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Democrats Block Safeguard Against CFPB Social Credit System

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Democrats in the House of Representatives voted on Wednesday against an amendment to a proposed bill that would prevent the Consumer Financial Protection Bureau (CFPB) from forcing credit reporting agencies to evaluate Americans based on political opinions or religious beliefs.

Without such an amendment, Republicans warn, the powerful CFPB would have the legal authority to make nearly any criteria mandatory for a private credit evaluation company to take into consideration, paving the way for a system in which the federal government has the power to assign numerical scores to individuals based on their loyalty to a certain political party, membership in civil society groups that the government approves or disapproves of, or other private behaviors.

The system, they say, would mirror the newly minted “social credit system” in place in China, which bans citizens from key social services like public transportation if they lose too many points behaving in a way the Communist Party disapproves of.

The CFPB, the brainchild of Senator Elizabeth Warren (D-MA), is an executive agency that does not answer to the presidency, making it unaccountable to anyone but its head. The constitutionality of giving an unelected body the power to impose its demands on private individuals and corporations has been the subject of extensive debate, and the unique power given to a bureau director triggered an aggressive fight for the seat after founding director Richard Cordray, chosen by President Barack Obama, resigned.

Republicans moved on Wednesday to amend the 1970 Fair Credit Reporting Act in light of the existence of the CFPB. The failed amendment would have prevented the Bureau from forcing private credit scoring companies to “make use of information related to political opinions, religious expression, or other expression protected by the First Amendment, whether obtained from a social media account of a consumer or other sources.”

The amendment would have been tacked onto Rep. Ayanna Pressley’s (D-MA) Student Borrower Credit Improvement Act, or Comprehensive CREDIT Act of 2020, which grants the CFPB power to order private credit evaluation companies not to take into account what Pressley and her fellow Democrats consider unfair criteria. Having bad credit could keep an American from buying a car or a home, limiting their economic potential. Pressley’s bill would, in particular, prevent unexpected medical expenses or unpaid student loans from harming a person’s credit.

The bill, which passed, decrees:

A consumer reporting agency may not furnish any consumer report containing any adverse item of information relating to a delinquent or defaulted private education loan of a borrower if the borrower has rehabilitated the borrower’s credit with respect to such loan by making 9 on-time monthly payments (in accordance with the terms and conditions of the borrower’s original loan agreement or any other repayment agreement that antedates the original agreement) during a period of 10 consecutive months on such loan after the date on which the delinquency or default occurred.

It then tasks the CFPB to implement a “credit rehabilitation” system to help individuals reach the point necessary for the above protection to apply to them.

The amendment banning the CFPB from including First Amendment expressions in its “credit rehabilitation” – in ways such as improving someone’s credit for “good” speech or excluding them from the program for “bad” speech – would not have significantly limited the scope of the Comprehensive CREDIT Act.

Yet Democrats rejected the amendment with 208 votes; only 15 House Democrats voted in favor of the free speech protections. Some, like Rep. Tulsi Gabbard (D-HI), abstained.

House Minority Leader Kevin McCarthy (R-CA) warned following the vote that the CFPB, if the new law passes the Senate without such protections, would now have the power to use any aspect of a person’s life to change their credit score, with significant potential for abuse.

“In keeping with their theme of handing over more control to the government, Democrats now support giving the CFPB unchecked authority on credit score modeling, without any built-in measure to stop potential abuse of power or violation of our Constitutional rights,” McCarthy said in a statement following the vote. “There is a terrifying parallel to the practices of China’s communist regime, which seeks to control the actions of their population with a social credit score. This kind of oppressive practice is antithetical to American freedoms and ideals.”

