Why the CFPB Is in Danger of Getting Trumped

The Trump administration has taken a concerted effort to destroy, defang and scrap the Consumer Financial Protection Bureau. Here's why it's wrong.

Just beyond the Trump swelter of the hour, lawmakers have been busy concocting plans to dismantle key achievements of the Obama years. Among those accomplishments currently targeted is a concerted effort to destroy, defang, scrap (feel free to select the word) the Consumer Financial Protection Bureau.

The CFPB was created to protect consumers from the kinds of predatory practices that played a big part in the financial meltdown of 2007 to 2008. The idea was simple: Create a federal agency to be, to quote Sen. Elizabeth Warren, “the cop on the beat” in the financial sector. The CFPB was to have the ability to take decisive action to shut down questionable practices. The CFPB was designed to be the regulatory safeguard against future financial wipeouts. (Think: Batman.)

It’s Populist!

Given the populist nature of Mr. Trump’s ascent to the White House, it remains for me a real head-scratcher as to precisely why the CFPB is on the chopping block.

The agency is tasked after all with policing financial products (and practices) that specifically take advantage of consumers. It has jurisdiction over a host of consumer “favorites” like credit reporting agencies, payday lenders, debt collectors, debt settlement companies and student loan servicers, as well as banks, credit unions, credit card companies and many other financial services organizations operating in the United States.

With the power to ban financial products deemed “deceptive, unfair or abusive,” the CFPB also possesses the authority to impose significant penalties on financial predators.

What kind of penalties are we talking about? More than $5 billion so far, including a record $100 million against Wells Fargo in 2016 ($185 million all in). The CFPB has helped nearly 30 million consumers recover several billions of dollars in remedies from financial companies. All this, and in 2016 the CFPB, experiencing a huge amount of growth both in programs and staff, stayed $67 million under its budget cap.

So, if the CFPB hasn’t been too expensive for the federal government to run, what’s the problem? Follow the money.

Conservatives argue that the Dodd-Frank Wall Street Reform and Consumer Protection Act (aka Dodd-Frank, the law that authorized the creation of the CFPB) has cost businesses more than $24 billion in compliance-related expenses and 61 million paperwork hours. It’s also a federal agency, and it has a fairly big budget. This is what the Republicans are focused on.

You can almost hear President Trump: “So, why are we spending so much money on this thing? It’s sad, really.”

It’s Under Attack

Rep. Jeb Hensarling, chair of the House Committee on Financial Services, cited what he calls “the avalanche of regulations that smother the U.S. economic system” in his latest rally to kill the Consumer Financial Protection Bureau. This so-called “avalanche” was in response to an economic event that nearly destroyed the world economy.

Hensarling seems to be motivated primarily by conservative ideology, a central tenet of which being that too much centralized power is a bad thing. “The CFPB is arguably the most powerful, least accountable agency in U.S. history,” Hensarling wrote in a recent Wall Street Journal opinion piece. “CFPB zealots have the power to determine the ‘fairness’ of virtually every financial transaction in America. The agency defines its own powers and can launch investigations without cause, imposing virtually any fine or remedy, devoid of due process.”

In an Oct. 11, 2016, decision, a federal appeals court ruled that the president should have the authority to fire the director of the CFPB other than for cause. The agency is currently appealing the court’s decision. “Other than the President,” Judge Brett Kavanaugh wrote for the 2-1 majority, “the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power.” Anticipating the popular response, Kavanaugh added, “That is not an overstatement.”

The reason I say the attacks are mainly ideological is complicated, but in essence it seems like pressure from financial sector lobbyists plays a big part in the pushback against the CFPB and that the focus on centralized power is really just putting sheep’s clothing on an influence-buying wolf.

I don’t know how else to view the willful misunderstanding of what the CFPB actually does, which is simple: It demands accountability from financial institutions. The idea that, as Hensarling said, the CFPB “requires lenders essentially to read their clients’ minds, know and weigh their clients’ comprehension levels, and forecast future risk” is absurd.

Consider, if you will, the various ways consumers got screwed by the Wild West years in the finance world that led to the Great Recession. There is no mind reading required, but plenty of policing is needed.

It doesn’t matter if it’s the latest SNL sketch or Trump’s policy man Stephen Miller proclaiming that the new administration accomplished more in three weeks than most presidents achieve in four or even eight years — a claim that was quickly quashed — though I suppose he was right if you consider chaos an accomplishment. What matters is that we’re getting distracted from assaults on real progress made since 2008.

Killing the CFPB is an ill-advised and dangerous move, and one that will backfire on Republicans in the long run. As we as consumers filter through the latest, greatest Trump outrage (or triumph), and as we focus on the news cycle, huge things are happening behind the scenes. This one might be a doozy, making America unacceptably vulnerable again.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: uschools

The post Why the CFPB Is in Danger of Getting Trumped appeared first on Credit.com.

How to Protect Your Money Under Trump’s Financial Regulation Changes

An executive memorandum signed by President Donald Trump on Feb. 3 is aimed at consumers’ retirement accounts and will impact a majority of Americans almost immediately. The memo might delay, potentially forever, the so-called “fiduciary rule” that would have legally bound financial advisers to give retirement savers the best advice possible.

Critics lashed out, claiming the memo was a gift to Wall Street, as it threatens to roll back rules designed to protect Americans’ retirement accounts instituted in the wake of the financial crisis, when some savers saw their account balances drop by 25% in a single year, according to an estimate from Hewitt Associates. But supporters say those rules were flawed, and that this cure for the financial crisis was worse than the disease.

Investors’ Best Interests Could Take a Back Seat

If you are looking for a bottom line, here it is: Financial advisers could be let off the hook from higher standards that were about to be placed on the advice they give investors. Those standards would have opened up advisers to lawsuits if they gave advice to clients that put their own commissions above their clients’ best interests.

But at least some of the intended effect of the rule may still happen. Because the rule was years in the making, and just weeks away from taking effect, many brokerages have said they’ve already implemented the changes it required. Some are even using the moment as a marketing opportunity.

In practical terms, the new rules discourage advisers from offering commission-based products to buyers, so some firms, like Merrill Lynch and JP Morgan Chase, were moving away from commission-based IRAs. That change will probably continue.

