It is Time to Pay Attention to CFPB Developments and Credit Cards

Submitted by Stephen Auburn, Equable Ascent Financial, LLC

Like many of us in the financial services industry, we’re following closely the ongoing government effort to define the Consumer Financial Protection Bureau’s role and authority.

As non-depository institutions playing an integral role in our nation’s credit markets, the debt collection industry is concerned that some of the proposed actions are not needed. In fact, we suggest that some of the proposals requiring more “supervision” may not help consumers as the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 intends, particularly as they relate to the ARM industry.

Firms like ours purchase and recover distressed debt, including consumer credit card debt that has already been charged off by banks or other lending institutions. This represents a vast amount of money for our economy and for the consumers whose future ability to secure credit has been compromised by non-payment.

By removing these assets from the balance sheets of banks and other credit originators – and then helping consumers get back on track – our industry helps restore liquidity to the system, plain and simple. We do not engage in any false or misleading practices in doing so and in fact are already a heavily regulated industry subject to both state and federal requirements including the Fair Debt Collection Practices Act (FDCPA).

While debt buyers have no role in originating credit at the beginning of this process, we are very instrumental in helping recover funds further down the line. When consumers have stopped paying their bills, which happens for a wide variety of reasons, we are called upon to help work with those consumers, attempt to set up a payment plan and in the process, move them one step closer to resolving issues that have already harmed their credit rating. Typically, these debts are settled for substantially less than the original amount the consumer agreed to pay when signing up for the loan in the first place. While this is clearly not the intended outcome for the originating lender which took the risk by granting the credit, it is a compromise that is often the only workable solution.

When we succeed in helping consumers move toward a resolution through such settlements, the benefits ripple throughout the system. The billions of dollars that are infused back into the economy help lubricate the credit-based marketplace without requiring any government assistance or taxpayer money. Lenders are able to continue lending, rather than tie up their capital, and consumers are able to continue borrowing rather than simply defaulting and having no further access to credit.

With Congress back in session and looking to help create jobs and improve the U.S. economic outlook, it is important for our industry to monitor the implementation process for the CFPB and provide context to make certain the outcome is rational. A system that balances consumers’ needs along with those of the institutions like ours which support the free flow of credit is in everyone’s best interest.

Stephen Auburn is the General Counsel at Equable Ascent Financial, LLC (EAF) and oversees government affairs. EAF with its subsidiary company Apex Financial Management, LLC, is a leader in buying and recovering consumer debt and commercial accounts receivable. Headquartered in Buffalo Grove, Illinois, with more than 175 employees, EAF has provided specialized end-to-end services to maximize returns and liquidity since 2000.