edition: May 21, 2024 

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Supreme Court rejects payday lenders' challenge to Obama-era consumer protection bureau

The Supreme Court on Thursday upheld the U.S. consumer protection agency that was created under President Obama and congressional Democrats to protect Americans from financial scams.

By a 7-2 vote, the justices rejected a constitutional claim brought by a coalition of payday lenders who had won before a panel of three Trump appointees on the 5th Circuit Court of Appeals.

The lower court had questioned the legality of the Consumer Financial Protection Bureau, ruling it was not properly “accountable to Congress” because it did not receive its funding through an annual appropriation.

Writing for the majority, Justice Clarence Thomas said early American history shows that Congress could fund the government through different means, not just through an annual appropriation.

Read more at YAHOO FINANCE

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The Internal Revenue Service issued a consumer alert today following ongoing concerns about a series of tax scams and inaccurate social media advice that led thousands of taxpayers to file inflated refund claims during the past tax season.

Jose L. Santiago

Public Affairs Specialist

Tax Outreach, Partnership and Education

Statement on Supreme Court Decision in CFPB v. CFSA: CFPB

The Consumer Financial Protection Bureau issued a statement today regarding the Supreme Court’s decision in CFPB v. Community Financial Services Association of America:

“For years, lawbreaking companies and Wall Street lobbyists have been scheming to defund essential consumer protection enforcement. The Supreme Court has rejected their radical theory that would have devastated the American financial markets. The Court repudiated the arguments of the payday loan lobby and made it clear that the CFPB is here to stay.”

“Congress created the CFPB to be the primary federal watchdog protecting consumers from predatory and abusive practices in the financial sector. Since the CFPB opened its doors in 2011, it has delivered more than $20 billion in consumer relief to hundreds of millions of consumers and has handled more than 4 million consumer complaints.”

“Today’s decision is a resounding victory for American families and honest businesses alike, ensuring that consumers are protected from predatory corporations and that markets are fair, transparent, and competitive.”

“This ruling upholds the fact that the CFPB’s funding structure is not novel or unusual, but in fact an essential part of the nation’s financial regulatory system, providing stability and continuity for the agencies and the system as a whole. As we have done since our inception, the CFPB will continue carrying out the vital consumer protection work Congress charged us to perform for the American people.”

Read more at Consumer Financial Protection Bureau

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Prepared Remarks of CFPB Director Rohit Chopra Regarding the Supreme Court’s Decision in CFPB v. CFSA: CFPB

Our economy and our financial system don’t work for the public when there are laws on the books that simply go unenforced. This isn’t just bad for consumers, it’s bad for the honest businesses that play by the rules. We saw the results of this in a devastating financial crisis that cratered the economy.

Since the CFPB opened its doors as part of the Federal Reserve System in 2011, large financial firms have been scheming to defund consumer protection and law enforcement and return to a market where they are able to act with impunity. The payday loan lobby has repeatedly argued that the CFPB’s funding structure within the Federal Reserve System is unconstitutional.

Yesterday, the Supreme Court rejected a radical theory that would have rattled financial markets by injecting uncertainty into all of the CFPB’s actions taken since day one. In its opinion, the Court repudiated the arguments of the payday loan lobby. The Court’s ruling makes clear the CFPB is here to stay.

Here’s what will happen next. First, the CFPB will be able to forge ahead with our law enforcement work. During the pendency of this Supreme Court case, a number of the CFPB’s enforcement actions were put on pause. In many of these lawsuits, we allege that the defendants engaged in severe misconduct that took advantage of people, including ones living paycheck to paycheck and even military families. That means justice has been delayed for too many.

Read more at The Consumer Financial Protection Bureau (CFPB)

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See Your State's Fiscal Data Like Never Before: PEW


Fiscal 50: State Trends and Analysis

State Population Trends:

South Carolina, Florida, and Texas were the fastest-growing states in 2023, while eight states lost population. Population change is the difference between all new residents—births and newcomers from other states and abroad—and those who died or moved away.

A Range of Emerging Fiscal Risks Could Disrupt State Budgets

With major demographic, environmental, and technological changes on the horizon, states must find ways to look ahead and consider the potential fiscal impact of these new and emerging risks to ensure that they have time to plan for and manage these future budget challenges.

Read more at The Pew Charitable Trusts

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Equifax Canada exploring use of payday loan data in credit score calculation

TORONTO — Equifax Canada says it's exploring how using payday loan data could affect people's credit scores.

The agency says including data sources that aren't traditionally used to calculate credit scores could help paint a more complete picture of consumers' credit health.

Equifax says this could improve credit scores for consumers with "responsive repayment of payday loans," potentially leading to better loan terms and interest rates for those customers as they seek to rebuild their credit.

Last month, Equifax said it was exploring the use of rental data in calculating credit scores, adding that including "alternative data" could establish or enhance the credit scores for millions of Canadians.

Read more at The Canadian Press

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Top financial disruptors that stress out Americans

Americans with limited savings stress about their finances for nearly an entire work month (18.63 days) each year, new research suggests. 

A survey of 2,000 U.S. adults with less than two months of liquid savings or assets on hand found that while their finances are often top of mind, a third (33%) feel paralyzed to act when a financial disruption occurs.

The most common disruptions that make people feel paralyzed include an unexpected bill or expense (55%), medical emergency (52%), increase in cost of necessities (44%), increase in loan payments (37%), or job loss (36%).

Financial tasks take up a lot of time in an average month, with about a quarter of respondents devoting one full week per month to budgeting, checking their bank account balance and reviewing their credit transactions.

Read more at MSN

Dreher Tomkies LLP

Dave Ramsey Says Renting Is A Smart Financial Move To Avoid Becoming 'House Poor'

Well-known financial adviser Dave Ramsey said renting is a strategic choice — not a waste of money. It can save people from becoming ‘house poor,' a situation where owning a home stretches your finances too thin, leaving little room for other expenses and savings.

Renting allows people to buy time, until they can purchase a home.

"Just because a mortgage payment might be less than rent doesn't mean it's the right time for you to buy a house," Ramsey wrote in a May 7 post on X. "There are a LOT more expenses that come with homeownership than the monthly payment."

Don't Miss:

Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Here's how you can collect passive rental income without being a landlord.

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Gen Z Credit Card Use is Outpacing Millennials’, Amid Financial Stress and Ballooning Debt

At one time, Generation Z said it wanted to avoid credit cards. But a new study finds they are charging more now than Millennials did at the same age. With less than half of Gen Z even old enough to use credit, are they already shaping up to be 'Generation Debt'?

Not so long ago, studies and surveys reported Generation Z loved debit cards and avoided credit. It wasn’t the first time a generation said it felt that way: For a while, Millennials were wary of credit cards and hesitated to get into debt, having seen the troubles parents or older siblings faced during the mortgage crisis.

But Gen Z’s relationship to credit cards has changed big time, according to research by TransUnion, as well as analysis of its extensive credit database.

The company compared Gen Z to Millennials when they were in the same age range—22-24 years old — and adjusted dollar figures for credit use and income for inflation.

Read more at The Financial Brand


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