Some good news from a man who is obviously not an “ivory tower” economist or an academic! Drew Breakspear, Florida’s banking commissioner, comments on banks that dropped deposit advance products (payday loans), virtual currencies, regulatory issues and consolidation in the financial services industry.

Is there a way for banks to offer short-term small-dollar loans? [From “RepubHub]

I tell a story about a conversation I had with someone. We were chatting and for some reason payday loans were mentioned. The person said, ‘I used a payday loan once.’ I said, ‘For how much?’ ‘$300.’ ‘How long?’ ’30 days.’ ‘How much did you pay?’ ‘$42.’ I said, ‘Didn’t you feel that was a lot?’ And the response was, ‘It was the only way I could feed my family next week. I would have paid $100.’

I’m always concerned about eliminating a pool of credit [payday advances] that may be the only source of credit for a segment of the population if you don’t have something better to replace it.

I constantly hear about how expensive it is. I don’t think people always understand the fixed-cost element. If you are doing payday lending, you have to have a storefront, utilities, staff. You have to fill out paperwork. When someone walks in for a $300 loan, there is a certain fixed cost. Let’s say it costs $20 to make a loan. I’m not saying that is the actual number. But let’s just say $20 on $300 is 6.6%. If it was a $3,000 loan, $20 is 0.6%. It’s the same fixed cost.

To read this piece in its entirety: RepubHub. It’s not long and is certainly worth your time!

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Kevin Wack, with American Banker, wrote an interesting piece regarding state bank regulator uneasiness with the Fed’s interference in the payday loan industry.

Kevin quotes Margaret Liu, senior vice president at the Conference of State Bank Supervisors: “It is one thing to be ensuring that a business partner, the client of a bank, is operating legally,” she said. But a line is crossed when a payday lender “is being denied banking services because of concern about a federal agency advancing its own policy agenda, beyond appropriate supervisory responsibilities.”

Here’s a link to Kevin’s piece: American Banker (Subscription Required) Also on RepubHub

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“Debt collectors cannot garnish consumers’ wages without a court order, and they cannot sue consumers in a tribal court that doesn’t have jurisdiction over their cases,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Regardless of tribal affiliation, debt collectors must comply with federal law.”

Webb and his companies, under terms of the settlement, agreed to a $550,000 civil penalty for violating the Credit Practices Rule, which prohibits payday lenders from requiring borrowers to consent to have wages taken directly out of their paychecks in the event of a default. The defendants surrendered $417,740 stemming from their prior practice of attempting to garnish consumers’ wages without court orders, according to a partial judgment in favor of the FTC in September 2013.

Along with the monetary payment imposed on the defendants, the settlement bans… Read More

CONSUMER FINANCIAL PROTECTION BUREAU ORDERS BANK OF AMERICA TO PAY $727 MILLION IN CONSUMER RELIEF FOR ILLEGAL CREDIT CARD PRACTICES

Millions of Consumers Harmed by Bank’s Deceptive Marketing and Unfair Credit Card Billing Practices

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) has ordered Bank of America, N.A. and FIA Card Services, N.A. to provide an estimated $727 million in relief to consumers harmed by practices related to credit card add-on products. Roughly 1.4 million consumers were affected by Bank of America’s deceptive marketing of their add-on products. Bank of America also illegally charged approximately 1.9 million consumer accounts for credit monitoring and credit reporting services that they were not receiving. Bank of America will pay a $20 million civil money penalty Continue Reading..

Four Oaks Bank in North Carolina issued a press release today announcing their “stock sale will provide Four Oaks with a shot of much-needed capital. It is operating under a May 2011 agreement with the Federal Reserve Board that requires it to meet certain capital requirements. The company has struggled to find investors and it was a target the Justice Department’s “Operation Choke Point” probe, which investigates banks’ ties to payday lenders. Four Oaks reached a $1.2 million settlement with the Justice Department in January, helping to dispel its troubled aura.”

Here’s a link to the Press Release.

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