A conservative think tank does not put the proposed debt collection rule as one of the top five priorities facing Kathy Kraninger, the new director of the Bureau of Consumer Financial Protection, although one of those priorities is an area that impacts the ARM industry.
The priorities facing Kraninger, at least as far as the Competitive Enterprise Institute is concerned, are:
- Re-write the payday lending rule
- Define the term “abusive”
- Reform enforcement of the Equal Credit Opportunity Act
- Shift the focus of enforcement
- Reform the BCFP’s internal operations
The BCFP has said that a proposed debt collection rule is on the horizon and is due to be issued next March. Whether that means the CEI thinks Kraninger will get to these priorities first and address them before March, whether the March timeline is just a pie-in-the-sky idea, or whether the debt collection rule is just not high profile enough, remains to be seen.
Among the priorities listed by the CEI, how the bureau goes about defining the term abusive could significantly impact the ARM industry.
“An ambiguous abusive standard is not conducive to a well-functioning financial market or regulatory system,” writes the CEI. “Financial institutions need clarity. They cannot wait years for court decisions to determine the extent of a given regulatory scheme. Arbitrary punishment of activities long been deemed lawful is a detriment to all participants in financial markets.”
Back in October, Mick Mulvaney, who was acting director of the BCFP, said the agency would issue a proposed rule that would define the word, at least as it pertains to the context of Unfair, Deceptive, or Abusive Acts or Practices (UDAAP). There are a lot of laws that ban the use of unfair or deceptive acts, but the Dodd-Frank Wall Street Reform & Consumer Protection Act, which gave birth to the BCFP, also gives the agency the power to regulate and enforce activities it deems to be abusive. Former Director Richard Cordray frequently used that weapon in regulating the financial services industry, even though what constitutes an abusive practice has never been objectively defined.
“I think ‘unfair’ is fairly well-established in the law, ‘deceptive’ is very well-established in the law and to my knowledge, I don’t think ‘abusive’ is nearly as established in the law,” Mulvaney said when he announced the proposed rule. “You have a right to know what the law is.”