The Chinese social credit system is political, not financial – the Communist Party assigns a numerical value to every citizen in the country based on “good citizenship,” largely defined as loyalty to the party. China’s expansive surveillance system monitors every action, online and in the real world, every citizen takes and scores a person based on each one. Among the activities known to affect a social credit score are jaywalking, curbing one’s dog, littering, and speaking ill of the government online (“disturbing public order”). Ethnic and religious minorities fear that practicing any religion under communist rule will hurt their social credit scores, particularly Christians and ethnic Uyghur Muslims, millions of which are currently languishing in concentration camps. Among other vulnerable groups are anti-Xi Jinping Marxist activists, human rights attorneys, Communist Party members considered disloyal to Xi, or musicians suspected of using their art to promote non-Communist values.

The Chinese social credit system has “blacklisted” over 13 million people as of May, when Beijing made its latest figures public. It has blocked 23 million attempted purchases of train, public bus, and airplane tickets. The consequences for having a low credit score range from being banned from traveling anywhere or patronize businesses like hotels in the country to being forced to use an “embarrassing” ringtone that immediately identifies one as a “discredited individual.”

China has begun exporting this system, along with its surveillance technology, to countries in the Western Hemisphere like Venezuela, Ecuador, and Bolivia.

The CFPB was nominally created to protect Americans from economic malfeasance in the aftermath of the 2008 economic crisis.

“Every day, the good people at that independent agency crack down on dishonest and deceptive practices like the ones that helped cause the crash,” President Obama said in July 2016, sitting next to Warren, who designed the agency. “The proof is in the more than 27 million consumers who in just five years have gotten refunds and other relief from credit card companies, payday lenders, debt collectors, and others that tried to rip them off.”

Yet the Bureau has faced repeated accusations of abuse of power, particularly under Cordray, its founding director. In perhaps the most absurd example of overreach, the CFPB attempted in 2015 to punish a land development company for not maintaining roads in Tennessee at the standard the Bureau deemed appropriate. Industries or organizations the left disapproves of, like firearms manufacturers or politically conservative religious groups, could similarly find themselves in CFPB crosshairs.

The CFPB’s constitutionality has been controversial given the fact that the president has only limited oversight on the agency through a narrow list of reasons to remove a director. Lawsuits have attempted to bring the constitutionality of the agency to the Supreme Court but have yet to successfully do so. The Supreme Court in October agreed to hear a challenge to the constitutionality of the CFPB.

Democrats’ move to prevent free speech safeguards from being added to the CFPB’s credit evaluation powers occurred just as Warren launched a campaign against “disinformation,” a word the Chinese regime often uses to censor anti-communist speech.

“Anyone who seeks to challenge and defeat Donald Trump must be prepared to take on the full array of disinformation that foreign actors and people in and around his campaign will use to divide Democrats, suppress Democratic votes, and erode the standing of the Democratic nominee,” Warren wrote on Twitter on Wednesday. “Campaigns and tech companies can take a number of steps to slow the spread of misinformation right now. And as president, I’ll take a series of actions to further address the spread of disinformation.”

Warren did not define “disinformation” or offer examples of how she would use executive power to silence “disinformation.”

Other Democratic presidential candidates have posited a separate point system for evaluating good citizenship. Andrew Yang has named his social credit system “modern time banking.”

“Volunteer activity and community engagement would be tracked by an app and seeded, initially, by the government. After that, local administrators would oversee the program,” Yang explained on his website, comparing the point system to loyalty programs at chain restaurants.

Follow Frances Martel on Facebook and Twitter.



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Possible Raises Series B and Moves Fully Remote | State News

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SEATLLE, Oct. 20, 2020 /PRNewswire/ — Possible raises $11 million in new equity funding to expand the team and to provide additional products for its customers. Union Square Ventures led the round, with participation from existing investors Canvas Ventures, Unlock Venture Partners, Columbia Pacific Advisors, Union Bay Partners, Tom Williams, and FJ Labs. The company has also secured $80 million in new debt financing from Park Cities Advisors.

Furthermore, the company is now fully remote and recently onboarded software engineers from across the US and the globe. Possible is committed to distributed work and actively recruiting for a number of other remote roles.

