I will be the first to admit that there are a lot of people in the ARM industry who know a lot more about the Fair Debt Collection Practices Act than I do. And there are a lot of people who know the inner workings of the Bureau of Consumer Financial Protection better than I do. But as a huge believer in the transitive property of mathematics, I am left to wonder something.
For those of you who don’t remember what the transitive property is, it’s a mathematical theorem that says if a = b and b = c than a = c. How does this apply to the ARM industry? Let me try to explain.
For months now, Mick Mulvaney, the acting director of the CFPB, has said that his agency will not “push the envelope” when it comes to enforcing the laws of the financial services land. The era of regulation by enforcement is over, Mulvaney has said on numerous occasions. Mulvaney has also said that the data will guide the CFPB’s actions moving forward. For example, the agency, under former director Richard Cordray, had issued on a payday lending rule. Back in January, when talking about the agency’s mission moving forward, Mulvaney noted that only 2% of the complaints submitted by consumers to the CFPB were related to payday lending, while “almost a third” of the complaints were related to debt collections. “Data like that should, and will, guide our actions,” Mulvaney wrote in a memo. Mulvaney also announced that the payday lending rule was under “reconsideration.” Let’s call that “a.”
Earlier this month, the CFPB published its semiannual regulatory agenda, which outlines the status of proposed and upcoming rules that the agency is working on. The CFPB indicated that a proposed debt collection rule was due out by March 2019. Let’s call this “b.”
Yesterday, Congress voted to repeal guidance that had been issued by the CFPB under former director Richard Cordray. The guidance aimed to establish limits on how miuch auto dealers could mark up the interest rates approved by lenders on loans to consumers. In a statement applauding Congress’s move, Mulvaney said:
I thank the President and the Congress for reaffirming that the Bureau lacks the power to act outside of federal statutes. As an executive agency, we are bound to enforce the law as written, not as we may wish it to be. In this case, the initiative that the previous leadership at the Bureau pursued seemed like a solution in search of a problem. Those actions were misguided, and the Congress has corrected them.
Let’s call this “c.”
If Mulvaney has gone on record as saying that the CFPB’s mission is to “enforce the laws as written,” and that “lacks the power to act outside of federal statutes,” does that mean he believes the CFPB doesn’t have the authority to move forward with a debt collection rule? Is a debt collection rule another “solution in search of a problem”?
It doesn’t seem like “a,” “b,” and “c” are equal to each other here.
Could I be wrong? Could the fact that Mulvaney applauding the repeal of a rule have nothing to do with the CFPB’s work on a proposed debt collection rule? Absolutely. But in looking at the aggregate amount of activity that has come out of the CFPB under Mulvaney — significantly fewer enforcement actions, a significant slowdown on rulemaking, and an overall retreat in regulating the financial services industry — is it plausible to see a scenario where a debt collection rule never sees the light of day? I think it is.
When former director Cordray resigned and left the CFPB, people smarter than me said that the ARM industry needed to march into the CFPB’s office and try to negotiate a rule that made sense. That march may seem more important than ever now.
The ARM industry should be looking at whatever happens with the payday lending rule to see what the CFPB, at least under Mulvaney’s leadership, has planned for a debt collection rule.
Numbers don’t lie, the old saying goes. And I’m not sure the numbers add up to a debt collection rule ever being released. Could I be wrong? Absolutely. In case I am, I have started a pool. Click here and you can choose when you think the CFPB will issue a proposed debt collection rule. Unfortunately, “never” is not an option.