Payday lending

The Consumer Financial Protection Bureau on Wednesday issued an advisory for banks and credit unions on how to prevent and respond to elder abuse.

The first protection a consumer needs is the assurance that any new reforms will not inadvertently drive all regulated credit from the market.

The Consumer Financial Protection Bureau faces a tough balancing act as it seeks to issues a proposal to rein in high-cost payday loans. A chief concern is what will replace payday lenders if federal regulations force many of them to shut down.

Endorsements from lawmakers such as Bernie Sanders and Elizabeth Warren of the U.S. Postal Service providing banking services overlook how a similar plan faltered after the Panic of 1907.

In what has become almost a grim ritual, Consumer Financial Protection Bureau director Richard Cordray faced a barrage of hostile questioning from Republican members of the House Financial Services Committee, who hammered him over everything from payday lending to regulatory relief for small banks.

A left-leaning group is attacking one of the most prominent Democrats in Washington as being insufficiently tough on payday lenders. The ad shows how once-obscure financial issues are commanding a higher profile this election season.

The White House and other Democrats have long pushed for banks to offer affordable small-dollar loans as an alternative to payday loans and other costlier credit, but banks have struggled to make them profitable and safe for consumers.

LendUp, which makes subprime consumer loans online and over mobile phones, announced Wednesday that it has raised $50 million in equity funding, plus an additional $100 million in debt financing.

Overlapping missions and jurisdictions are fueling competition between the Consumer Financial Protection Bureau and the Federal Trade Commission, according to former officials at both agencies.

After several years of tussling with mortgage rules and their implementation, the Consumer Financial Protection Bureau is focusing on several areas that will primarily affect the nonbank market, including debt collection, payday-type loans and prepaid cards.

Banks have made changes to overdrafts, such as lowering fees offering clearer explanations. They better, as the CFPB will soon offer new rules for overdrafts. Plus, overdraft revenue has declined at many banks. Still unanswered is the question of how to offer short-term credit, if overdrafts disappear.

The Consumer Financial Protection Bureau's payday loan proposal threatens many money services businesses on the front lines of stopping money-laundering and terrorist financing.

The agency has struggled with how to regulate small-dollar and payday loans in recent years, pushing back its own deadline several times for completing a proposed rulemaking. That could be because the plan is so sweeping, some said.

A federal appeals court has ruled that Visa and MasterCard were coerced by law enforcement into cutting ties with a website that runs sex-related ads. The decision is a powerful statement in the debate over how far government officials can go in enlisting financial institutions as their deputies.

There is no shortage of opinions about payday loans. But the same cannot be said for hard research, which is needed before regulators write new rules for the industry.

A federal judge who dismissed a case against two high-cost lenders suggested the outcome was unfortunate, but said her hands were tied by the law.

Embattled online lender CashCall has paid nearly $2 million in restitution and fines for allegedly deceiving and overcharging borrowers, California's Department of Business Oversight announced.

The telemarketing industry will not be allowed to use remotely created checks and other forms of payments under rules adopted by the Federal Trade Commission. The measures, designed to reduce fraud against consumers, drew opposition from the Federal Reserve Bank of Atlanta and the banking industry.