Over the weekend, the country announced a new president-elect, former Vice President Joe Biden, and a new Vice President-elect, Sen. Kamala Harris. The pair are set to replace President Donald Trump and Vice President Mike Pence on Inauguration Day, which will be Jan. 20, 2021. A new Democratic administration could mean significant changes for how the accounts receivable management industry is regulated. [Click here to sign up for a webinar, being held on Monday, November 9 at 4:15pm ET, which will discuss the prospective impact of the election results on the industry.] AccountsRecovery.net reached out to a number of individuals in the ARM industry and asked for their thoughts about what a Biden White House will mean for the industry. Here is what 15 of them had to say:
Rick Perr, Partner, Kaufman Dolowich & Voluck
It would be naive to think the election of Democrat Joe Biden as President of the United States would signal continuity in regulation of the ARM industry. However, Joe Biden is much more of a centrist Democrat and hails from a state, Delaware, with many deep connections to the financial services community. A Republican-controlled Senate will also act as a check to more radical policies.
I do expect a new CFPB Director, but it will take some time to see how this impacts the already-released Rule on Debt Collection. I suspect that it will remain intact but will be joined by more progressive sections over the course of the next four years.
Margot Saunders, Senior Counsel, National Consumer Law Center
The election of Joe Biden to the presidency provides us with hope for the future of this country. For consumers specifically, it means that the federal agencies charged with protecting consumers will actually engage in those efforts.
Manny Newburger, Managing Partner, Barron & Newburger
What does the election of Joe Biden as president mean for the ARM industry?
I know that many are nervous, but I do not think that President-Elect Biden is the enemy of the ARM industry that some of his primary opponents were. Federal student loan debt relief was certainly on his to-do list. Beyond debts owed to the federal government, however, the discussion gets interesting. As we saw with the ACA’s challenge to the emergency regulations in Massachusetts, there are constitutional limits on the power of government to prohibit creditors from enforcing their rights and protecting their assets.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
Although there have been promises of bipartisanship, I certainly expect a new Director. That is unfortunate, as Director Kraninger has worked hard to do the job. I do not see Reg. F as “political.” It has its fans and its detractors, its strengths and its weaknesses, but the staff who worked so hard to bring it to fruition are simply hard-working civil servants who did the job without regard to partisan politics.
What will the biggest impact of Joe Biden’s election be on the ARM industry?
I expect real change in the federal student loan sector and in the Higher Education Act and its implementing regulations.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
I think that (outside of federal student loans) it is too soon to tell. The pandemic, global trade, international relations, unemployment, and the environment all seem to be much higher priorities that could easily consume most of his term.
Jack Brown III, President, Gulf Coast Collection Bureau
As many in our industry, I wished we could have had four more years of a Trump administration who set a top priority to reduce regulations. In my opinion, the reduction of regulations allows for lower barriers to entry to the market, encourages innovation, and allows for forward thinkers to improve the overall industry. In regards to what impact a Biden administration may have to our industry, I would harken back to the Obama administration and CFPB oversight similar to what we saw when Cordray was the director. I think we will see much more stringent requirements be put forward; luckily, we have a much more conservative court that will place restrictions on additional burdens that might go too far. I think you will see much more regulation by enforcement and a lot more litigation over these practices.
Joann Needleman, Partner, Clark Hill
Before the election I thought a Joe Biden win would have a significant impact on the financial services industry including the ARM industry. However, I do not think the results of the election were a clear mandate for change in policy, rather a referendum on a single person. If there was a mandate it was a mandate of moderation and compromise. The Blue wave never happened and despite losing the Presidency, Republicans did rather well in this election.
Whether Director Kraninger will keep her job still remains to be seen but the CFPB has been rather active in the last year. Supervision examinations and enforcement investigations were at comparable levels when Director Cordray ran the Bureau. That trend will remain regardless of who is the new Director. If moderation and compromise are the themes of a Biden Administration, then I do not foresee any real wholesale changes at the CFPB or a retreat to the CFPB of years past. Debt collection will still have a significant focus at the Bureau but I think credit reporting is their top priority at the moment. If there is a change in Director at the CFPB, I do not believe it will be someone who is already in Congress due to the slim margins in both chambers. Rather I see a career regulator like a Rohit Chopra. Pay close attention to a state AG like Xavier Becerra from California or Letitia James from New York although their path to confirmation could be a challenge.