For now, the memo also means consumers must be vigilant and ask financial advisers, “Are you getting a commission?” when taking their advice.

Consumer advocates spent years working to get the federal government to enact a rule that targets these potential conflicts of interest. They finally made progress in 2010 when the Labor Department, which regulates some retirement accounts, initially proposed a fiduciary rule. After years of bickering with the financial industry, the Labor Department finally settled on the rule in April 2016. It was set to take effect this April.

Only retirement accounts were to be covered by the rule; normally taxed brokerage accounts were not. The rule would have covered certain financial advisers who use titles like wealth manager, investment consultant or broker; certified financial planners are already required to meet the fiduciary standard.

Many consumers don’t realize that current rules mean some advisers can legally steer clients into high-commission products when better, cheaper options exist. The Obama administration, which supported the Labor Department rule, issued a report last year claiming that less-than-best advice to savers costs Americans $17 billion annually in retirement funds.

Undermining Consumer Protections?

A second financial-related executive action signed by Trump last week may have even farther-reaching consequences, but they won’t happen right away. That order called for a review of financial reform legislation known as “Dodd-Frank,” which passed after the housing bubble burst. Its numerous protections included tighter monitoring of the stability of banks and creation of the Consumer Financial Protection Bureau. Trump’s order calls for the Treasury Secretary to review the law and recommend changes within 120 days.

Advocacy groups said that taken together, the two orders threaten to undermine a host of new rules put in place to protect consumers.

“President Trump’s comments and executive order today suggesting rollback of financial regulations would violate his campaign promises to hold Wall Street accountable and to help everyday American families,” said Christine Hines, Legislative Director of the National Association of Advocates, in a statement. “We must never forget that the reckless behavior of big banks and predatory lenders and the lack of safeguards to hold them responsible for their actions caused the Great Recession, leaving millions of Americans without jobs, wiping out their savings, and causing devastating loss of their homes.”

A draft of the fiduciary rule memo called for a 180-day delay of the rule and a review by the Labor Department. The order actually signed by Trump omitted the language calling for immediate delay, but that’s still a likely outcome. Acting U.S. Secretary of Labor Ed Hugler made that clear in a statement:

“The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum,” it read.

The memo was cheered by some on Wall Street. Discouraging commission-based products hurts smaller investors who don’t like paying up-front fees, they argued.

“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” said National Economic Council director Gary Cohn to the Wall Street Journal. “The banks are going to be able to price product more efficiently and more effectively to consumers.”

But consumer advocates were unanimous in their condemnation of the review, saying it could remove a critical tool for protecting unsophisticated retirement savers.

“If the Department of Labor follows through on this threat and delays and repeals the rule, brokers and insurance agents will be free to go back to putting their own financial interests ahead of the interests of their clients, recommending investments that are profitable for the firm but not the customer,” the Consumer Federation of America said in a statement. “And they will be permitted to do all this while claiming to act as trusted advisers.”

Sen. Elizabeth Warren (D-Mass.), said in a statement that the review “will make it easier for investment advisors to cheat you out of your retirement savings.”

“Donald Trump talked a big game about Wall Street during his campaign — but as President, we’re finding out whose side he’s really on,” she said.

Retirement savers should know that the immediate effect of the Trump memo means advisers can continue to give out bad advice that’s compromised by commission structure; the rule that remains in effect now requires only that the investment is “suitable.” That might sound like a small distinction, but John Bogle, the man who popularized low-cost index funds, put it in context in an interview with Business Insider at the end of December:

“Fiduciary means putting the client first, and as I have observed in the past, the only other rule we have is the client comes second,” Bogle said.

The Trump administration did not immediately respond to requests for comment on how the actions would affect consumers.

How You Can Protect Yourself

Before making any investment decision based on an adviser’s recommendation, always ask if he or she will earn a commission. When picking an adviser, ask if their firm accepts fiduciary responsibility. Even if it’s not legally required, advisers can voluntarily accept the fiduciary standard. But make sure you get that in writing.

It’s also wise to monitor your financial goals, like building and maintaining a good credit score, which you can do for free here on Credit.com.

Image: Squaredpixels

The post How to Protect Your Money Under Trump’s Financial Regulation Changes appeared first on Credit.com.

Trump’s Executive Order to Limit Regulations: What It Means for Your Business

trump_small_business

Just 10 days after taking office, President Donald Trump continued to check items off his campaign promise list as he signed his latest executive order on limiting regulation of small businesses.

The executive action, titled “Reducing Regulation and Controlling Regulatory Costs” was signed Monday morning after President Trump met with small business owners. The four-page document outlined two key changes to current government operations. First, any new regulation an agency enacts must be met with two regulations that will be eliminated. And second, there will be a cap on the cost of new regulations for the federal government, which will be $0 for fiscal year 2017.

The action gives substantial power to the Director of the Office of Management & Budget, who has yet to be confirmed. Rep. Mick Mulvaney (R-South Carolina) is currently up for that position and Senate hearings were held last week as part of his confirmation bid. The Director, under Monday’s executive order, would determine the incremental costs allowed for each agency as well as how the costs of regulations would be measured.

Experts on governance echoed skepticism at how the executive action would actually be implemented.

William Gale, a fiscal policy expert at the Brookings Institution, told the Washington Post, “The number of regulations is not the key. It’s how onerous regulations are. This seems like a totally nonsensical constraint to me.”

What Does This Mean for Your Business?

Levi King, CEO and Co-Founder of Nav, is concerned about the implementation of the action, but the spirit behind it is a step forward for small businesses.

“If small businesses are focused on paperwork and licenses, if half their money’s spent satisfying government regulations, they won’t be in business long,” King said. “I support smart regulation, but eliminating bureaucratic rulemaking that stifles innovation and discourages new jobs and growth would be a welcome development. On the other hand, as we saw with the airport chaos this weekend, major policy changes require a thoughtful, measured approach.”

While the executive action does a lot to limit the cost of additional regulation for the federal budget, the decreased cost to small business owners is yet to be seen. In the NSBA survey, nearly 40% of respondents said new regulations had a “very significant” impact on their plans to grow or expand their business.

