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The Consumer Financial Protection Bureau (CFPB) has a new set of rules aimed at preventing payday loan operations from targeting low-income borrowers who will be buried by high fees and rising debt loads. Payday loans are traditionally a loan of $500 or less wherein the borrower “provides a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as rollovers, are common.” Using these lenders to make ends meet, borrowers are taken advantage of which has traditionally been a state regulatory issue. However now the federal government will be stepping in to curb this extortive multibillion dollar industry. Fees from payday loans can quickly accumulate, causing some borrowers to “lose their bank accounts and cars, or even risk prison time”.

Richard Corday, director of the CFPB, said: “Extending credit to people in a way that sets them up to fail and ensnares considerable numbers of them in extended debt traps, is simply not responsible lending.” These new rules cover payday loans, vehicle loans, loans using a car as collateral and various other forms of high-cost lending. Enders will be responsible for making sure debtors can repay the loan in full on time before extending the loan by checking their income, borrowing history, previous financial obligations and any other indicators that the borrower would most likely default or roll over the loan. • A 60 day respite between loans • Lenders must provide affordable repayment options • Loans cannot exceed $500 • Loans cannot have multiple finance charges • Loans cannot use a vehicle as collateral Regulations on interest rates and repayments as a share of income include mandatory capping off to prevent run-a-way fees.

Back in February, the CFPB warned about the payday loan industry which is largely unregulated and functions outside of proper oversight and accountability. The CFPB estimates that the $46 billion payday loan or cash advance industry has no oversight, refuses to give full disclosures of interest and fees involved, and takes an annual percentage of an excess of 300% against borrowers. The Consumer Federation of America (CFA) counts 32 states in the US that “permit payday loans at triple-digit interest rates, or with no rate cap at all.” Shockingly 80% of payday loans are rolled over within 14 days while an estimated 50% of these loans are “in a sequence at least 10 loans long.”

By Editor Filed in News May 19th, 2015 @ 11:50 am The Consumer Financial Protection Bureau (CFPB) filed a complaint and proposed consent order in federal court against PayPal, Inc. for illegally signing up consumers for its online credit product, PayPal Credit, formerly known as Bill Me Later. The CFPB alleges that PayPal deceptively advertised promotional benefits that it failed to honor, signed consumers up for credit without their permission, made them use PayPal Credit instead of their preferred payment method, and then mishandled billing disputes.

Under the proposed order, PayPal would pay $15 million in consumer redress and a $10 million penalty, and it would be required to improve its disclosures and procedures. “PayPal illegally signed up consumers for its online credit product without their permission and failed to address disputes when they complained,” said CFPB Director Richard Cordray. “Online shopping has become a way of life for many Americans and it’s important that they are treated fairly. The CFPB’s action should send a signal that consumers are protected whether they are opening their wallets or clicking online to make a purchase.”

As with credit cards and other forms of credit, consumers using PayPal Credit may incur interest, late fees, and other charges. Consumers often enroll in PayPal Credit while purchasing a good or service online or while creating a PayPal account. Since 2008, PayPal has offered PayPal Credit to consumers across the country making purchases from thousands of online merchants, including eBay. The CFPB alleges that many consumers who were attempting to enroll in a regular PayPal account, or make an online purchase, were signed up for the credit product without realizing it. The company also failed to post payments properly, lost payment checks, and mishandled billing disputes that consumers had with merchants or the company. Tens of thousands of consumers experienced these issues.

According to the Consumer Financial Protection Bureau (CFPB), the shadow banking industry (SBI) is largely unregulated and functions outside of proper oversight and accountability. The CFPB estimates that the $46 billion payday loan or cash advance industry has no oversight, refuses to give full disclosures of interest and fees involved, and takes an annual percentage of an excess of 300% against borrowers.

For the first time the CFPB has suggested regulating the SBI because of their dubious practices and products. The SBI refers to a loan of $500 or less wherein the borrower “provides a personal check dated on their next payday for the full balance or give the lender permission to debit their bank accounts. The total includes charges often ranging from $15 to $30 per $100 borrowed. Interest-only payments, sometimes referred to as rollovers, are common.” The Consumer Federation of America (CFA) counts 32 states in the US that “permit payday loans at triple-digit interest rates, or with no rate cap at all.” Shockingly 80% of payday loans are rolled over within 14 days while an estimated 50% of these loans are “in a sequence at least 10 loans long.” David Silberman, associate director for market research and regulation explained: “Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap.”

The Consumer Financial Protection Bureau (CFPB) has fined Wells Fargo for $100 million based on fraudulent customer account practices. An additional $85 million is to be paid to the city of Los Angeles in California, along with the Office of the Comptroller of the Currency.

