Updates

March 20, 2019

Members and Friends of AILA:

Yesterday, in Montgomery, the Association held its most successful Legislative Day Meeting to date. Thank you to the many members who attended.

The afternoon meeting started at 3:00 with a report from Alabama Banking Department Supervisor Scott Corscadden. The Supervisor first reviewed some staffing changes at the Department, and then reported on the number of licensed entity locations supervised by the Department. There are currently 13,343 total licensees, of which 3,250 are either Small Loan Act or Mini-Code licensees. Corscadden reported that the Department expects to conduct over 3,000 examinations in 2019. There was a general discussion of multi-state license registration and examination.

Mr. Corscadden addressed the Department’s continuing review of cyber security, credit reporting and debt repair, consolidation and collection issues. He also discussed the amorphous “Fintech” and “Pay Advance” developments in connection with the delivery of loan products and wages to consumers. He also reported to our group that the SLA and M/C licensees continue to handle complaints in an exemplary fashion. Scott took questions. His presentation provided good insight into how the Department views its role in consumer protection.

At 4:00, Members of the Alabama Legislature and staff began arriving for the Legislative Reception. We have never had a larger turn-out of Senators and Representatives, including attendance of Speaker Pro Tem Marsh and Lieutenant Governor Ainsworth. Since we are so early in the Regular Session, our Representatives used our reception as a great opportunity to socialize with us and with their colleagues. We had the chance to review our industry with many of the “newer” Representatives who may not be as knowledgeable about traditional installment lending.

All in all, yesterday was a great day for the Alabama Installment Lenders Association. I thank the leadership of the Association and our Government Affairs Team who spent all day and prior days at the State House talking-up our Legislative Reception, which resulted in such an outstanding attendance. Although these receptions are expensive to hold, they are invaluable in establishing and cementing strong relationships with our Representatives.

Maury Shevin

November 13, 2018

AILA Members and Friends:

Please find attached the PEW Charitable Trusts October, 2018 report, State Laws Put Installment Loan Borrowers at Risk; How outdated policies discourage safer lending. I share this report with you so that you will know the type of information that is being circulated to policy makers.

There are some seriously misleading conclusions. For example, PEW criticizes repeat borrowing as a characteristic of installment lending, while wholly failing to acknowledge and address repeat borrowing on credit cards, charge cards and equity credit lines as comparable activities. Rather, the report only compares payday and title loans. Further, PEW criticizes the inclusion of voluntary ancillary products in loan transactions while not analyzing the relatively inexpensive cost of such products against the occurrence of more and more frequent, devastating losses to borrowers—especially subprime borrowers—from hurricanes, wildfires, tornadoes, volcanoes and floods.

Most significantly, the PEW report completely ignores the economic reasons why an installment loan is such an important product, as well as the competitive reasons why installment loans are such an attractive product for 10’s of millions of customers.

Maury

November 7, 2018

AILA Members and Friends:

Our next Legislative Meeting & Reception in Montgomery is set for Tuesday, March 19, 2019, on the 6th floor of the RSA Plaza Building, 770 Washington Avenue. The RSA Plaza Building is located directly across Washington Avenue from the Alabama State House which is behind the State Capitol. The business meeting will start at 3:00 PM, and the Reception for Members of the Legislature and Staff will start at 5:00 PM.

Please plan to stay and talk to our friends in the Legislature, until approximately 8:00 PM. This will be the beginning of a new quadrennium, with a lot of new faces. Our Legislators will have a direct impact on our business.

Parking in the adjacent lot, will open at 2:30.

I look forward to seeing you in Montgomery.

Maury

June 5, 2018

From: Shevin, Maury
Sent: Tuesday, June 05, 2018 1:24 PM
To: ‘ birmingham@bizjournals.com’ < birmingham@bizjournals.com>
Subject: Your recent article concerning the OCC, banks and short-term, small-dollar loans

I am the Association Director of the Alabama Installment Lenders Association, the oldest and most respected Alabama trade association devoted to the consumer finance industry in the State of Alabama. Your article and your experts left a gaping hole in your reporting on recent developments with the OCC’s small dollar loan policy. By writing only about banks and payday lenders, you completely ignored the most significant and safest source for small-dollar lending in the USA—traditional installment loans.

In Alabama, traditional installment lenders are licensed by the State of Alabama Banking Department to make loans under the Alabama Small Loan Act and the Alabama Consumer Credit Act. These loans are fixed-rate, fully amortizing, closed-end extensions of consumer credit, under which the principal amount financed and scheduled interest are repaid in substantially equal installments. Further traditional installment loans do not include interest-only payments nor balloon payments at maturity. And, the traditional installment lender determines the borrower’s ability to repay before extending the loan.

