Payday loans – Informare Wissen Und Koennen Thu, 04 Nov 2021 02:20:24 +0000 en-US hourly 1 Payday loans – Informare Wissen Und Koennen 32 32 NCUA Enables Service Organizations to Make Auto and Payday Loans | Journal of Credit Unions Thu, 21 Oct 2021 19:00:00 +0000

The Board of Directors of the National Credit Union approved a final rule which will allow credit union service organizations to enter into any type of loan authorized for federal credit unions.

Currently, CUSOs – businesses owned by credit unions to provide financial or operational services to institutions or their members – are only allowed to offer mortgages, student loans, credit cards and more. commercial loans. The new rule would now allow CUSOs to expand their activities into other categories of loans, including auto loans and payday loans.

The rule was passed by a 2-1 vote at the board meeting Thursday with President Todd Harper casting the dissenting vote. Calling the settlement a “bad rule at the wrong time,” Harper said the agency must protect the Equity Insurance Fund, which insures members’ deposits in federally insured credit unions, against loss.

“Instead, this regulation will likely increase these losses in the years to come,” he said. “My fear of future losses for the Equity Insurance Fund is not hypothetical. It’s a fact.”

According to NCUA staff calculations, at least 73 credit unions suffered losses from CUSOs between 2007 and 2020, Harper said. The eventual failure of 11 of these credit unions caused the Share Insurance Fund $ 305 million in losses. Combined with the losses CUSO caused to credit unions that did not go bankrupt, the total losses for the system amounted to nearly $ 600 million, he said.

“My fear of future losses for the Equity Insurance Fund is not hypothetical. It’s a fact, ”said Todd Harper, president of the National Credit Union Administration, voting against the rule that allows credit union service organizations to provide auto and payday loans.

But board member Rodney Hood said it was difficult to assess the correlation between losses and CUSOs or even causation in these specific cases.

Harper said the agency didn’t have to look for many earlier examples of CUSO causing NCUA headaches. A CUSO focused on business lending “broke loose” during the Great Recession, and the regulator eventually had to provide a $ 60 million line of credit to keep the credit union that owns it from going bankrupt, he said. he declared.

He added that earlier this year, NCUA was forced to wind up a small credit union because of its mortgage problems, CUSO. “With this rule, I’m afraid we will open the door to similar situations in the future, but this time in payday loans and auto loans,” Harper said.

But Hood and NCUA vice president Kyle Hauptman said allowing CUSO to provide auto loans would keep the business in the credit union system.

Consumers now use their cell phones to compare prices for the best car and the best financing without ever having to visit a dealership, Hauptman said. The pandemic has accelerated this trend, he said, and it could hurt the loans of some small credit unions if they are not able to provide those loans as well.

“The technology and scale needed to compete in an online consumer and automotive marketplace is beyond the reach of most individual credit unions,” Hauptman said.

Hood agreed, saying that the indirect auto loan is essential for credit unions, so the NCUA must give them the tools to scale and compete in the online market.

“We cannot stand idly by and watch the auto market evolve and do nothing,” he said.

The CUSO rule doesn’t go far enough, Hood said. He also wants CUSOs to be allowed to invest in fintechs.

These investments are critical to keeping the credit union system safe and strong over the long term, and therefore these institutions should be at the table to work with fintechs, Hood said.

“Without investments in fintechs, the credit union system runs the risk of stagnating for years to come, as the cooperative system has to respond to changing dynamics,” he said. “And the same goes for the regulator of the industry.”

Harper was not alone in opposing the CUSO rule.

The American Bankers Association said the rule creates more risk for consumers and the credit union industry by allowing larger credit unions to grow into “risky loan types” without proper oversight from the NCUA. .

“Banks, small credit unions and the president of the NCUA himself have raised concerns about this action, which will further erode the character and purpose of the credit union charter,” the door said. – ABA’s speech, Ian McKendry.

The NCUA said it received more than 1,000 letters on the rule, one of the largest sets of public comments the agency has ever received.

Hood and Hauptman said CUSOs have provided direct consumer loans for decades without harming credit unions. Without CUSOs, many credit unions, especially small ones, would not have been large enough to compete with mortgage, business, credit card and student loans.

But Harper, who has opposed the rule since the process began in January, said the regulator had its priorities misplaced as the country continues to grapple with the pandemic.

“In the current economic environment, the NCUA board should strive to adopt rules, protect consumers, and prepare the system for the likely credit losses to come as consumer aid programs COVID-19 is ending. This rule is no relief in a pandemic, ”said Harper.

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Covid, Payday Loans Without Debit Card, Student Loan – The Issues Addressed By Biden’s Office Tue, 19 Oct 2021 07:00:00 +0000

The Consumer Financial Protection Bureau (CFPB) has announced its firm intention to become a more aggressive maintainer for consumers. The changes in their internal politics were encouraged by the Biden administration. As the coronavirus pandemic poses more and more financial challenges to millions of Americans, lenders like Instant Сash Advance and private customers must come to terms with new financial orders.

The office was nearly destroyed under former President Donald Trump. When its tenure enforcement measure was sharply curtailed, the agency managed to protect a large number of people from predatory lenders who issued payday loans online the same day without debit card.

The CFPB will deal with consumer complaints and take action against companies that break the law. Of course, some experts are skeptical of the agency’s effectiveness as taxpayer spending has increased. Complaints to the CFPB reached 60% in 2020 compared to 2019.

Consequences of the Covid crisis

The pandemic has caused political, economic and medical crises around the world. Dealing with the consequences has become the top priority of the President’s office.

The pandemic has challenged the US economy with the hardest recession since the Great Depression. Millions of citizens have fallen into poverty in a short time. Covid encouraged the development of serious problems and highlighted the continuing problems for payday loan borrowers.

Americans can turn to financial companies for help, whether they want relief or get new loans to cover sudden expenses. The agency must ensure that financial companies and debt collectors meet government protection deadlines. He can also enforce the company’s voluntary commitments to all types of borrowers, from home buyers to credit card users.

Collective loan obligations

The CFPB aims to overturn or rewrite previous rules regarding debt collection. According to the new consumer policies, loan companies will need to develop a more democratic approach to the loan approval and fundraising processes.

The policies of the Trump era gave too much power to lenders and debt collectors. They literally allowed them to hunt down consumers by calling them once a day. A consumer with multiple medical bills received more than 20 calls and messages each week.

At the same time, the National Consumer Law Center says consumers can revive the prescribed amount of money by making small payments. This would allow them to avoid conflicts with debt collectors.

Student loans

Under Biden’s administration, the Office of Consumer Affairs tends to enforce policies on student loans in depth. Politicians have criticized student loan services for cheating borrowers and stealing their money by making more expensive repayment offers.

Other changes under Biden’s administration could require loan departments to inform borrowers of all available options. These include economic hardship or unemployment problems. Transactions carried out by reputable and trustworthy lenders like will remain intact.

Payday loans

Over 12 million Americans apply for a payday loan each year. This type of loan holds extremely high interest rates for consumers. With regard to CFPB operations, payday loan practices have received special attention.

CFPB has over 10 priorities geared towards payday loans. For example, they eliminated mandatory underwriting provisions that would have prevented lenders from issuing money to consumers without first assessing their financial reputation and financial capabilities.

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