Possible provides friendly access to capital and a simple way to build credit for people who otherwise would get a payday loan or get hit with a bank overdraft fee. The company uses real-time financial data, rather than a credit score, to qualify customers and provide funds instantly through its iTunes and Android apps. Unlike payday loans or overdraft fees, Possible loans are paid back in small installments over multiple pay periods to allow customers to catch their breath. By reporting on-time payments to the credit bureaus, Possible enables its customers to build credit history and eventually qualify for cheaper, longer term financial products. On average, customers with low credit scores see their scores increase by 70 points within 4 months.

Tony Huang, Possible’s CEO explains, “So many people who live paycheck to paycheck can’t afford to build credit history. We’re helping them do it for the first time while providing them with a friendlier and more affordable small-dollar loan.”

Since launching in June 2018, Possible’s given out loans to hundreds of thousands of customers, helping meet short-term cash needs while building credit history or establishing credit for the first time. These customers, often with bad credit or no credit history, are underserved by traditional banks. Possible fills that gap and provides financial access to those who need it most while giving them the means to climb their way out.

Gillian Munson, Partner at Union Square Ventures, explains the thesis behind their new investment, “Through tech innovation, data-driven insights, and a focus on the customer, Possible is well on its way to winning the hearts and minds of both consumers and regulators alike, and building a trusted brand that endures.”

A 2019 Experian study shows 34.8% of consumers are subprime and can’t access money when they need it. They pay $106 billion in punitive fees each year to the existing financial system for short-term credit products. These consumers are trapped in predatory debt cycles of payday loans and overdraft fees without the means to rebuild their credit or improve their financial health. While there has been a number of new tech-enabled products in this space, most lead to similar debt cycles and don’t address the harder issue of improving long-term financial health. That’s where Possible comes in.

Since the company is now fully remote, Possible is actively hiring talent across the globe. Tyler, Possible’s CTO, explains, “Being fully distributed allows us to access the talent pool of the entire world. Our success so far is a reflection of the quality of our people, and we believe hiring globally will allow us to find exceptional people to join us in achieving our mission.”

About Possible

Possible is a fintech company based in Seattle, Washington. The company provides a friendlier and easier way for customers to access capital while also building credit history and improving long-term financial health.

About Union Square Ventures

Union Square Ventures is a thesis-driven venture capital firm based in New York City. USV manages over $1 billion in capital across seven funds and focuses investments in portfolio companies with the potential to transform important markets.

About Park Cities Advisors LLC

Park Cities Advisors LLC (“PCA”) is a privately held, SEC-registered alternative credit manager based in Dallas, Texas. PCA is focused on private lending across the specialty finance and FinTech sectors and provides debt capital to companies across a variety of industries through asset-based financing transactions.



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Business Loans – Make The Right Choice!

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Your business needs funding and there’s no denying that! ‘You need money to make money’ and this is most applicable in the business world! While it is fairly easy to start with an awesome idea, to make a business profitable, you need to invest a good chunk of capital.

Whether to buy equipment or hire the right minds, you need capital! And the best way to go about it is to search for the ‘right’ business loan solution. Finding the ‘right’ one amongst the plethora of available options is a tricky decision.

You’ll be under stress to match the repayment frequency. And thus, your business will suffer. Hence, finalizing the right business financing solution after analyzing your business structure, repayment terms, cash-flow, and urgency is the best practice.

Here’s a detailed breakdown of which business financing solution or small business loan will help your business better!

1. For Real Estate – SBA

SBA loan is one of the most popular loans for small business owners. This is pretty straightforward to understand but involves extensive paperwork. If you need a place to kickstart your business, this is most suited for you.

It is issued by a private lending party or a bank. But the interesting part is that this loan can be guaranteed up to 85% by the federal agency—Small Business Administration (SBA). Hence, lending institutions are free and content to give the loan.

