Today’s news that Richard Cordray is resigning as director of the Consumer Financial Protection Bureau is the biggest news to hit the industry in some time. It has the potential to completely change the course of regulatory compliance in the industry. Whomever is selected to replace Cordray will have to decide whether to move forward with a proposed debt collection rule, whether to continue aggressively enforcing its regulatory prerogative, or not. To assess what this development means for the industry, AccountsRecovery.net reached out to several industry executives and asked for their thoughts. Here is what they said:
Today’s announcement is an opportunity to open a new chapter at the Bureau that will hopefully foster greater dialogue among the many stakeholders who participate in the credit ecosystem allowing for greater and more equitable representation in the decision-making process. Winston Churchill once said, “To improve is to change; to be perfect is to change often”.
Mark Dobosz, Executive Director
NARCA – The National Creditors Bar Association
The collections industry is, and has always been, the most resilient type of business in the United States. We have inherited an undeserved reputation, we have been battered and tattered by every government entity and we have been litigated to death by predatory attorneys. In my honest opinion, I do not think that the departure of Cordray means anything to the agencies that operate with integrity, follow the law and treat consumers and employees with dignity and respect. Some will say that his departure could prevent the injection of rules that could potentially cause great harm to our industry, but if not Cordray, if not the CFPB, it will be something else. I have learned to fight the good fight, stand up for what we believe in, educate those on the positives of our industry and to strategize around the rules and regulations that are out of our control to be as effective as possible with the hand we are dealt. Cordray or no Cordray, our industry will always be facing some sort of challenge and as we have for many decades, will not only survive, but continue to thrive.
Gordon Beck, CEO
Diversified Consultants, Inc.
Cordray wanted to go out on a high note, but the repeal of the arbitration rule was a blow and a loss. I do not think it was his intention to be the director of the CPFB in 2017. His departure brings significant opportunity for the debt collection industry. Now is the time to develop your post-Corday strategy and to actively engage the Bureau on important priorities to ensure that the debt collections rules are fair, clear and workable.
This is significant news for ARM companies, as this signals a potential change in the oversight process on the companies in the space. We are yet to see who the next individual will be to head up the agency, but remain optimistic there will be a more business-friendly leader at the helm. Since Trump was elected, we have been awaiting for a material change to ease restrictions and this could be a catalyst. The news is making national press and we have already begun to get pinged by financial groups who are now, more than ever, tuned into our markets.
Michael Lamm, Managing Partner
Corporate Advisory Solutions
I think it is certainly the end of an era. However, it does not mean the end of the agency, nor does it change its mission and legislative mandate.
My hope is that this presents an opportunity to get Democrats and Republicans to agree on conversion of the agency’s management structure to a bipartisan commission – something that has worked very well at the FTC.
Manny Newburger, Founding Shareholder
Barron & Newburger
I was a little surprised by the news this morning. While not totally unexpected, as rumors have been circulating for months that Director Cordray would step down, I had begun to think the Director intended to stay till the end of his term. Hopefully his departure and the appointment process of his successor will be smooth with little disruption to the debt collection rulemaking process. We are looking forward to rules that bring clarity and guidance. I wish Director Cordray the best of luck in his new endeavors.
Stoneleigh Recovery Associates
ACA International looks forward to continuing its ongoing dialogue with the CFPB and developing a collaborative relationship with a new Director. As part of the process of attempting to recover outstanding payments, ACA members fulfill a vital role in our credit-based economy by helping businesses, large and small, obtain payment for goods and services already received by consumers. ACA is committed to working with the CFPB’s future leadership to ensure that any new policies and regulations impacting the credit and collection industry reflect an accurate understanding of the how debt collection process works, are based on robust data about the industry instead of preconceived notions, and balance regulatory burdens with actual benefits.
This resignation has been long awaited, and long overdue.
Bedard Law Group
First of all, we need to put this vacancy in perspective. According to the Center for Presidential Transition, “the President of the United States must fill approximately 4000 Federal government appointments.” According to CNN, on February 25, nearly 2,000 vacant governmental positions existed. On February 28, 2017, Trump announced he did not intend to fill many of the numerous governmental positions that were still vacant, as he considered them unnecessary. This vacancy rate falls in line with Trump’s commitment to trim Federal government spending and reduce the government’s payroll. Quite frankly, the President has intentionally lagged behind other recent Presidents in terms of appointments and to date has filled about half of the open positions.
The practical effect of leaving manager and directorship positions in Federal agencies is to freeze their respective agendas. Managers become “acting” managers. Directors become “acting” directors. No one trusts the organization’s hierarchy and all fear being replaced once a permanent manager or director is appointed. Few choose to drive an agenda in case that agenda conflicts with the vision of the yet to be appointed manager or director.
Cordray’s vacancy presents Trump with three options. Under the Vacancies Reform Act of 1998, Trump could temporarily fill the seat by allowing the current person who holds the second in command position to Cordray assume an acting director position or he could appoint a director who otherwise qualifies for the position either because he or she already holds a director position confirmed by the Senate or a similar position in terms of pay and responsibility.
My guess is Trump will take the opportunity to seat a temporary director of the Consumer Financial Protection Bureau with strong connections to Wall Street. Until such time we can reasonably expect one of two scenarios to play out. We will either see the new, proposed rules for debt collection published in the Federal register as soon as Friday or anytime leading up to Cordray’s last day in office or zippety do dah [legal term]. If the new rules are not published before Cordray exits his post I highly doubt we will see them in proposed form for many, many months or even years to come. Time will tell.
Rozanne Andersen, Chief Compliance Officer
I was meeting with the CFPB today and there was a different tone in the room after the announcement came out. It felt like it wasn’t true until it was officially announced.
As for my thoughts are it doesn’t change much for agencies. When the change happens it will take a new person some time to get up to speed and to try to make changes that eventually have to trickle down. At the end of the day keep doing what you are doing and prepare for your next examination.
Tim Collins, Chief Compliance Officer
Some other reactions:
Richard Cordray @CFPB has been a true champion for the rights of consumers against predatory practices in for-profit schools, payday lenders, housing and more. The fight to protect and someday expand this legacy will be a hard one — but an essential one to keep battling for. https://t.co/fkV9bKqQXO
— Gene Sperling (@genebsperling) November 15, 2017
Consumer advocates bummed Cordray is leaving his command & giving Trump more time to undo his work. But OH-Gov is his dream job, and he'll never have a better shot than the 2018 Trump backlash election.
— Michael Grunwald (@MikeGrunwald) November 15, 2017
Richard Cordray to run for Ohio governor, Columbus Dispatch reporting
— Laura Litvan (@LauraLitvan) November 15, 2017
The @CFPB has been arguably the least accountable independent government agency. I’m pleased to hear that Director Cordray will be stepping down. We need new leadership that brings accountability to this rogue agency and respects our laws while implementing much-needed reforms.
— French Hill (@RepFrenchHill) November 15, 2017
The new Director of the @CFPB must be someone with a track record of protecting consumers & holding financial firms responsible when they cheat people. This is no place for another Trump-appointed industry hack.
— Elizabeth Warren (@SenWarren) November 15, 2017