Streamlining and simplifying government regulation of small businesses was a major topic of last week’s Senate confirmation hearings for Linda McMahon, Trump’s nominee to head the Small Business Administration, with Republicans and Democrats urging that there were necessary changes needed to make sure small business understand regulations and are also getting more access to government contracts. (You can read more about the hearing here.) So, it should come as no surprise that limiting regulations is a focus of the new administration.

President Trump was surrounded by small business owners as he signed the executive order Monday, but the law itself mostly pertained to limiting the cost of regulatory oversight on the federal government. A recent survey on small business regulations from the National Small Business Association found that small business owners reported spending an average of $12,000 a year on regulations and 58% of owners said federal regulations where the most burdensome source. The Internal Revenue Service, Environmental Protection Agency and Department of Labor were cited as the federal agencies with the most burdensome regulations in the survey, with the IRS dominating the vote.

For many small business owners, $12,000 a year is the difference between profit and loss, especially if you’re in your first few years of business. And when margins are tight, taking out business loans to finance a new hire to help you become compliant or to pay for legal expertise to help you navigate the regulations can get expensive fast, especially if you have a bad business credit score.

Image: vgajic

The post Trump’s Executive Order to Limit Regulations: What It Means for Your Business appeared first on Credit.com.

Are Huge Budget Problems on the Way With Trump?

trump_and_your_wallet

Q. Is it wrong to think we should also expect huge budget problems and less aid to the states from decreased revenue? Given Trump’s penchant for borrowing and record of bankruptcies, “volatility in the markets” may be an understatement.
— Looking ahead

A. We’re still waiting to see the depth of the new president’s plans, and exactly what he’ll pursue in terms of policy.

President Trump’s inaugural address can be summed up in two words: “America First.”

He vowed that every decision on taxes, trade, immigration and foreign policy would be made with U.S. interests first, Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield, New Jersey, said.

“It will be interesting to see if his campaign rhetoric will mirror his actions as our 45th president,” Gobo said. “In other words, he has talked the talk, but will he be able to walk the walk?”

Gobo said most of the policies and plans Trump has spoken of have not yet been presented, and even the ideas presented could change drastically before they are finalized.

He said the United States is much larger and more complex than one or a few of Trump’s business entities, with more checks and balances preventing Trump from running the country as he would one of his businesses.

Also, Gobo said, even with the Senate, House and presidency held by a Republican majority, it doesn’t mean they’re all in agreement when creating policy.

“One major positive component is that Trump has worked with governments and businesses around the world so he may have rare, practical insights into international economics and trade above and beyond the typical politician,” Gobo said.

The Economic Pros & Cons of a Trump Presidency

Gobo offered a list of pros and cons.

The Pros

  • The Senate, House, and president should all agree on pro-business policies which can lead to growth in the economy and more jobs, Gobo said.
  • New infrastructure investments could be additional fuel for this growth.
  • Trump didn’t get to his current state by making uneducated decisions “and he certainly will not do anything to sabotage growth now,” Gobo said.
  • Wishes to open up state lines and promote competition among healthcare companies could lower costs for the average American, Gobo said.

The Cons

  • Gobo said there are concerns over immediately and fully enforcing immigration laws as Trump has said he will do. This could cost the federal government revenue, shrink the labor force, and possibly reduce the real GDP by $1.6 trillion, Gobo said, sourcing the American Action Forum, a right-leaning policy institute in Washington, D.C.
  • Trump’s healthcare idea may not garner the savings he intends, Gobo said, because policy in states may not translate to the same access to networks that local providers can contribute in-state.
  • Trump made many promises to the American people that may be a challenge to deliver, Gobo said.
  • And then there’s Twitter. “Combine Twitter with an impulsive personality and he has the ability to effect reputation or policy perception very quickly,” Gobo said.

Then there are taxes to consider.

Gobo said among the pros: Lowering taxes should create incentives to work and spend, many believe lower taxes are also a catalyst for growth, many believe the current tax policy is archaic and too complex, and lower corporate tax rates may bring corporate tax money back to the US.

But on the con side, Gobo said, what if growth does not occur after tax cuts are made? And the Trump plan, according to the Tax Police Center, would require spending cuts to avoid adding about $1.1 trillion to the federal debt by 2025, Gobo said.

Policy takes time to implement and the effects of new policies take time to present themselves, Gobo said.

“The true effects will be unknown for some time and we should not be eager to adjust strategies based on the multitude of `what if’ scenarios being presented at this time,” he said. “What we should do right now is follow the plans we have made for ourselves for the next 10, 20, or 30 years and not get caught up in the unproductive nature of short-term ideas that we can’t control.”

Your financial plan should allow enough flexibility to make any necessary adjustments based on any new tax or policy changes that may be enacted, Gobo said.

Editor’s note: Staying on top of the aspects of your finances that you can control can help you feel more certain in uncertain times. Managing your credit well is one of those things. You can get your two free credit scores, plus a snapshot of your credit report details, updated every 14 days, absolutely free on Credit.com.

Image: TriggerPhoto

The post Are Huge Budget Problems on the Way With Trump? appeared first on Credit.com.

The Issue With Nixing the Affordable Care Act That No One Is Talking About

Without a replacement, millions Americans will lose health insurance — and that creates a moral hazard. Here's how.

Never mind his crowd-favorite pledge to build the Great Wall of Mexico with a “big, fat door,” President Donald Trump’s cornucopia of campaign promises included many a forgettable vow. But you had to be whale-spotting from a lily pad on Loon Lake to miss the president’s pledge to repeal the Affordable Care Act (ACA).

What may not be as obvious is the effect that such a move could have on crime — specifically medical identity theft.

Promises are often downgraded to “ideas” post-victory, but now that Candidate Trump is leader of the free world, it’s time to revisit this major pledge. One of the first things our new president did Friday was sign an executive order urging his administration to fight the ACA.

The executive order has no teeth. It simply states the Trump administration’s position, and, sure, that carries with it all the heft brought to bear by the Oval Office. But what is worrisome for proponents of the ACA is that the executive order follows current legislative efforts in Congress to obliterate the centerpiece of President Barack Obama’s legacy. With a newly installed majority, Republicans are poised to dismantle the historic law that helped 20 million uninsured Americans get affordable healthcare. Most recently, in a 227 to 198 vote, members of the House approved a budget that would kill major provisions of the ACA.