Nicole Strickler, Partner, Messer Strickler
Will the election of Joe Biden mean more or less regulation for the ARM industry?
Traditionally, a democratic president means more regulation. But, Biden will have a lot on his plate when he takes office. I think pandemic response and stimulus will likely be first on the list. We will see what priority financial regulation will have as time goes on.
Mike Frost, Partner, Malone Frost Martin
What does the election of Joe Biden as president mean for the ARM industry?
It will be interesting to see if Biden/Harris take a similar approach to debt collection as Obama/Biden. Within the first week of the Obama/Biden administration they eliminated the IRS debt collection contract do to a belief that governmental tax collection is an inherent government duty and should not be outsourced.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
I think we should all assume that when there are shifts in the party that controls the White House that it will have a direct and significant impact on the CFPB. I would assume we will see a change at the Director level and change in philosophy.
What will the biggest impact of Joe Biden’s election be on the ARM industry?
Overly burdensome regulation. What we saw with Obama/Biden administration was an extreme focus on regulation, especially in the financial services area. I would assume the Biden/Harris administration will be as, if not more aggressive, with similar regulation.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
Without question, more. The run off elections will really tell the story. If the Senate shifts power Our industry will see a swing in perspective which will drive more regulation and oversight of financial services, including the account receivable management industry. We have weathered these storms before and will do so again but the landscape will change drastically.
Stefanie Jackman, Partner, Ballard Spahr
The impact of the election of Joe Biden as the country’s 46th President on the ARM Industry is not yet clear as we do not yet know which party will control the Senate in the new year. Rather, we need to see the result of Georgia’s January 5th runoff and whether Georgia’s two Republican Senators retain their seats. If one or both do, then the Senate will remain under Republican control. If so, it is possible that President-Elect Biden may decide not to replace CFPB leadership as it may be difficult to get a new nominee through the Senate and any sort of collective effort to revise the FDCPA or enact other consumer-protection legislation seems unlikely to succeed. On the other hand, if Georgia’s incumbent senators fail to retain their seats, then the Senate would flip to being controlled by the Democrats, then the combination of the White House and Congress all being of the same party likely means a new CFPB Director and potentially, an effort to renew legislation like that we saw from Representative Waters during the pandemic seeking to expand the scope of the FDCPA’s coverage.
Tim Collins, Chief Compliance Officer, TrueAccord
What does the election of Joe Biden as president mean for the ARM industry?
It is good to have the election over. Business needs certainty. We will not see much from the new administration as it relates to the ARM Industry for some time to come because of the way Part 1 was written and other more pressing issues.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
Not for Part 1 of the rule because of the way it was written and what it included. I would not be surprised if Director Kraninger stayed on after the transition especially if a new Director structure was implemented.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
I do not see an increase in regulation. If anything we may see it in other areas of financial services that trickle down to impact the ARM industry.
Leslie Bender, Senior Counsel, Clark Hill
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
It is interesting to consider how President-Elect Biden will approach the CFPB and its consumer protective mission and accomplishments. With the pandemic taking center stage and the country’s highest priority, the work and leadership of the CFPB over the short run just does not seem like something demanding immediate new Administration attention. Since hosting the debt collection town hall in Philadelphia, Director Kraninger has respected the work of the CFPB and has not worked to disassemble the Bureau. She has been transparent with the public including Congress and has displayed poise and a thoughtful consideration of a wide array of consumer and industry perspectives. As the CFPB’s leader, Director Kraninger has been fair, even-handed and sensible – protecting consumers through enforcement actions and supervision in critical and perhaps emblematic areas. Notably, she has kept her predecessors’ promises by flexing the Bureau’s rulemaking powers. While the pandemic may cause the Biden Administration to push relief for consumers over the short run as it relates to credit reporting or debt collection issues, so long as the credit reporting and debt collection industries continue to be responsive to consumers and to follow the rules of the road, it seems unlikely we will see significant and immediate changes to these industries. It is important to mention that under the current Administration, while there has not be considerable new regulation at the federal level, the states and even some localities have dramatically increased the regulation and oversight of these industries.
