In Montana, Governor Bullock Signs Order to Enforce Net Neutrality

From the New York Times:

Most efforts underway to restore so-called net neutralityface big obstacles and would take many months, if not years, to succeed.

But in Montana, the governor has used the stroke of a pen to bring the rules to broad parts of his state.

Through an executive order, Gov. Steve Bullock declared on Monday that any internet service provider with a state government contract cannot block or charge more for faster delivery of websites, two core aspects of net neutrality, to any customer in the state.

Many major landline and mobile broadband providers, including Charter, CenturyLink, AT&T and Verizon, hold government contracts in the state. The new requirements apply to new and renewed contracts signed after July 1, 2018.

The action, the first of its kind by a governor, could face legal challenges.

In December, the Federal Communications Commission rolled back rules meant to protect a free and open internet. The new rules say states cannot create net neutrality laws. The agency did not respond to a request for comment about the Montana action.

Read the complete article here.

CFPB to reconsider rule on payday loans

From CNN Money Edition:

The watchdog agency said in a statement Tuesday that it intends to “reconsider” a regulation, issued in October, that would have required payday lenders to vet whether borrower can pay back their loans. It also would have restricted some loan practices.

If the rule is thrown out or rewritten, it would mark a major shift for an agency that had zealously pursued new limits on banks and creditors before Mick Mulvaney, President Trump’s budget director, became the CFPB’s acting director.

Mulvaney took over the top job at the CFPB in November following a leadership scramble. A vocal critic of the CFPB when it was run by President Obama appointee Richard Cordray, Mulvaney since said the agency would cut back on burdensome regulations.

Tuesday’s announcement does not amount to a formal repeal of the payday lending rule. But it does cast doubt on whether it will ultimately be implemented.

Payday loans provide those in need with small amounts of cash — typically between $200 and $1,000. The money needs to be paid back in full when a borrower receives his or her next paycheck, and such loans often come with exorbitantly high interest rates.

Consumer advocates that have supported the CFPB’s restrictions on the loans say such transactions often take advantage of people in desperate financial situations.

“The CFPB thoroughly and thoughtfully considered every aspect of this issue over the course of several years,” Karl Frisch, executive director of progressive group Allied Progress, said in a statement. “There is no reason to delay implementation of this rule — unless you are more concerned with the needs of payday lenders than you are with the interests of the consumers these financial bottom-feeders prey upon.”

The sentiment was echoed in a statement by Sen. Elizabeth Warren, a Democrat who helped create the CFPB.

“Payday lenders spent $63,000 helping Mick Mulvaney get elected to Congress and now their investment is paying off many times over. By scrapping this rule, Mulvaney will allow his campaign donors to continue to generate massive fees peddling some of the most abusive financial products in existence,” Warren said.

Read the complete article here.

Consumers lack financial literacy, contributed to Great Recession

From the LA Times:

Guess how many Americans correctly answered this basic financial question: Is the stock of a single company usually safer than a mutual fund?

A) 100% B) 80% C) 60% D) None of the above.

The right answer is D. Barely 1 in 2 people knew that a single stock is not safer than a mutual fund, which holds many stocks.

The question, included in a survey by a pair of college professors, underscores a fundamental problem facing millions of Americans. At a time when the world of personal finance is increasingly complex — and when people are more responsible than ever for their own financial future — Americans’ understanding of basic concepts is sorely lacking.

Despite many efforts to boost knowledge, studies show that most people don’t understand rudimentary principles of finance and investing. Even well-educated and upper-income Americans often have poor financial literacy, experts say.

“By and large, people are pretty clueless,” said Olivia Mitchell, executive director of the Pension Research Council at the University of Pennsylvania and coauthor of the study.

A 182-page analysis by the Securities and Exchange Commission last year found that “investors have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud.”

The result, experts say, is young people who are mired in student debt and older Americans who face bleak retirement prospects. People who don’t understand basic concepts are ill-equipped for more complex tasks, such as ferreting out hidden fees or conflicts of interest that are embedded in many financial products.

The collective ignorance has played a role in recent financial crises, according to some experts. The subprime mortgage meltdown would have been less severe, they say, if people understood the pitfalls of the loans they were taking out.

Read the complete article here.