Last year Wells Fargo was sued by employees (current and former) and customers all across the nation for setting up “unwanted accounts, unwarranted fees”. According to the lawsuit, this was “the largest California-based bank violated state and federal laws by misusing confidential information and failing to notify customers when personal information was breached.” Using “aggressive tactics” to coerce new customers, Wells Fargo made it “difficult to correct the mistakes” made by Wells Fargo and return fees to customers because of “high-pressure sales culture set unrealistic quotas, spurring employees to engage in fraudulent conduct to keep their jobs and boost the company’s profits.” Over the course of an extended period of time, “Wells Fargo employees secretly opened unauthorized accounts to hit sales targets and receive bonuses.” There were 1.5 million accounts opened without the authorization of customers and 500,000 credit cards accounts to boot. Wells Fargo has consistently blames “a few rogue employees. Five hundred employees were terminated, according to a Wells Fargo spokesperson. There was no mention of rescinding of bonuses paid to those employees, and there is no clear evidence that executive’s payouts totaling $155 million for “performance based compensation” for 2012 through 2013 was returned to the bank.

Those bonuses were administered based on the fraudulent accounts opened without customer approval. In a statement, Wells Fargo expressed belated regret and a sudden desire to “take responsibility for any instances where customers may have received a product that they did not request.” The training that caused this problem in the first place was a cross-selling strategy called “Going For Gr-Eight” which is a brochure for employees to push banking products onto households of existing customers to increase fee potential and overall profitability. Wells Fargo “staffers, fearing disciplinary action from managers, begged friends and family members to open ghost accounts” and forged signatures “and falsified phone numbers” of customers who did not want to open an account. This practice drove Wells Fargo’s financial success with an estimated “26% of the company’s revenue was from fee income, including those from credit and debit card accounts, trusts and investments.” The bank not only stole money from customers but “also damage their credit scores” and put some into collections to garner fees “for unauthorized accounts went unpaid”. In case of a complaining customer, Wells Fargo would “sandbag” their customers; meaning “failing to open accounts when requested by customers, and instead accumulating a number of account applications to be opened at a later date.”

The leaders of the U.S. Senate Banking Committee,  Sen. Tim Johnson (D., S.D.) and Sen. Mike Crapo (R., Idaho),  released a draft bill on Sunday that would provide explicit government guarantees on mortgage-backed securities (MBS) generated by privately-owned banks and financial institutions. The gigantic giveaway to Wall Street would put US taxpayers on the hook for 90 percent of the losses on toxic MBS the likes of which crashed the financial system in 2008 plunging the economy into the deepest slump since the Great Depression. Proponents of the bill say that new rules by the Consumer Financial Protection Bureau (CFPB) –which set standards for a “qualified mortgage” (QM)– assure that borrowers will be able to repay their loans thus reducing the chances of a similar meltdown in the future. However, those QE rules were largely shaped by lobbyists and attorneys from the banking industry who eviscerated strict underwriting requirements– like high FICO scores and 20 percent down payments– in order to lend freely to borrowers who may be less able to repay their loans.  Additionally, a particularly lethal clause has been inserted into the bill that would provide blanket coverage for all MBS  (whether they met the CFPB’s QE standard or not) in the event of another financial crisis. Here’s the paragraph:

“Sec.305. Authority to protect taxpayers in unusual and exigent market conditions…. If the Corporation, the Chairman of the Federal Reserve Board of Governors and the Secretary of the Treasury, in consultation with the Secretary of Housing and Urban Development, determine that unusual and exigent circumstances threaten mortgage credit availability within the U.S. housing market, FMIC may provide insurance on covered securities that do not meet the requirements under section 302 including those for first loss position of private market holders.” (“Freddie And Fannie Reform – The Monster Has Arrived”, Zero Hedge) In other words, if the bill passes,  US taxpayers will be responsible for any and all bailouts deemed necessary by the regulators mentioned above.  And, since all of those regulators are in Wall Street’s hip-pocket, there’s no question what they’ll do when the time comes. They’ll bailout they’re fatcat buddies and dump the losses on John Q. Public. If you can’t believe what you are reading or if you think that the system is so thoroughly corrupt it can’t be fixed; you’re not alone. This latest outrage just confirms that the Congress, the executive and all the chief regulators are mere marionettes performing whatever task is asked of them by their Wall Street paymasters.

Wells Fargo & Co. is refunding hundreds of thousands of customers tens of millions of dollars for account add-on products such as legal services or insurance, Dow Jones reported, citing people familiar with the matter.

Regulators are looking at whether customers were deceived, Dow Jones reported, and at their awareness of the products and ability to cancel them. Wells Fargo has spent nearly two years trying to clean up from a scandal that first erupted in 2016 over fake accounts opened in customers' names by employees trying to meet aggressive sales targets. Soon, sales practices in other areas of the bank fell under scrutiny, including in mortgages and auto lending. In April, the bank struck a $1 billion settlement with the CFPB and the OCC over its risk management failings.