“This is a critical first step toward delivering relief to Americans who are struggling under this law,” House Speaker Paul Ryan said last week.

It’s hard to say exactly how many Americans would lose their health insurance should Obamacare go away, since Republicans have yet to outline a plan to replace it. However, a recent study from the non-partisan Congressional Budget Office (CBO) found a straight-up repeal would leave about 18 million people uninsured the following year.

It goes without saying the majority of those affected will not resort to a life of crime in order to acquire healthcare. In fact, it is unlikely, but should Congress, in concert with the Trump administration, repeal the ACA without providing a viable alternative, the sheer number of uninsured people will create a moral hazard — crimes will become a possibility where they would not have been — and this can only result in an uptick in the medical identity theft numbers.

What Is Medical Identity Theft?

As I explain in my book, Swiped: How to Protect Yourself in a World Full of Scammers, Phishers and Identity Thieves, medical identity theft is widespread, and potentially deadly.

While there is a long and sordid history of organized crime running healthcare-related scams whereby crooked doctors and garden-variety crooks team up to defraud insurers or get prescriptions for controlled substances that are then sold for recreational use, the theft of one person’s healthcare by another is a very real thing, and it can be life threatening.

Your medical records provide information that can be used in a variety of ways. For instance, once a criminal has your personal information and insurance details, he or she can use it, or enable another person to use it to gain access to the healthcare system in your name, and the result could be the contamination of your medical records with his or her co-mingled information.

Nothing is more dangerous than going to a hospital and having “your” medical records, as used by an identity thief or his/her “customer,” reflect an inaccurate blood type, medical history, or the existence or absence of certain allergies when you are receiving medical care, particularly in an emergency situation.

Another result of medical identity theft can be denial of service. If an impostor uses your insurance to gain access to healthcare, it can affect your own ability to access care: Many insurance plans have annual caps on certain types of procedures and treatments — and obviously no insurance company is going to pay for one person to have an appendectomy twice. An identity thief with access to your insurance could drain your coverage before you even know it’s happened and leave you in the lurch when you need it.

How to Prevent Medical Identity Theft

There are ways to defend against medical identity theft. Most involve proactive monitoring of your medical files. Many larger medical providers permit you to review your medical records by way of a secure website. If your doctor doesn’t offer such a service, you should sit with him, her or their staff at least once per year and review your files to confirm their accuracy. In addition, you should intently review any correspondence you receive from your health insurer, particularly Explanation of Benefit Notices, which will be the most immediate way to discover theft of services.

You should also review your credit reports at least once a year at AnnualCreditReport.com to make sure that all information is accurate. If you notice anything involving medical debt or a collection relating to a medical bill that is news to you, confirm its accuracy and that it’s not an indication you are a victim of medical identity theft.

You might also wish to keep track of your credit scores. Any sudden, unexplained drop could indicate a problem, and that issue might stem from medical identity theft. (You can view two of your free credit scores, updated every 14 days, on Credit.com.)

As for threats to the ACA, nothing has happened … yet. Lawmakers are still trying to figure out how to approach their stated goal of repealing Obamacare, and it won’t be easy. If you have concerns, you can call Speaker Ryan and other lawmakers who have vowed to do away with the ACA. As for the stated goal of repealing the ACA: An ounce of caution may be worth a pound of cure.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: PeopleImages

The post The Issue With Nixing the Affordable Care Act That No One Is Talking About appeared first on Credit.com.

4 Tips for Entrepreneurs Worried About Trump Immigration Policies

The Obama administration took steps to help foreign entrepreneurs stay in the United States but will the Trump immigration policy changes alter that?

When Mike Galarza first heard what then-candidate Donald Trump had to say about building a wall between the United States and Mexico, deporting illegal immigrants and possibly limiting legal immigration, he was stunned. As an immigrant from Mexico, the issue was personal, but as an entrepreneur and business owner, he worried it could also impact his bottom line.

“It’s a bad representation of American culture and it’s totally the opposite of what I’ve seen and my reality here in the U.S.,” Galarza, the founder and CEO of of billing automation startup Entryless, and one of Business Insider’s “Badass Immigrants in Technology,” said. “I think it’s a very divisive rhetoric that goes beyond the Mexican people … so my first reaction was ‘he is not what America is, not what America stands for.’”

Galarza has beefed up his visa and is actively pursuing a green card. And in light of Trump’s executive order Wednesday that directs funds to build a border wall and curtail some immigration, Galarza is waiting to see whether it could signal that documented immigrants may have a harder time doing business in the United States over the next several years.

The White House declined to comment on how new immigration policies might impact current visa holders or future visa applicants.

What to Watch for 

What will be most telling, according to Susan J. Cohen, founder and chair of the immigration practice at law firm Mintz Levin in Boston, is what the administration does with a ruling by the Department of Homeland Security in the waning days of the Obama Administration. The International Entrepreneur Rule has been frozen pro forma along with most pending rulings and edicts across most federal government departments as the new administration reviews them.

Galarza

Mike Galarza beefed up his visa ahead of potential immigration policy changes. Photo courtesy of Mike Galarza.

“I think what happens with that rule will at least provide some insight into how some of the other aspects of immigration may go in this administration,” Cohen said.

The rule, set to take effect July 17 if it isn’t altered by the new administration, provides for a “parole” period for foreign entrepreneurs, granting them 2.5 years in the United States to establish and grow a startup. They would, of course, need to qualify for that time, including having $250,000 in funding and being able to demonstrate the potential for “significant public benefit.” After the parole period, the applicant would be able to apply for a 2.5 year extension as long as the startup meets additional benchmarks.

“Right now, I think we’re just in wait-and-see mode with respect to the skilled worker population who have extraordinary talents that they would like to bring to the United States,” Cohen said.

Waiting and seeing is exactly what Galarza, who grew up in San Luis Potosi, Mexico, is doing. Last October, he wrote about his concerns for the future of his company and himself in the United States in a blog post on inDinero.com.