The traditional installment loan has served American borrowers for more than a century. In the fiscal year ending 2016, the Alabama Banking Department reported that licensees under these two laws had 725,000 loans outstanding. This vast number of loans means that these licensed lenders fulfilled the financing needs for many Alabamians. As of the reporting date, the total outstanding balance on these loans was $4.344 billion; and these licensees had combined assets of some $5.538 billion.

It is surprising to me that you would ignore this most common form of consumer credit extension.

Traditional installment lenders will continue to meet the growing demand of Alabamians for the efficient delivery of consumer loans at a fair price. Consumer credit is the fuel that drives the American and Alabama economy. The Alabama Installment Lenders Association is proud of the role that we are playing in making credit available to so many worthy people in Alabama.

Very truly yours,

Maurice L. Shevin

July 6, 2017

AILA Members and Friends: I think you will find the following message from AFSA regarding arbitration to be of interest. Maury

AFSA (American Financial Services Association) Email dated July 6, 2017

The Consumer Financial Protection Bureau (CFPB) is continuing its efforts to finalize an arbitration rule, as well as a small-dollar loan rule.

AFSA expects the CFPB to issue a final rule prohibiting the use of class action waivers in arbitration clauses very soon. The final rule is likely to be similar to the one that was proposed in May of 2016. AFSA anticipates that financial institutions will have around seven months to come into compliance with the final rule.

AFSA is working with its sister trade associations on a response to the final rule, which includes discussions with members of Congress about using the Congressional Review Act (CRA) to overturn it. As a reminder, regulations can be overturned by simple majority vote and the president’s signature. Industry is working with Congressional leaders to garner the 51 votes needed for Senate passage. The trade associations are also discussing potential litigation challenging the rule.

The CFPB is also working to finalize the small-dollar loan rule. AFSA expects a final rule by this fall. The proposed small-dollar loan rule had an effective date of 15 months. AFSA continues to advocate for a narrower scope for the rule.

If there is a new CFPB director, the effective dates of either rule could be moved, the rules could be altered, or the rules could be withdrawn.

For questions or comments, please contact AFSA EVP Bill Himpler via email or at 202-466-8616.

July 29, 2017

AILA Members and Friends:

I have compared some statistics from the Alabama State Banking Department Annual Reports for FY 2016 and FY 2015. The fiscal year in Alabama runs from October 1st to September 30th. We are probably five months away from seeing the next Annual Report from the Alabama State Banking Department. The following statistics are based on a comparison of 2016 with 2015:

Number of Mini-Code Licensed Offices: increased by 10.9%.

Number of Mini-Code Total Receivables: increased by 64.9%.

Dollar Amount of Mini Code Receivables: increased by 8.23%.

Net Profit: decreased by 10.1%.

Number of Small Loan Act Licensed Offices: decreased by 0.6%.

Number of Small Loan Act Loans Outstanding: decreased by 8.9%.

Dollar Amount of Total Loans Outstanding: decreased by 3%.

Net Profit: decreased by 20.7%.

Combined Number of Mini-Code and SLA Licensed Offices: increased by 6.7%.

Combined Number of Mini-Code and SLA Receivables: increased by 26.7%.

Combined Dollar Amount of Mini-Code and SLA Receivables Outstanding: increased by 7.6%.

Net Profit of combined Mini-Code and SLA: decreased by 10.8%.

I expect that the next Annual Report will show a marked increase in Small Loan Act licenses, both because of the continuing transition of Deferred Presentment licensees to installment lending, and because of the increase lending limits under the Small Loan Act. We will soon see whether the change in the law has a positive effect on profitability.

Maury

July 25, 2017

AILA Members and Friends: With Jonathan Paret’s permission, I share with you the following information concerning the likelihood of a CRA intervention in the CFPB’s proposed Arbitration Rule. Maury

BEGINNING OF THE END FOR CFPB ARBITRATION RULE? – House Republicans today are expected to pass legislation that would block a CFPB rule banning mandatory arbitration language in consumers’ contracts with credit card companies and banks.

The White House “strongly supports” the resolution. It said the CFPB’s rule “would benefit trial lawyers by increasing frivolous class-action lawsuits.” Read more.

Compass Point analyst Isaac Boltansky on what’s next – “We now peg the odds of the mandatory arbitration rule being reversed through the [Congressional Review Act] at 60 percent. The House will easily clear the measure, but the whip count in the Senate is still fluid at this juncture and appears to be losing its footing.”

July 11, 2017

CFPB Pulls the Trigger on Arbitration Agreements Rule

Yesterday, July 10th, the Consumer Financial Protection Bureau released its Arbitration Agreements Rule pursuant to the Dodd-Frank Act. The release of this Rule has been much anticipated since the publication of the Proposals last year. True to the Proposals, the Rule does not prohibit mandatory arbitration on a non-class wide basis. However, it does eliminate the imposition of mandatory, class-wide arbitration by those who provide consumer products and services on a repetitive basis (for example, “creditors” as that term is used in the Truth-in-Lending Act, and those participating in credit decisions, acquiring consumer contracts, leasing automobiles, providing debt management services, debt collection and more).