The best things about this loan are the lowest down payments and low-interest rates. If you wish to pay in the very long term, you can do so. An SBA loan involves a lot of flexibility. The condition being you should have the right financial service provider to guide you.

2. For An Equipment Or Any One-Off Loan – Equipment Financing, Term Loan

Do you need a new computer, or a tablet for your employee, or maybe a vehicle for your business’ delivery needs? Equipment financing is best suited for such kinds of needs. You can also get up to 100% financing solutions.

But there is one drawback that you should be aware of. As long as the repayments are done on time, you’ll continue to have access to the equipment. But the moment you fail short of your commitment, the lending institution has completed control over ceasing it.

A business term loan is another solution for this kind of requirement. Term loans are based on the ‘term’ that can be anywhere from 1 to 5 years. So, the repayment has to be made in that time-frame. If you’re looking for business loans in Edgewater, NJ, this will be just about right for you!

3. Need To Balance Cash Flow – Business Line of Credit

Business Line of Credit is the best financing solution that can help you with balancing your cash flow or handling any emergencies.

You get access to a limited amount of funds for a set period of time that you need to pay with interest and as soon as you pay it back, your specific balance sheet is turned back to ‘0’. This indicates that you’re again eligible for using that fund.

You can do it repetitively. There is no drawback to this mechanism. So every time you have an emergency fund need, you can look towards the business line of credit.

The only shortcoming of this system is that the interest rate is high and may require collaterals for approval. However, it is one of the most appealing choices if you need capital and have a bad credit score!

4. Credit Card Based Businesses – Merchant Cash Advance

Do you own a business that involves payments via credit cards? If yes, then the merchant cash advance is the right solution for you.

A business like retail or food chain that makes use of credit card transactions the most, can utilize merchant cash advance to boost its business. The way this financing system works is, the lender will enquire about your daily credit card transactions to the terminal provider and get your exact details. Then, he will compare it with the asked amount. If both are in accordance, you’ll become eligible for the advance.

The repayment term is interesting for this financing solution. Instead of getting a fixed rate, the advance provider will give you the figure in percentage. So every day if you make $1000 and the decided percentage is 5, then $50 will be ‘withheld’.

A merchant cash advance acts more like an investment than a loan!

5. Have No Collateral – Invoice Financing, Equipment Financing

Not all businesses have the luxury of putting collateral on the line and getting access to the desired fund. If you fall into the same category, you do not need to worry! Invoice financing can help you out even in this crunch situation.

Your account receivables serve as collateral in this financing solution and can help you get a loan up to 85% of its worth.

The only downside is the interest rate that is marginally higher than the traditional solutions.

Bonus: For A Small Duration – Short Term Loan

What if you need a loan just for 18 months? You have some debt or need to manage the cash flow, but your requirement is small. Which loan is right for you?

Well, you can opt for a short term loan. This loan gives you instant access to a lump sum of money that should be paid within the next 18 months.

The best part about this loan is that bad credit doesn’t bother the process!

This can also support businesses that need temporary loans to manage or settle a few things. Businesses that do not need some loan that lasts for years!

But just like all other financing solutions, this loan as well comes with a few drawbacks.

The first one being the annual cost will be slightly towards the higher side and the second being that a few businesses may find it hard to cope-up with the weekly payments.

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Financial advisor Helen Baker shares the six saving tricks to help you save THOUSANDS

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A leading financial advisor has shared the saving tricks that will help you to save thousands in a short amount of time, including adopting the 50/30/20 method and never signing up for financial products on your partner’s behalf.

Helen Baker, from Queensland explained that if this year has shown us anything, it’s that you need to have some spare money in the bank in case of loss of income.

Helen revealed the top tips and tricks to help you save tens of thousands of dollars, no matter what your salary or financial goals are.

