You are here

Bank Notes: IRS, Neil Barofsky, Cash America and Wells Fargo

Adam R.'s picture

Posted December 19, 2013

IRS Delays Filing Season: The Internal Revenue Service says that it will push back the start of the filing season until January 31st, 2014. The IRS is putting this one on to Congress and there is probably some validity to that position, given that the duration of the shutdown mirrors the period of the filing delay. People will still be able to prepare their taxes, of course, but

the IRS won't accept them until the end of the month.

Barofsky scores a legendary sell-out: Neil Baroskfy, the former special inspector for TARP, now has taken up the duty of defending CashCall. As a person who used to play a leading role in holding banks accountable, this new job represents a shift of unprecedented audacity. Barosky wrote "Bailout," a book that described federal regulators as shameless toadies of the banks that they were supposed to be overseeing. But now he is here, defending a company that manages to be egregious on several levels. No one doubts that CashCall serviced ultra-high cost loans - some with rates above 300 percent. But even worse, the CFPB says that CashCall was attempting to collect on loans that were uncollectable.  The defense that Barofsky will likely take is that CashCall was only the agent of Western Sky Financial.  I'm trying to imagine what might constitute a comparable sell out: perhaps an ex-ACORN organizer taking a job with a large Wall Street investment bank in its sub-prime lending unit? An ex-legal aide public defender using his experience to devise a bank-walk away strategy for a foreign sub-servicer? We all have to draw our own line in the sand.

Cash America settles with CFPB over debt-collection; will Wells Fargo respond? Yesterday, Cash America agreed to pay $19 million in fines and restitution. According to the settlement, Cash America was robo-signing documents for lawsuits they filed in Ohio. It also indicated that it had violated a law that caps interest rates on any extension of credit to a service members and their families.

That announcement follows a statement made by Wells Fargo on Monday that it only lends to companies that comply with the law. Wells said this in response to a query generated over a recent report that linked their corporate finance division to loans with a variety of payday and other high-cost lenders. The Charlotte Observer's story included this section:

Wells Fargo said in a statement that the bank “provides credit to responsible companies in a variety of financial services industries.” The bank regularly checks to make sure the companies to which it lends are in compliance with the law, Wells said.

The settlement said that Cash America was destroying documents,