Rozanne Andersen, Chief Compliance Officer, Ontario Systems
It is my understanding, the majority, but not all, of the Consumer Financial Protection Bureau (CFPB)’s provisions of Regulation F interpreting the Fair Debt Collection Practices Act, were issued as final on October 30, 2020 in order to beat a November 1, 2020 deadline. Apparently, those provisions of Regulation F not issued as final prior to November 1 but issued after such date, would trigger a mandatory Congressional review provision. With all the unknowns about the post-election composition of the Senate, House of Representatives and candidly, the office of the President, the CFPB’s Trump -appointed Director, Kathleen Kraninger, opted to shield all but the disclosure and time barred debt provisions of Regulation F from Congressional review. She accomplished this by issuing the industry friendly provisions on October 30, 2020.
The remaining provisions of the new rule for debt collection, disclosure and time barred debt provisions, are scheduled to be issued in December. Since these remaining rules for debt collection were not issued prior to November 1, 2020, a mandatory review by Congress will be required to make them final. It remains to be seen if the current Congress will approve them or postpone their review until the next President and members of the new Congress are inaugurated. Under current law, the Director of the CFPB can be fired at will by the President. Once inaugurated, President Biden will be empowered to replace Kathleen Kraninger as he sees fit.
Dennis Barton, The Barton Law Group
My biggest piece of advice is to not overreact fearing the worst. Do not make extreme plans believing we will face sudden and striking industry regulations before we see what Biden actually has in store for us. He has a relatively moderate reputation for a Democrat. But even those who believe he has been polluted by those more radical, the ARM industry is not Biden’s focus. His emphasis is on responding to COVID-19, economic stimulus, and the environment. That will preoccupy his mind, time, and resources for a significant time.
Aaron Reiter, Director of Sales & Marketing, InterProse
What does the election of Joe Biden as president mean for the ARM industry?
I don’t think the ARM industry will rank very highly on the priority list of the Biden administration, at least for the first two years of his term. Biden, historically, has been a consistent voice for moderates and what he feels are common sense legislation paths with bipartisan support. Based on these impressions, I’m not inclined to think the ARM industry’s arguments that we are an integral part of a healthy economy will fall on deaf ears if there are voices to his left arguing for policies that would be detrimental to the debt recovery industry.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
In the near term, no. The debt collection rules, as a whole, contain elements of modernization and efforts to sync up policies. I would anticipate there would be some tweaks to make things a bit more restrictive (for example, the maximum contact/week/debt interpretation may get more restrictive clarification), but I doubt the spirit of it will change substantially.
What will the biggest impact of Joe Biden’s election be on the ARM industry?
Leadership and priorities from executive branch appointees. The Senate looks to remain a counterbalance to a Democratic administration, which, if recent history is any guide, will likely devote itself to the sole purpose of making sure absolutely nothing of any substance occurs over the next two-to-four years, depending on how the next election cycle goes. Therefore, the industry only needs be concerned about executive orders that could impact the industry, but as I mentioned earlier, the ARM industry is going to be super low on the priority list as the Biden administration focuses primarily on environmental policy, immigration, federal judicial appointments, and international relations. I expect Biden to spend as much time abroad during his first two years as in the White House as he works to repair relationships with NATO and allies who will be vying to host him as their guest to reaffirm relationships with American political, military and financial support.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
In the short term, I anticipate little to no changes. Again, maybe some tweaks to the rule changes released a week ago, but nothing that ruins the spirit of modernizing and clarifying rules. I say that with the knowledge that everything the Trump administration has done may become a priority to discard, revoke or erase out of pure spite due to the policy of the Trump administration to do the same to Obama term policies and executive orders. I would like to believe the Biden administration will be less petulant abou their political machinations, but given the climate and irrational desire of humans to undo the policies of a foe, I’m fully aware this may be the outcome and some babies will get thrown out with the bathwater (I hate that metaphor because it’s alarming, but it’s apt in this case). Worst case, the new rules get revoked and ash-canned with no further thought, more likely they get suspended for review and we are handed uncertainty again well past the one year go-live date we are expecting. Most likely, I think we will see some tweaks and revisions but we’ll still get some of the clarity and modernization we have so badly needed to serve the industry.