When I founded Entryless, I faced—and continue to face—unique challenges because of my immigrant status. I came to the U.S. from Mexico in 2009 on a travel Visa, which allowed me to work for an employer but not for myself. This required me to build Entryless from the ground up in my spare time—and by spare time, I mean at night when I should’ve been sleeping … It was worth every sleepless night. I now have an E2 Visa, and even though I have to return to the U.S. Embassy in Mexico each year to renew it, Entryless is established and growing. However, my next renewal is not a slam dunk — especially if the next administration adopts isolationist policies.

Since then, Galarza decided it was as good a time as any to beef up his visa. He recently upgraded to an EB1 visa, also known as an Outstanding Researcher or Professor visa. It renews every 10 years, which he says gives him some comfort now that Trump is in office. He also is actively working on getting his green card.

Reviewing visa options and starting the green card process are both good steps for immigrant entrepreneurs regardless of whether they are just setting up a business or, like Galarza, have been established for some time, according to Cohen.

Here are four things immigrant entrepreneurs can do right now to help ensure their business succeeds in the United States going forward.

1. Talk to an Immigration Attorney

“It’s important to meet with a competent professional who can help each person explore all possible options and leave no stone unturned to try to figure out a solution that will allow the individual to hopefully remain in a secure immigration status in the U.S. if that’s what they want to do,“ Cohen said.

Depending on your immigration status, that process could mean looking at which visa fits your situation best, looking at a different kind of visa that provides a little more security like Galarza did; it could mean seeking green card status or even applying for citizenship, Cohen said.

2. Breathe

Nothing is going to change right away, Cohen said. There are few unilateral changes that the new president can make (The North American Free Trade Agreement’s (NAFTA’s) TN-1 visas excluded. They would disappear if the United States withdraws from NAFTA). Most immigration reform, including changes to visa requirements, and even changes to how visas are vetted will take time.

“Things are going to take a considerable period of time before they get changed,” Cohen said. “There are a lot of things that can’t be changed without Congress.”

3. Focus on Your Business

“Get customers,” Galarza said. “That’s the first thing, because if you have that really nothing can stop you, because there’s a need for your product and people that rely on it and it becomes critical to them and their existence and there’s this chain that gets created. Based on that … you can prove to the American immigration system that you’ve earned your right to stay in this country and to get funding to grow your business faster.”

4. Create Your Own Funding

If you’re just starting your business or are at a point where you are ready to expand but can’t secure venture capital or small business loans, credit cards can help you get through short-term cash flow issues, even if your credit isn’t stellar or you don’t have a credit history.

In fact, using a credit card for your business expenses can even help you establish and improve your credit standing. Keep in mind, however, that you can go overboard. It’s possible to have too many credit cards, which can lead to too much debt, missed payments because you can’t keep up with the due dates and other issues.

Image: BasSlabbers

The post 4 Tips for Entrepreneurs Worried About Trump Immigration Policies appeared first on Credit.com.

How to Prepare Your Money for a Trump Presidency

Here's how to prepare your funds for a Trump presidency.

After a volatile election, President-elect Donald Trump will be inaugurated as the 45th president of the United States on Jan. 20. Consumers are divided over what this means for their finances — some are eager to bet big on American stocks, while others are considering hiding their cash under a mattress. To help you prepare for the changes ahead, we spoke with a handful of financial experts who shared their thoughts on investing with caution.

‘Dysfunctional Politics Aren’t New’ 

“We tend to invest based on emotion, and some people are really high on Trump, and some people are scared to death of Trump,” said Allan Roth, founder of Wealth Logic, a financial planning firm in Colorado Springs, Colorado. “When Obama was elected, a lot of people were like, ‘We’re going to print money, U.S. stocks are horrible, put everything in gold, avoid the dollar, avoid the stock market’ — and the absolute opposite happened. I’m a believer in capitalism, and capitalism trumps dysfunctional politics. And dysfunctional politics aren’t new.”

Roth won’t be the only financial expert keeping a grounded outlook. Jude Boudreaux, a financial planner based in New Orleans, said the main question around investing should be your goals and time horizon, not what we expect to happen in the next four years. “The biggest message I have is not to overreact,” he said. “The next 12 months, from a market standpoint, are not going to be the difference between you being able to retire successfully or not.”

“My advice to consumers is boring,” said Michael Falk, CFA and partner with Focus Consulting in Long Grove, Illinois. “Spend less than you earn, keep your focus on your goals, which are likely more than four years away, and never stop learning.” (You can see how your financial decisions are affecting your credit by viewing your free credit report snapshot, with updates every two weeks, on Credit.com.)

Hedge Against Inflation 

Many investors are rightly concerned about inflation, said Robert Dowling, a financial planner with Modera Wealth Management in Westwood, New Jersey. Employment is up, and Fed Chair Janet Yellen recently said it “makes sense” for the U.S. central bank to gradually raise interest rates. For these reasons, he said investors may want to give themselves exposure to Treasury Inflation-Protection Securities, or TIPS, which provide a hedge against inflation, as well as commodities. “I would never suggest selling everything and buying these two different asset classes,” he said, but if investors have exposure to these, it could benefit their portfolio when inflation takes hold.

Think Globally

Another option for concerned investors is adding more global exposure, Dowling said. Again, you’ll want to broadly diversify, not concentrating too much on one country or type of investment, and avoid currency risks by choosing a quality mutual fund with help from an expert. “There is a portion of exposure we always like to have to emerging markets — small economies and small countries offer lots of growth (and volatility),” Boudreaux said. Investing no more than 5% “has always helped us.”

When betting on emerging and developed markets — which are all available in inexpensive index funds — “don’t pick stocks just to pick them,” advised William Bernstein, author of The Investor’s Manifesto. “The transaction costs will eat you alive.” Keep your risk tolerance in mind and try not to overestimate it. “If you think you can [tolerate more risk], maybe you want to tamp it down,” he said. “Once every 10 years you get a real financial crisis. You want to have an allocation you can live with when that does happen — and that’s not an if, that’s a when.”

Set Aside Cash

“Because I think the potential impacts are so opaque,” Falk said, referring to the Trump presidency, “I lean toward avoiding leverage and major directional bets, and maintaining some dry powder (cash) or quick access to capital.”

