails. Collectors would be explicitly permitted to contact debtors through email and text message. Collectors would also be prohibited from contacting debtors through social media or through a work email. Rules would almost exclusively cover third-party debt collectors and generally wouldn’t apply to in-house creditors, according to a senior bureau official. The proposed rules also clarify what debt collectors have to disclose to consumers in official notices.