David Kaminski, Partner, Carlson & Messer
What does the election of Joe Biden as president mean for the ARM industry?
The election of Biden means that our work by and on behalf of the collection industry is never done. That we will have to work hard to convince the administration of the extraordinary benefits the debt collection industry has conferred on the American economy for years. That the stronger the industry is, the better America does. That now, more than ever, to help America prosper and thrive during the current Pandemic, more balance is needed that is line with 2021 and beyond business and economic realities.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
I believe, with a glass that is more than half full, that the Biden Administration will recognize the years of work the CFPB has done with countless debt collection coalitions during the Obama and Trump administrations in bringing about the new debt collection rules. Hopefully, with CFPB guidance, the new Administration will not disrupt the years of fine work and extraordinary effort that has brought about somewhat balanced and fair new rules by which all can abide.
What will the biggest impact of Joe Biden’s election be on the ARM industry?
That the status quo be maintained.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
Hopefully, as stated above, the Biden administration will recognize the economic benefit the ARM industry confers on the American economy and that the administration will not seek to put any further burdens on an industry already over plagued with regulation.
Jeff Freedman, co-CEO, MRS BPO
What does the election of Joe Biden as president mean for the ARM industry?
I think the answer will largely be determined by what happens in the Senate. If the Democrats win the Senate, I think Biden’s win could mean stark changes to the industry (especially if the pandemic and its effects drag on). We saw what the Democrats wanted in the Heroes Act and it was not pretty for the industry. If the Dems get the Senate, I imagine they would look to push a similar bill (perhaps not as extreme) and I see no reason that Biden wouldn’t sign it.
If the Republicans win the Senate, I think it will act as a check on the Dems, and I believe that we will largely be status quo.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
Well, clearly there will be a change in its leadership so that alone is a significant change. I believe we will see a return to regulation by enforcement that was a staple under the Obama administration. I think we can expect to see a more aggressive approach from the CFPB than what we have seen the last 4 years.
What will the biggest impact of Joe Biden’s election be on the ARM industry?
Again, my answer largely depends on what happens in the Senate. If the Dems win the Senate, his election could be difficult on our industry (especially if the pandemic lingers). If they don’t win the Senate , I think there will be minimal impact.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
Same answer here. I believe we will see more regulation if the Dems have both houses of Congress and the White House. I believe regardless that there will be more enforcement actions.
Don Maurice, Principal, Maurice Wutscher
ARM issues did not receive much play during the run-up to the election and Biden has not been a knee-jerk critic of either the financial services industry or the Trump policies impacting the industry. But there will be some changes. Biden can appoint a new CFPB Director and, depending on who that person is, we could see changes to the recently released FDCPA rules as well as to the rules that are expected to be released in the coming months. A new Director could also bring more of the specious enforcement actions we saw with Cordray. Biden will also have a few FCC Commissioner appointments, impacting rulemaking for the TCPA and other call technology. The commission, now majority Republican, will flip in 2021. But we should not expect to see anywhere near the level of disruption after Obama took office when the 2007-2008 financial crisis fueled a hyper-regulatory atmosphere in Washington.
Gordon Beck, President, Valor Intelligent Processing
What does the election of Joe Biden as president mean for the ARM industry?
At the end of the day, it’s no secret that with Democratic Presidents come heavy oversight. We need to all be prepared. The ARM industry always finds a way, this will be no different.
Do you think that Joe Biden’s election will mean significant changes at the CFPB or for the debt collection rule?
I have no reason to assume that the CFPB’s rule-making, something that has been in play for many years, will be impacted this close to release. This is no concern to me. I could be wrong, but I feel that the expansion of CFPB powers is a more significant threat to our Industry.
What will the biggest impact of Joe Biden’s election be on the ARM industry?
I feel the biggest effect will be indirect. Prior to Covid, the economy was booming, unemployment at an all-time low, people working and digging out of the hole, stock market breaking records and people were paying their bills. If we do not build on this post-Covid, we will feel the negative effects on the consumer’s ability to pay their bills.
Will the election of Joe Biden mean more or less regulation for the ARM industry?
If partisan history repeats itself, we can expect more regulations without a doubt.
Nice job getting this out so quickly Mike, and kudos to all of your contributors for their insightful responses.