Dowling agreed, suggesting consumers shore up at least two years’ worth of living expenses, which can be stashed in a CD or money market account. For retirees, having the cash to draw from while they work to replenish their lagging portfolio — a popular strategy known as cash-flow management — can be invaluable. For young professionals, it can help to have those savings on hand in case of emergency. “Pay yourself first, fund your Roth IRA and build good spending habits,” Boudreaux advised. “The spending habits you develop in your 20s and 30s will have a much greater impact on your financial future than what the market does in the next two to four years.”

Image: BasSlabbers

The post How to Prepare Your Money for a Trump Presidency appeared first on Credit.com.

Most Borrowers Don’t Think Trump Will Be So Bad for Their Student Loans

Many borrowers actually like an idea about student loan repayment Trump mentioned in a speech during his campaign.

Nearly 40% of student loan borrowers are concerned that Donald Trump’s administration will negatively impact their student loans, according to a new survey from Student Loan Hero. As the country moves into a new era of governance, some graduates are concerned that an already-difficult student debt situation will get worse.

In fact, more than one-fourth (26.6%) of survey respondents admitted they believe a Trump administration will have a “very negative” effect on their student loans. On the other hand, about 40% said they think Trump will have neither a positive nor a negative effect on their student loans, and the remaining respondents (about 20%) said they think he will have a somewhat or very positive effect on their student loans.

These figures come from a poll conducted by Google Consumer Surveys on behalf of Student Loan Hero from Jan. 6 to 9, and the results are based on a nationally representative sample of 1,001 adults with student loans living in the United States.

In the last few years, there’s been quite a lot said about the growing student loan crisis. But what can be done? Student loan borrowers have some idea of policy changes they’d like to see implemented during the Trump administration.

Borrowers Want More Student Loan Forgiveness Options

When asked which student loan changes they would like to see implemented under Trump’s administration, nearly half (44.3%) of respondents chose “federal loan forgiveness after 15 years.” In a speech during his campaign, Trump mentioned something along those lines, proposing a repayment plan in which borrowers pay 12.5% of their income for 15 years, after which any remaining balance would be forgiven. (Whether or not that’s a viable proposal is another matter.)

Currently, student loan borrowers can have their loans forgiven after 20 to 25 years of payments on a federal income-driven repayment plan. There is also a program for federal student loan forgiveness after 10 years in a qualifying public service job (only payments made after Oct. 1, 2007 count). Additionally, borrowers in certain industries can qualify for partial loan forgiveness. However, not everyone qualifies for these forgiveness programs; of those who do, not all will actually have any debt left over by the time the repayment term is up.

It’s not surprising many student loan borrowers expressed interest in a federal loan forgiveness program that discharges student debt after 15 years. According to the survey, 25% of respondents have either stopped making student loan payments or have lowered the amount they put toward repayment in the hope that the government will forgive student loan debt in the future.

Borrowers Also Want Refinancing Options

Student loan borrowers aren’t just asking for forgiveness. Close to one-third of respondents (31.4%) would like to see a program to refinance federal student loans implemented during a Trump administration.

Currently, it’s only possible to refinance through private lenders — the federal government doesn’t offer a refinancing option. The problem is that refinancing federal loans with a private lender means losing access to federal protections such as income-based repayment, deferment, forbearance and some forgiveness programs. Not to mention, borrowers are subject to credit checks and other underwriting criteria that’s at the discretion of each individual lender.

A federal refinancing program could help more borrowers gain access to refinancing options, retain their federal benefits and allow them reduce their interest charges.

How Much Debt Do Student Loan Borrowers Have?

Addressing student loan debt is likely to be on the radar for the incoming administration, especially with nearly $1.4 trillion in student loan debt outstanding.

According to the survey, more than one-third (36.4%) of student loan borrowers have more than $30,000 in debt. Nearly one-fifth (19%) have more than $50,000 in student loan debt. Interestingly, 7.5% of the survey’s respondents aren’t even aware of how much debt they have.

It’s yet to be seen how Trump or Betsy DeVos, his nominee for Secretary of Education, will handle what many consider to be a crisis, but the consensus seems to be that something needs to be done. In response to a request for elaboration on Trump’s student loan repayment proposal, a spokeswoman from his transition team said, “If confirmed, the Secretary designate looks forward to working with the President-elect, the Congress and other stakeholders to address the issues of student debt and repayment.”

No matter who is president, student loan debt can seriously impact your financial situation, including your credit score. (You can see just how much by reviewing the two free credit scores you can get through Credit.com, which are updated every 14 days.) Knowing your options when it comes to student loan repayment and refinancing will be crucial over the next four years and beyond.

Image: vm  

The post Most Borrowers Don’t Think Trump Will Be So Bad for Their Student Loans appeared first on Credit.com.

How Secure Will ‘The Cyber’ Be Under Trump?

Here's why we need the CFPB to protect us from identity theft and maintain our cyber security.

I have to admit that when President-elect Trump uttered “the cyber” during the first presidential debate, I was right there with the tech community in the collective eye-rolling that followed. “The Cyber” memes were born, along with real concern about the candidate’s grasp on cyber security, and with the recent announcement of former New York City Mayor Rudy Giuliani as the cyber czar, those concerns multiplied.

The seeming “miunderestimation,” or possibly anti-comprehension, regarding something so crucial to national security may not on the surface seem like a consumer issue, but it is.

Our nation’s approach to cyber security at this juncture — beset by hostile state-sponsored attacks on our electoral process, expertise and secret information grabs from major industries and the federal government, and ransomware attacks —is a matter of the utmost urgency, and the President-Elect has said as much to his credit.

But Mr. Trump’s response can’t be just a marketing move or a branding opportunity — things he gets. There must not be merely the appearance of change — commissions talking and debating endlessly with little to show for it. There must be actual boots-on-the-ground solutions — now. Unfortunately, I don’t think that’s what will happen.

The Consumer Financial Protection Bureau specifically comes to mind—our nation’s most successful boots-on-the-ground agency — if Mr. Trump does as many are predicting he will do, and makes it yet another piece of President Obama’s dismantled legacy.

