WSJ: President to Nominate CFPB Head Next Week; It's Not Warren

The report is at http://blogs.wsj.com/washwire/2011/07/15/obama-to-nominate-consumer-bureau-chief-next-week/?KEYWORDS=elizabeth+warren.

Comments

[Afbob Blairjr]

It did it again! The "x" (after y)is a superscript indicaing compounding in an iPhone button.

[Afbob Blairjr]

Eratta: In the transferring the above document from Word to the Comment box, the software converted in the iPhone formula string the “yx “ to “yx”. The yx is a button on the iPhone when held the long side horizontally. There should not be an “x” to indicate multiplying just before the left parentheses. A F “Bob” Blair Jr

[Afbob Blairjr]

If Elizabeth Warren is not Director of the CFPB, it will almost certainly be the end of my long quest to see that the financially, mathematically-TRUE, COMPOUND Annual Percentage Rate (which I acronym, CAPR) is adopted in the Truth in Lending Act (TILA) of 1968. Currently, the act continues to use the original (1968) financially, mathematically-UNTRUE Simple-Interest method of calculating the Annual Percentage Rate (which I acronym, SIAPR). That SIAPR method is also called the “actuarial,” or “nominal,” or an alternate, “US Rule.” Nowhere does the act say it is “mathematically true”. As a matter of fact, in the preambles of the original bill it stated it is “used for comparison.” In TILA Part 226, Appendix J (b)(1) the Act states: (b) Instructions and Equations for the Actuarial Method (1) General Rule The annual percentage rate shall be the nominal annual percentage rate determined by multiplying the unit-period rate by the number of unit-periods in a year. Webster’s New College Dictionary ©1958 and Blacks’ Law Dictionary © 1968, both define “nominal” as “not real or actual.” That should give the reader a strong clue that the SIAPR is not true. A loan with a stated due date, as 14 days on a typical payday loan, is called a closed-end loan. Adding to the absurdity of this bogus method is TILA’s clause on the accuracy of expressing an APR (SIAPR) TILA “226.17(2) General disclosure requirements: [the tolerance of accuracy shall be within] … no more that 1/8 of 1 percentage point ….” Of great interest to the lawyers who read this is the a possible cause célèbre, the current case of an “Unconscionable Act” in Wisconsin: Payday Loan Store of Wisconsin Inc v. Jesica (only one “s”) Mount. Mount made many payday loans, one or more for 446% and 1338%, all calculated with the financially, mathematically-UNTRUE APR (SIAPR) method.” Mount won in Circuit Court. The Court of Appeal sent it to the Wisconsin Supreme Court, which has not decided whether to hear it yet. Apparently, their calculation of the (NOMINAL) APR on the 18-day and 6-day (unusual, usually 14 days) loans of $100 with $22 in interest was [using Excel mathematical notations] (22/100)*(365/18)*100 = 446% [really, 446.111%] and (22/100)*(365/18)*100 = 1,339% [really, 1,338.333%]. Three decimal places or less may be used if the percentage rate is within the tolerance of accuracy, which should not be “by more than 1/8 of 1 percentage points” of the accurate rate. 1/8th% = 0.125%. [Picayune deminimus: therefore, technically, the rate 446.000%, or simply 446%, is within that tolerance, but 1338% should be any number including and between 1338.458% and 1338.208%.] And now … what keeps me young … THE MATHEMATICALLY, FINANCIALLY-TRUE COMPOUND ANNUAL PERCENTAGE RATE, the rate for a unit period compounded for the number of unit periods in a year = (I know you are not going to believe this, but check with your local PhD in Finance, I double-checked with one who readily agreed with me. On the 446% that true CAPR is 5,538.784%, calculated as (using Excel “^” symbol for compounding) ((((22/100)+1)^(365/18))-1)*100. But the magic of compounding can make results a greatly increased answer. The CAPR of the 1338% loan is 17,928,912.336%, ASTRONOMICALLY UNCONSIONABLE! It is calculated the same as above, except the 18 becomes a 6, ((((22/100)+1)^(365/6))-1)*100.. If you have an iPhone you can perform the calculation (using the side-ways math calculator) by pressing precisely 22÷100+1=yx(365÷6)=-1=x100. The tolerance of accuracy on the 1338% loan, which should be less than 1/8th percent ().125%). It is 143,420,592 of the 0.125%’s, calculated as (17,928,912.336%-5,538.784%/0,125%, SUPER ASTRONOMICALLY UNCONSCIONABLE.
That disparity is so egregious that an attorney, rarely totally financially literate, should be able to proceed. I think on this Wisconsin case there should be an Amicus Curiae interposal of voluntary information from Publici Juris and with recommendation of Cy Pres for some consumer financial protection group as the National Consumer Law Center (which, strangely, does not respond to my quest). If anyone is interested, I will send 2 chart/graphs of the variance of the CAPR and SIAPR in the two rates for each payment period, including the effect of when the interest-only is paid on the due dates. I do not see a way to put the charts here unless Gupta knows a way. Remember John 32: “…the truth will set you free.” Remember, also Justita Non Est Neganda Non Defferenda: “Justice is to be neither denied or delayed.” I hope you are wrong about Warren. Will Obama acquiesce on the other conditions the Republicans want? A F “Bob” Blair Jr afblair@internet8.net