Helen Baker (pictured), from Queensland, shared the saving tricks that will help you to save thousands in a short amount of time

Helen Baker (pictured), from Queensland, shared the saving tricks that will help you to save thousands in a short amount of time

1. Use the 50/30/20 strategy to control spending

The first way that Helen said you can save a bit more than you already do is by adopting the 50/30/20 strategy to control your spending.

‘This simple yet effective budgeting method involves dividing your after-tax income into three categories,’ she told FEMAIL.

Put 50 per cent of your net income towards ‘must-haves’ like rent, utility bills, school fees and groceries, then reserve 30 per cent for your ‘wants’, like dining out, fashion and entertainment.

Finally, Helen said you need to keep 20 per cent back for loan repayments or building up your savings.

This simple approach will help you to save thousands over the course of a single year.

The first way that Helen said you can save a bit more than you already do is by adopting the 50/30/20 strategy to control your spending (stock image)

The first way that Helen said you can save a bit more than you already do is by adopting the 50/30/20 strategy to control your spending (stock image)

2. Consider salary sacrificing to superannuation

Helen’s second tip involves you voluntarily sacrificing some of your salary to your superannuation.

‘If you are looking to save a deposit for your first home, the First Home Super Saver Scheme enables you make voluntary contributions in your super fund and withdraw up to $30,000 of eligible contributions towards your home deposit,’ she said.

Concessional contributions made to an approved super fund are taxed at just 15 per cent, rather than the marginal rate of up to 46.5 per cent on your regular pay.

‘If you have an income of $70,000 and want to put $15,000 towards a home deposit, you can end up paying nearly $4,875 of that $15,000 in tax,’ she said.

By contrast, if you sacrifice $15,000 a year into your super through the First Home Super Save Scheme, you pay just $2,250 in tax per year and could have around $25,000 available for a home deposit after two years.

3. Avoid signing up for products on your partner’s behalf

It might feel tempting to sign up to products on your partner’s behalf as you are a couple, but Helen said it’s best to avoid taking out a credit card, loan or mobile phone plan on your partner’s behalf, in your name.

‘If your partner falls behind on repayments, it can affect both your credit ratings, and if you break up or your partner accumulated debt, and you are married or defacto, you will be liable for their debt,’ she explained.

Avoid rushing into joint bank accounts or co-signing loans, she added.

Even though it’s important to have joint finances and accounts when you’re in a long-term relationship or marriage, you must also have your own savings and emergency fund. 

Helen said it's best to avoid taking out a credit card, loan or mobile phone plan on your partner's behalf, in your name (stock image)

Helen said it’s best to avoid taking out a credit card, loan or mobile phone plan on your partner’s behalf, in your name (stock image)

4. Hide your savings account from yourself

When you set up a savings account, there is always a temptation to dip into it when you need a boost.

But Helen said you should set up a separate bank account for your savings, and ideally one that you can’t access with your current banking app.

‘Choose a savings account that charges withdrawal fees,’ she added – as the harder and more expensive it is to access your account, more likely you are to realise your savings goals.

5. Cut your spending instead of increasing your income

Smart spending can be just as good, if not better, than increasing your income, Helen said.

‘Look at expenses that you can cull, such as a subscription that you rarely use,’ Helen said. 

You could also cut dining out as much and look after your existing items so you can use them for a longer period. 

6. Create a bill strategy 

Helen recommends that you outline all of your bills in a spreadsheet so as to avoid incurring any late fees and pay every bill when it’s due. 

‘Ensure your calendar gives you adequate time to thoroughly check invoices and make sure you are not being overcharged,’ she said.

Try to group any bills into categories of $100, $100-$500 and $500 plus. 

‘Smaller bills, such as mobile phone plans or other monthly service utilities, can be paid by setting up automatic payments,’ she said.

‘Larger bills, such as tax, rent or mortgage repayments, require more diligence. It is also crucial to pay substantial bills on time to avoid incurring a bad credit rating.’ 

Helen is a spokesperson for money.com.au. For more information, please click here

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