The CFPB was an important accomplishment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The agency is charged with protecting consumers from the predatory financial practices that brought about the economic meltdown of 2007 to 2008, and to watch out for signs of future trouble. The CFPB has the power to ban financial products deemed “deceptive, unfair or abusive” and to impose penalties on companies that take advantage of consumers.

Barring a judicial miracle, the current CFPB director Richard Cordray is almost certainly going to receive one of Mr. Trump’s signature “You’re Fired” communiqués. (Interesting side note, our President-elect doesn’t own that trademark.) Worse, an anti-CFPB former Texas Congressman, Randy Neugebauer, appears to be the leading candidate to get the job.

Among other things, the Distinguished Gentleman from Texas thinks payday lenders are too roughly treated by the CFPB and that all business contracts should contain mandatory arbitration clauses (barring class action suits). He also thinks that the CFPB should be headed not by a single director, but by a commission of people from both sides of the aisle. Those of us who support the CFPB believe that this would diminish the agency’s ability to go after dangerous practices that harm consumers in a timely and effective way.

The Trump transition team did not respond to a request for comment regarding it plans for the CFPB and/or Cordray.

This Is About Appointing the Right People

It was reported last week that the cyber security czar role in the Trump administration will fall to the President-elect’s close associate and campaign stalwart, former New York City Mayor Rudy Giuliani.

There is a connection here between what appears to be afoot at the CFPB and the next administration’s approach to cyber security — both represent bad decisions based on a basic incomprehension of what is at stake and what needs to happen next. The CFPB works, specifically the single-director approach. Instead of hiring an opponent of the agency to presumably dismantle it, we should be using it as a model to create a single-director federal agency that emulates the CFPB to oversee cyber security.

As it stands, Mr. Giuliani will be bringing together experts working on cyber security solutions and business leaders who are targeted by hackers from the energy, financial and transportation sectors. The next step that is missing here is a government agency that can fine entities that do not meet the threshold for cyber security best practices— mandated employee education, maintaining technology and tools, hiring experts — practices that the agency would determine and set as a standard. (You can learn more about how to protect yourself from cyber threats like identity theft here and monitor two of your free credit scores for signs of foul play every 14 days on Credit.com.)

In a recent interview, Mr. Giuliani said of the President-elect, “He’s going to elevate this to a very large priority for the government — and I think by doing this, he’s trying to elevate this as a priority for the private sector.”

As the Christian Science Monitor’s Passcode noted, quoting the former NYC mayor, the idea here is pretty simple: Trump will go straight to the public to “educate people on how important [cybersecurity] is, even to the point of their own personal protection.”

That is a fantastic idea that everyone should applaud. Whether the user is in the Pentagon or logging onto a free Wi-Fi network, our cyber security too often comes down to an individual clicking or not clicking on a malware-laden link or falling prey to some other security pratfall.

That said, any agency dedicated to cyber security would need to work closely with the military and intelligence communities, and would also have to focus its resources on real solutions to the dangers we face, many of them extinction-level threats. The person running it would have to be at the cutting edge of cyber security best practices.

When the news came down of Mr. Giuliani’s cyber czar role, experts almost immediately hit Twitter with reasons this was a bad idea. (Mr. Trump’s transition team also didn’t respond to request for comment regarding this choice. Guiliani was not readily available for comment either.) As happens, the cyber security community took a look at the website of Giuiliani’s cyber security company, giulianisecurity.com. They found serious problems, including expired SSL, no https and an exposed CMS login, to name a few. You don’t need to know what these things are, but the cyber czar sure does. There can be no “oops” in his or her record.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: DeanDrobot

The post How Secure Will ‘The Cyber’ Be Under Trump? appeared first on Credit.com.

Will a Trump Presidency Lead to More Predatory Lending?

Bank regulations, consumer protections and net neutrality all up for debate as the Trump administration takes the reins.

Free markets mean corporations and consumers are engaged in a constant arm-wrestling match over prices and rules governing marketplaces. When President-elect Donald Trump takes office, will the rules of this engagement change substantially?

Already, Republicans are fighting hard to dismantle, or at least disempower, the nation’s newest federal consumer protection agency, the Consumer Financial Protection Bureau (CFPB). But that’s just one of several steps being weighed that could dramatically impact the balance of power between consumers and corporations during the next several years. Trump and his appointees will soon be dealing with everything from net neutrality to robocalls to late fees. Like so much with Trump, it’s hard to know if he stands with traditional Republican positions on these issues, or if he has his own ideas. But clearly, the future of issues ranging from payday-loan regulation and binding arbitration rules to debit card swipe fees are at stake.

Consumer Protections On the Line

The power of federal consumer protection agencies like the Federal Trade Commission (FTC), which fields things like consumer identity theft complaints, tends to ebb and flow based on which political party holds power in Washington, and on the state of the American economy. The economic collapse last decade, combined with the rise of Democratic power in Washington, led to a host of steps taken to reign in what supporters say were abusive practices that hurt consumers, particularly by the financial industry. Financial reform saw passage of the CARD Act, which banned several credit card issuer practices that consumers found frustrating, such as double-cycle billing or seemingly random late fees and interest-rate hikes.

More importantly, the Obama years also saw creation of the first new federal consumer protection office in decades. As Trump takes office on Friday, a battle royale has already developed between consumer groups and conservatives who want to gut America’s youngest consumer-oriented agency. The war of words escalated last week, with opponents of the bureau calling for Trump to immediately remove bureau chief Richard Cordray, calling him “King Richard,” while supporters have promised they have “gone to Defcon One” to protect it.

The CFPB is the brainchild of Elizabeth Warren — then a bankruptcy expert, now a Democratic Senator from Massachusetts. The bureau was designed to pick up where other banking regulatory agencies, like the Office of the Comptroller of the Currency (OCC), left off. Bank regulators like the OCC have the difficult job of serving two masters — both the safety and soundness of the banking industry and the fairness with which consumers are treated. Critics said the abuses apparent during the housing bubble, such as unclear mortgage documents, demonstrated that regulators sided too often with banks and neglected consumer protection. So the CFPB was designed as a consumer-first agency. It was also designed to enjoy independence from industry pressure — it is not subject to Congressional purse string requirements, and its director not subject to removal for political reasons. At least, that was the intention of Warren and Democrats who wrote the legislation creating the CFPB.

