[Chambo]

http://debanked.com/2015/07/federal-...nline-lending/ "We just have a few questions...."

And so it starts

[Chambo]

In Lift the Fog, Give us Regulation, Merchant Cash and Capital CEO Stephen Sheinbaum wrote, “It is also better, at least for the financial services industry, if the central government is the one to craft the regulation instead of getting one rule from each of the 50 state governments.”

hmmmmmmmm

[J.Celifarco]

In Lift the Fog, Give us Regulation, Merchant Cash and Capital CEO Stephen Sheinbaum wrote, “It is also better, at least for the financial services industry, if the central government is the one to craft the regulation instead of getting one rule from each of the 50 state governments.”

hmmmmmmmm

from a banks perspective it will be a lot easier if there is one set of rules they have to comply with rather then 50 different sets of rules that change state to state. If you go with belief that regulation is eventually going to come all our lives will be easier with 1 set of rules rather then 50.. Some of the banks can barely underwrite deals with no regulation can you imagine what it would be like trying to get an approval from some of these companies if they have to underwrite every file based on a different set of rules and criteria

[Mmarano]

What are you trying to say Matt?

In Lift the Fog, Give us Regulation, Merchant Cash and Capital CEO Stephen Sheinbaum wrote, “It is also better, at least for the financial services industry, if the central government is the one to craft the regulation instead of getting one rule from each of the 50 state governments.”

hmmmmmmmm

[Sean Cash]

from a banks perspective it will be a lot easier if there is one set of rules they have to comply with rather then 50 different sets of rules that change state to state. If you go with belief that regulation is eventually going to come all our lives will be easier with 1 set of rules rather then 50.. Some of the banks can barely underwrite deals with no regulation can you imagine what it would be like trying to get an approval from some of these companies if they have to underwrite every file based on a different set of rules and criteria

The larger issue here is that there are several groups and companies petitioning the CFPB to clarify the rules on Section 1071 of Dodd Frank and to begin enforcing them. Section 1071 expands the Equal Credit Opportunity Act's power in commercial financing (yes business lending and MCA).

The law as currently written potentially makes it illegal (for discrimination) for an underwriter to see a merchant's drivers license, google them, view their social media profiles, talk to them over the phone, meet them in person, visit their website, evaluate their marketing strategy, know their surname, and more. Basically the entire subjective MCA underwriting process as it uniformly exists today potentially violates discrimination laws under the Dodd Frank addition to the Equal Credit Opportunity Act. This is not a law people are considering. This is already the law and groups are petitioning the CFPB to start rolling it out.

The law most likely extends to ISOs too since all "financial institutions" are subject to it. As defined in the text, it says: “the term ‘financial institution’ means any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity.”

That means how an ISO places a deal depending on the circumstances or how many points they charge depending on the merchant and the situation may also be illegal. Again, this isn't an imaginary scenario. This is already the law.

[J.Celifarco]

The larger issue here is that there are several groups and companies petitioning the CFPB to clarify the rules on Section 1071 of Dodd Frank and to begin enforcing them. Section 1071 expands the Equal Credit Opportunity Act's power in commercial financing (yes business lending and MCA).

The law as currently written potentially makes it illegal (for discrimination) for an underwriter to see a merchant's drivers license, google them, view their social media profiles, talk to them over the phone, meet them in person, visit their website, evaluate their marketing strategy, know their surname, and more. Basically the entire subjective MCA underwriting process as it uniformly exists today potentially violates discrimination laws under the Dodd Frank addition to the Equal Credit Opportunity Act. This is not a law people are considering. This is already the law and groups are petitioning the CFPB to start rolling it out.

The law most likely extends to ISOs too since all "financial institutions" are subject to it. As defined in the text, it says: “the term ‘financial institution’ means any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity.”

That means how an ISO places a deal depending on the circumstances or how many points they charge depending on the merchant and the situation may also be illegal. Again, this isn't an imaginary scenario. This is already the law.

So essentially what you are saying is this law can potentially screw us all big time depending how it is interpreted and enforced

[rick_clsfunding]

It's basically the Community Reinvestment Act being applied to business loans - Can you see the train wreck coming...

[Mmarano]

There isn't one MCA company not guilty of this.

The larger issue here is that there are several groups and companies petitioning the CFPB to clarify the rules on Section 1071 of Dodd Frank and to begin enforcing them. Section 1071 expands the Equal Credit Opportunity Act's power in commercial financing (yes business lending and MCA).

The law as currently written potentially makes it illegal (for discrimination) for an underwriter to see a merchant's drivers license, google them, view their social media profiles, talk to them over the phone, meet them in person, visit their website, evaluate their marketing strategy, know their surname, and more. Basically the entire subjective MCA underwriting process as it uniformly exists today potentially violates discrimination laws under the Dodd Frank addition to the Equal Credit Opportunity Act. This is not a law people are considering. This is already the law and groups are petitioning the CFPB to start rolling it out.

The law most likely extends to ISOs too since all "financial institutions" are subject to it. As defined in the text, it says: “the term ‘financial institution’ means any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity.”

That means how an ISO places a deal depending on the circumstances or how many points they charge depending on the merchant and the situation may also be illegal. Again, this isn't an imaginary scenario. This is already the law.

[Mmarano]

It will be a few years. Not going to happen overnight.

It's basically the Community Reinvestment Act being applied to business loans - Can you see the train wreck coming...

[Sean Cash]

It will be a few years. Not going to happen overnight.

This is true. It is not a top priority on the CFPB's list but all it takes are advocacy groups to start making some noise (which they're starting to do) to make it a higher priority. We are probably looking at "years" at this point, but the reality is that we need to start waking up. A good start would be thoughtful responses to the Treasury Department's Request for Information

[Sean Cash]

It should be mentioned that Fundera is practically leading the charge for it to be enforced now: http://thehill.com/blogs/congress-bl...online-lenders

[Mmarano]

Sean,

I couldn't agree more with your response to me. My hope is to have a seat at the table when regulation does come. Lol.

This is true. It is not a top priority on the CFPB's list but all it takes are advocacy groups to start making some noise (which they're starting to do) to make it a higher priority. We are probably looking at "years" at this point, but the reality is that we need to start waking up. A good start would be thoughtful responses to the Treasury Department's Request for Information

[Chambo]

Keep dreaming sweats

[Chambo]

Y'all called me a crazy old timer a while back about all of this...

[Chambo]

Especially YOU Sean!

[Chambo]

"this is B2B, they'll NEVER regulate it" "Oh Chambo, you're crazy with your predictions...."

[Mmarano]

Ouch.. I see you're still grumpy as ever

Keep dreaming sweats

[Sean Cash]

Especially YOU Sean!

One minute I thought I was this hot shot kid just trying to get his deals funded and the next minute I turned into Chambo!

[Mmarano]

All I'm saying is we have a lot of time before the Federal Government makes noise. They're very busy.

Y'all called me a crazy old timer a while back about all of this...

[CreditGuy]

I feel like this was prescient when I posted it back in October:

Government will get involved eventually as well. Likely CFPB, The C stands for Consumer, but that is a technicality. If anyone is serious about being a long term player in this space, they should be thinking about hiring lobbyists sooner than later to make an attempt at optimizing whatever policy outcomes inevitably transpire.

Good to see everyone catching up 9 months later.

[Sean Cash]

I feel like this was prescient when I posted it back in October:

Good to see everyone catching up 9 months later.

Don't worry, we'll attribute all future industry regulations to you

[Mmarano]

Don't worry, we'll attribute all future industry regulations to you