The Biden administration issued a sweeping Executive Order on Friday that touches just about every area of the economy, including the Consumer Financial Protection Bureau and the banking and financial services industry. While the order did not specifically mention debt collection, it is likely that the order will have some impact on the accounts receivable management industry.
Under the order, federal regulators will be required to take a harder look at mergers and acquisitions within the banking industry. The order noted that a bank merger application has not been denied by a federal regulator in 15 years and that the United States has lost 70% of the banks it once had in the last four decades. Consolidation in the banking industry leads to a higher cost of credit for consumers and restricts the availability of credit for small businesses. The regulators, including the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, are being asked to update their guidelines to “provide more robust scrutiny of mergers,” according to the Executive Order.
At the same time, the CFPB is being tasked with issuing rules that will make it easier for consumers to be able to download their banking data and take it with them to new institutions. Not being able to take their financial transaction histories to new banks raises the cost of a new bank issuing credit, according to the administration. Access to banking data is an idea that has been on the CFPB’s radar for more than five years. The regulator issued an Advanced Notice of Proposed Rulemaking last Fall on consumer access to their financial records.
Also included in the Executive Order was a provision encouraging the CFPB to consider “enforcing the prohibition on unfair, deceptive, or abusive acts or practices in consumer financial products or services pursuant to section 1031 of the Dodd-Frank Act so as to ensure that actors engaged in unlawful activities do not distort the proper functioning of the competitive process or obtain an unfair advantage over competitors who follow the law.”