The Rule imposes specific language to include in a pre-dispute arbitration agreement to make crystal clear that the agreement does not prevent a consumer from being part of a class action case in court. It also imposes requirements on those who are subject to the Rule, to submit detailed records of arbitrations and arbitration related information to the Bureau.

The effective date of the Rule is March, 2018, at the earliest. And, there is still the possibility that Congress will act under its powers to reject the Rule within the next 60 days.

In preparation for an effective final Rule, creditors using pre-dispute arbitration agreements in their consumer finance transaction contracts, should consider the benefits of such agreements absent class-wide waiver, particularly in light of the “submission of records” requirement.

If a creditor determines that an arbitration agreement, without class-wide arbitration, is still of benefit, then the form of the agreement currently in use will require modification. If a creditor determines that arbitration without the component of mandatory class-wide arbitration is not of value, a “jury trial waiver” provision is a matter to be considered. The rules concerning jury trial waiver, differ from jurisdiction to jurisdiction.

Please let me know if you have questions. Maury

March 1, 2017

http://alisondb.legislature.state.al.us/ALISON/SearchableInstruments/2017RS/PrintFiles/HB321-int.pdf

Today, Rep. Fincher and 44 co-sponsors introduced HB 321 into the Alabama House, calling for a Constitutional Amendment to set the maximum interest rate a lender may charge “on a consumer loan, line of credit, or other financial product” at 36% APR.  A copy of the Bill is linked above.

As consumer finance companies well understand, such a limit would end most all sub-prime consumer loans and sales made in Alabama, including traditional installment loans, credit appliance, furniture and other product sales, and automobile and boat financing.  The ramification of such a law would have draconian consequences to Alabama’s consumers.

While I understand the intent of the proponents of this measure — to reign in consumer loan products that create a cycle-of-debt — the result of the passage of this Bill and the adoption of such an Amendment would cripple the very people the Bill is intended to help.

There are other more appropriate approaches to address loan products that are problems for Alabama’s consumers.  The Governor’s Task Force on Consumer Credit Laws has been hard at work on effective solutions.  This Bill’s approach is not one of them.  The Alabama Installment Lenders Association will be joining with others to explain the serious problems with this Bill and the severe implications for Alabama’s consumers that would result from its becoming law.

Maury Shevin

December 14, 2016

A Message to

Alabama Installment Lenders Association Members and Friends

We are drawing to the end of another year; and, it has been a good one for our Association and most of our members. Despite some concerns early in the year about the direction of the Alabama Legislature and notwithstanding some poor press reporting in the summer, the Alabama Installment Lenders Association has prevailed as a strong trade association that provides valuable and fair loan products to our customers. Because of our work this past year, I think that all stakeholders in the consumer finance world — lenders, customers, regulators, consumer advocates and academicians — have a better understanding of what a traditional installment loan is and how it works to the needs of our customers. And this is important.

There are still significant “threats” out there that have to be addressed in 2017. The Consumer Financial Protection Bureau remains high on the list of threats along with some consumer advocates who have difficulty distinguishing beneficial consumer loan products and services from those that are problematic. We will continue our outreach to regulators, legislators and consumer advocates to encourage their understanding of how traditional installment loans work for the good of our customers.

Next year will likely see changes in our industry. On the federal level, there is the possibility that the Trump Administration will oversee the dismantling of significant aspects of the CFPB through legislative changes to Dodd-Frank. But, don’t jump for joy quite yet. It remains to be seen whether the pieces of Dodd-Frank that are altered only apply to Wall Street and Money Center Banks, or whether the changes also affect Main Street consumer finance companies. We will look for some regulatory relief as “compliance” has become a significant cost of doing business for traditional finance companies, despite little showing that traditional installment loans are any real problem for consumers. Our sister trade association, the American Financial Services Association, is hard at work on our behalf in Washington, pushing for regulatory relief. The National Installment Lenders Association works diligently on our issues as well.

On the state level, those who would impose rate caps at unworkable levels will, no doubt, continue in their efforts. We’ve seen some of this approach promoted at the Governor’s Task Force Meetings on Consumer Credit held last October and November. We just need to stay the course, explaining how traditional installment lending works, and why rate caps do not. Our Association will meet in Montgomery on February 21, 2017, to discuss industry developments and meet our Legislators. This annual program is always one that I look forward to. I trust that this date is already on your calendar.

I hope that all AILA members enjoy this Holiday Season with good deeds, with good cheer, with family and with friends. And, may the New Year bring you peace and happiness.

Sincerely,

Maury Shevin, Association Director