A new era has begun in Washington, D.C., with the inauguration of President Trump, who replaced President Joe Biden. A new president and a new Congress provides a good opportunity to look back on the past four years and assess the legacy and impact of the Biden administration on the credit and collection industry. AccountsRecovery asked a number of industry professionals to share their thoughts on how the Biden administration impacted collections. Here is what they had to say…
Rick Perr, Kaufman Dolowich
The Biden Administration will be remembered for its unprecedented efforts to impose radical regulatory change through fiat. By Executive action from the Office of the President and through rulemaking, advisory opinions, and enforcement actions from the CFPB, the Biden Administration sought to unilaterally impose questionable policy positions onto the economy. The most notable were the failed efforts to eliminate lawfully contracted student loan debt, and the imposition of grossly improper bans on medical debt reporting. Neither of these positions were endorsed by a bipartisan collection of legislators. President Biden was elected into office on the promise of working across the aisle to formulate policies agreeable to a majority of Americans. Instead, he resorted to extreme policies designed to benefit a few at the expense of hard-working families and small business owners. The ARM Industry will not miss the Biden Administration and can expect a much more rational approach from the Trump Administration.
Don Maurice, Maurice Wutscher
I will remember Joe Biden as a non-leader. He had no vision of where we wanted to take the Nation. The directives undertaken by federal agencies, from Justice to the CFPB, never seemed to come from the White House. Instead, it was party leaders and agencies who drove policy. Joe Biden would just fall into line. His weak leadership ultimately led to his ouster by his party. It was an ignominious end, and it will be his legacy.
Mature participants in the ARM and financial services industries fared better than I would have imagined. But innovators continued to face roadblocks, as we saw with the Bureau’s BNPL “interpretive rule.”
Manny Newburger, Barron & Newburger
The last four years have been challenging for the ARM industry. The CFPB’s approach to regulation has had a tone that could be described accurately as vindictive. I have dealt with federal regulators for decades, and the rhetoric of the CFPB for the last four years has been disturbing.
I attribute much of this to the decision to appoint a non-attorney to run what is really a law enforcement agency. I will certainly miss Mr. Chopra the least of all of the CFPB directors to date. His non-attorney background has resulted in a lack of judicious restraint that should be noted by future Presidents. My sincere hope is that future administrations will worry as much about consumers who pay their bills as those who don’t.
Joann Needleman, Clark Hill
From a regulatory perspective, the last four (4) years have been exhausting. From junk fees to UDAAP, while the intention was there, the execution was poor to say the least. For the ARM Industry, the CFPB’s desire to regulate by fiat resulted in poor policy that in the end did more harm to consumers and the middle class. Despite the CFPB’s posture, consumers did not buy it and hence the election was a clear mandate to the contrary.
2020 and most of 2021 were a boon for the ARM industry only because of stimulus payments. What the Administration failed to recognize is that consumers are smart and care about their finances. Instead of devoting resources to educating consumers, the CFPB spent the next three (3) years reinterpreting longstanding Federal financial consumer law, despite a Supreme Court telling them otherwise. The result forced the ARM industry participants to enhance already existing compliance programs, that for the most part were satisfactory to long standing compliance expectations. Make no mistake, the ARM industry and the entire financial services industry need orderly and consistent regulation to operate efficiently and dare I say profitably. The next CFPB director must ensure that all financial services markets work to the benefit of all industry participants and consumers.
Mike Frost, Frost Echols
The first four years of the Biden Administration have posed significant challenges for the Accounts Receivable Management (ARM) industry, primarily due to regulatory changes, economic policies, and consumer protection initiatives. The Consumer Financial Protection Bureau (CFPB) introduced stricter restrictions on debt collection practices, which have increased compliance requirements for ARM companies. These regulations, aimed at protecting consumers, have limited collection efforts and raised operational costs for businesses in the sector. Additionally, the administration’s focus on consumer relief programs, such as debt forgiveness and moratoriums, reduced the volume of collectible debts, which directly impacted industry revenue. One of the most notable changes was the CFPB’s restrictions on medical debt credit reporting, which included rules that made it more difficult for ARM companies to report outstanding medical debts to credit bureaus. This policy shift has created significant obstacles for ARM firms that rely on medical debt recovery, limiting their ability to manage and collect outstanding accounts. Combined with broader economic factors such as rising inflation, interest rates, and consumer financial strain, these changes have contributed to a challenging environment for the ARM industry, restricting growth opportunities and increasing financial pressures.
