The Consumer Financial Protection Bureau (CFPB) yesterday revoked rules that required lenders to ensure that potential customers could afford to pay the potentially staggering costs of short-term, high-interest payday loans, The Hill reported. The bureau yesterday released the final revision to its 2017 rule on payday loans, formally gutting an initiative with roots in the Obama administration that was aimed at protecting vulnerable consumers from inescapable debt. The initial rule, released shortly before President Trump appointed new leadership at the CFPB, effectively banned lenders from issuing a short-term loan that could not be paid off in full by a borrower within two weeks. The measure required payday lenders to determine whether the customer had the “ability to repay” the loan with an underwriting process similar to what banks use to determine whether a customer can afford a mortgage or other longer-term loan. The CFPB has now issued a new version of the regulation that scraps those underwriting requirements, in line with a proposal released in February 2019. The new regulation leaves in place the original regulation's restrictions on how frequently a payday lender can attempt to withdraw funds from a customer's bank account.
Ascena Retail Group Inc., the owner of mall brands that occupy almost 3,000 stores in the U.S., is preparing to file for bankruptcy and shutter at least 1,200 of those locations, Bloomberg News reported. The company, which owns brands such as Ann Taylor and Lane Bryant, could enter chapter 11 as soon as this week with a creditor agreement in place that eliminates around $700 million of its $1.1 billion debt load. Lenders including Eaton Vance Corp. would assume control of the company. Ascena has experienced years of financial losses amid a boom in online shopping and slowdown in foot traffic at malls. The bankruptcy filing would allow the company to keep some of its brands operating while it shutters or sells others, the people said. Catherines and Justice are among the chains it’s considering to close or sell. The plan is not final and certain details could change. Ascena shut its shops in mid-March as the coronavirus outbreak spread, and began to re-open locations in early May as state authorities lifted restrictions. Customer traffic is much lower than normal at the revived stores, the company said in an update on the impact from COVID-19 on its business. Like other retailers, the company cited a slump in sales tied to the closures. The company’s earnings and cash flow have been “significantly reduced” despite efforts to preserve liquidity, Carrie Teffner, Ascena’s interim executive chair, said in the update. Ascena previously failed to sell two of its chains amid the losses and signs that creditors were losing confidence in its prospects. In September management discussed divesting Catherines and Lane Bryant, which specialize in plus-size women’s apparel, Bloomberg reported.
Treasury officials yesterday announced that five more airlines have signed letters of intent to accept government loans through the $2 trillion coronavirus economic relief package known as the CARES Act, the Washington Post reported. Alaska Airlines, Delta Air Lines, JetBlue Airways, United Airlines and Southwest Airlines join American, Frontier, Hawaiian, Sky West and Spirit airlines, which signed letters of intent last week. That brings to 10 the number of U.S. carriers that have signaled they will accept loans in addition to billions of dollars in government grants as they struggle to stay afloat amid the worst economic downturn in the industry's history. Under the CARES Act, airlines were eligible to receive more than $50 billion in grants and loans. The $25 billion grant program was focused on keeping pilots, flight attendants, mechanics and other front-line workers on the job. Another $4 billion in grants was made available to cargo carriers. The CARES Act provided $46 billion in loans, with $25 billion available to airlines, certified repair stations and ticket agents. Companies that receive loans must follow conditions similar to those required under the grant program, including keeping employees on the payroll through the end of September, maintaining certain levels of service as far out as 2022, and limiting stock buybacks and executive compensation.