A lawsuit that went in the favor of CFPB opponents last fall has, at least for now, paved the way for removal of CFPB director Cordray. The bureau and its supporters plan to appeal the ruling, but Republicans aren’t waiting around for that. They are urging Trump to remove Cordray as soon as he takes office.

“It’s time to fire King Richard,” Senate Banking Committee member Ben Sasse, R-Nebraska, wrote in a January 9 letter to Trump. “Underneath the CFPB’s Orwellian acronym is an attack on the American idea that the people who write our laws are accountable to the American people. President-elect Trump has the authority to remove Mr. Cordray and that’s exactly what the American people deserve.”

Bureau opponents say the CFPB should operate more like the FTC, with a slate of politically-appointed commissioners running things.

Last week, the Trump administration signaled it was leaning toward removing Cordray and reigning in CFPB power by revealing it had interviewed retired Texas Republican Congressman Randy Neugebauer as a potential CFPB chief. In Congress, Neugebauer was a leading CFPB critic, calling its efforts to regulate payday loans “paternalistic erosion of consumer product choices.”

Meanwhile, Rep. Jeb Hensarling, R-Texas, indicated he will move immediately to pass legislation he proposed last term named the Financial Choice Act, which is largely designed to roll back provisions of the Dodd-Frank Financial reform bill. It would eliminate the Volcker Rule, designed to prevent banks from taking some kinds of risks with their own money; it would also remove the Durbin Amendment that limited fees on debit card transactions.

“We were told [Dodd Frank] would lift our economy, but instead we are stuck in the slowest, weakest, most tepid recovery in the history of the Republic,” Hensarling said while supporting the bill last fall.

Bureau supporters are fighting back. Warren held a conference call on January 13 with 3,000 consumer advocates where she rang the alarm about the future of the CFPB and financial reform.

“It’s time to send a message to big banks, payday loan lobbyists and their Republican friends in Congress: The American people are watching,” Warren said, according to a press release from Americans for Financial Reform, an advocacy group. ”We’re going to fight back against any efforts to gut financial reform and to allow big banks and shady financial institutions to once again cheat consumers and put our economy at risk.”

Consumer advocacy groups universally support the CFPB, which says it has returned $12 billion to 27 million wronged consumers since its inception. One group held a “One of 17 Million” event in Washington, D.C. earlier this month.

“We’ve gone to DefCon One on protecting the CFPB because the predatory lending industry and the big Wall Street banks are all demanding the President-elect illegally fire the extraordinary CFPB director Richard Cordray and replace him with one of several industry henchmen who will help Congress eviscerate the successful bureau,” Ed Mierzwinski, program director at the Public Interest Research Group, an advocacy organization, said. “But how do you fire an effective official who has protected consumers and families from financial predators exactly as Congress asked him to do? You ignore the law and you ignore the voters’ demand for an unrigged financial system. We hope Mr. Trump has better judgment than that.”

Some Consumer-Friendly Officials Departing D.C.

Already, some noted consumer-friendly officials have started to leave Washington.

At the FTC, Chairwoman Edith Ramirez announced she would resign on Friday. Ramirez focused on emerging internet of things technologies during her six years at the FTC.

“Ramirez cast a spotlight on emerging privacy issues, involving ‘smart TV’s,’ cross-device tracking and other technologies,” the Center for Democracy and Technology said, praising Ramirez’s time at the agency. “Through a series of cutting-edge cases — Snapchat, D-Link, inMobi and Turn, for example — the commission made it clear that tech companies that deceived consumers or failed to protect their security would be punished and publicly shamed.”

In addition to consumer issues like privacy, the FTC’s main charge is to enforce antitrust law. During his candidacy, Trump signaled a break with traditional Republicans over anti-trust law, suggesting, for example, that he would have blocked the Time Warner-AT&T merger. But Trump picked former FTC commissioner Joshua D. Wright to run his FTC transition team. Wright, a traditional conservative who, in an op-ed penned days after Trump’s election victory, criticized “anti-merger mania.” He said evidence shows big mergers often help consumers, and cautioned against a return to the days of trust-busting.

Wright is widely believed to be the leading candidate to head the commission after Trump takes office.

The Trump transition team did not immediately respond to Credit.com’s request for comment.

So Long Net Neutrality?

Even bigger changes might be coming to the Federal Communications Commission (FCC), however Multichannel.com reported this weekend that Trump’s picks to head that agency — several veterans of the conservative American Enterprise Institute — have plans to eliminate the FCC’s consumer protection tasks altogether. Currently, the FCC helps consumers in dispute with telecommunications providers and sets policies, like net neutrality.

FCC Chairman Tom Wheeler, who led the charge for net neutrality and new privacy rules for broadband consumers, will vacate his spot on Inauguration Day. While Trump picked FCC transition team members with anti-net neutrality track records — one a Verizon economist, the other a former Sprint lobbyist — Wheeler said in a speech last week that overturning the commission’s rule is not a foregone conclusion. Changes would require a new rule making process, he said — and that would be a mistake.

“Tampering with the rules means taking away protections that consumers in the online world enjoy today,” Wheeler said in his speech.

While Trump transition team members Ajit Pai and Michael O’Rielly advocated for a streamlined FCC before, backtracking on issues like net neutrality seems less a sure thing after Trump added Republic Wireless co-founder David Morken to that transition team. As head of a small telecom company, Morken has said he is against changes that help entrenched competitors, and has a populist bent to his rhetoric.

“Traditional Republican telecom policy has favored incumbents who are heavily engaged in regulatory capture over innovators like us,” Morken told The Wall Street Journal in December.

His lack of opposition to net neutrality, in addition to that open challenge of established Republican thinking, has led some to think he might provide balance on a Trump FCC. But as with the many critical consumer issues the Trump administration will take on in the coming months, only time will tell whether populist positions or conservative leadership will win that arm-wrestling match — and how consumers will fare in their own wrestling match with corporations.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: andykatz

The post Will a Trump Presidency Lead to More Predatory Lending? appeared first on Credit.com.