Jack Brown, Gulf Coast RCM
The Biden administration’s impact on the ARM industry marked a significant turning point, particularly in its relationship with the CFPB. Under the Obama administration, the CFPB was established, with Director Richard Cordray setting its initial direction, focusing on Regulation F changes to the FDCPA. These proposals were later finalized during the Trump administration under Director Kathy Kraninger.
With the appointment of Director Rohit Chopra, the CFPB exercised its unchecked and unaccountable powers, operating with a level of influence comparable to a Cabinet-level agency, often coordinating press releases with the White House. The Biden administration sought to leverage the CFPB to implement substantive legislative changes to the healthcare revenue cycle, while only paying lip service to the Administrative Procedure Act and other regulatory safeguards.
Whether through CFPB actions or student loan forgiveness efforts, the Biden administration frequently bypassed legal precedent and constraints, despite recognizing the slim chances of these initiatives surviving judicial scrutiny. Ultimately, while the administration sought to shape public perception, it struggled to enact lasting policy changes.
Michael Lamm, Corporate Advisory Solutions
The Biden Administration’s impact on the ARM industry has been significant, particularly with its focus on consumer protection around medical debt and student loans.
One of the most notable changes was the introduction of regulations by the CFPB that barred medical debts from being included in credit reports. This policy which has been seen as a positive step for consumers has also faced significant pushback from the ARM industry, arguing that these regulations could impact the consumers intentions to pay back a legitimate debt.
During the Biden Administration, a total of $188.8 billion in student loan debt was forgiven for 5.3 million borrowers. After paying my student loans back completely, it was hard to watch this initiative take place over the past 4 years. I personally felt that it was a program designed to obtain votes.
As for what I’ll miss or not miss, it’s hard to say. The administration’s focus on consumer protection has been beneficial for many individuals, but the challenges and uncertainties brought about by these regulations have been a source of concern for the debt collection industry. Overall, the Biden Administration’s impact on the debt collection industry has been significant and my hope is that during the next 4 years we can enter a period of deregulation and more fair and balanced rules for the ARM industry.
David Williams, Williams & Fudge
The regulatory environment growth under President Biden, while maybe not unprecedented, was extremely active and a big challenge for the ARM industry. Along with actual regulation, we dealt with “tweets” and other communication that confused consumers and ARM companies alike. The excessive regulation and frankly unconstitutional behavior encouraged the industry to rally together and fight. ACA and other trade groups began “fighting everything” in courts and became much more aggressive in pushing back. Coalitions came together to send a consistent message in Washington and we are beginning to see the fruits of that labor.
The proverbial pendulum swung about as far as it could in the past four years. The positive of that is the needle moving that far gets the attention of industry and the public alike. We have the opportunity to bring common sense back to the ARM industry and in other areas of society. It is imperative that we continue working with allies in DC and throughout our country to fight for what is right for consumers and business. Let’s work together to maximize this opportunity!
Leslie Bender, Eversheds Sutherland
The Biden administration provided substantial economic relief during and immediately following the COVID-19 pandemic that affected the accounts receivable industry, including direct household payments, expanded unemployment benefits, and support for small businesses. Many consumers used their stimulus funds to pay their bills, thus having a positive impact on the ARM industry. The small business lending initiatives were also a lifeline for small businesses in the ARM industry. Meanwhile, under the Biden Administration the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) worked to modernize protections for consumers in eCommerce, online banking and elsewhere in the digital marketplace. Although criticized for promoting rules to ban the credit reporting of medical debt, the Biden Administration was focused on helping Americans navigate the challenges posed by and coming out of the pandemic. Regardless of whether the numerous rules and Executive Orders aimed at protecting consumers themselves survive the new Administration’s priorities, it is important to remember that the policies, research, and approach is now being taken up by state lawmakers and regulators and is likely to play out in a wide variety of ways in this and future state law making sessions.
