The Bureau of Consumer Financial Protection (BCFP, or CFPB) has issued its spring rulemaking update. Once again, debt collection remains on the docket, but is pushed down the road. A process that began with an Advanced Notice of Proposed Rulemaking (ANPR) in 2013, is now scheduled to produce a Notice of Proposed Rulemaking (NPR) in March 2019. And that's still not the end of it.
As the latest notice reads,
"The Bureau has been engaged in research and pre-rulemaking activities regarding debt-collection practices. Debt collection continues to be a top source of complaints to the Bureau. The Bureau has also received encouragement from industry to engage in rulemaking to resolve conflicts in case law and address issues of concern under the Fair Debt Collection Practices Act (FDCPA), such as the application of the FDCPA to modern communication technologies under the 40-year-old statute. The Bureau released an outline of proposals under consideration in July 2016, concerning practices by companies that are debt collectors under the FDCPA, in advance of convening a panel in August 2016, under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. The Bureau is preparing a proposed rule focused on FDCPA collectors that may address such issues as communication practices and consumer disclosures."
This lengthy timeline is a reflection of many factors. One, under former CFPB Director Cordray, all rules passed through his office. This created the true definition of a bottleneck, and -- although he never missed an opportunity to say how many debt collection complaints his agency received -- other matters were higher priorities. Two, I got the impression that debt collection issues turned out to be a lot more complex than the team originally expected. This required a lot of learning, and ultimately, a disentangling of creditor rules from third party rules. Three, the departure of former Director Cordray and the arrival of the current Acting Director Mick Mulvaney have changed the Bureau's approach to... well, everything.
The fact that a NPR has now been officially pushed from 2018 to 2019 may reflect the fact that things are again being revisited. This could be a positive development for the ARM industry, which has been pushing hard for guidelines around the use of modern communication channels, and clarity related to disclosures. Sources had told insideARM last fall that the Bureau was very close to releasing an NPR when Director Cordray suddenly resigned in November. That NPR was likely not going to fully address industry concerns. When Acting Director Mulvaney took over, everything was on the table for review, and debt collection rulemaking again hit at least a side burner, if not one in the back.
One way or the other, it now seems likely that debt collection rulemaking will see a third Director before moving to its next official stage -- release of a Notice of Proposed Rulemaking. Reports have indicated that President Trump is likely to wait as long as possible to nominate a permanent Director in order to allow Mulvaney to remain in place. This means a nomination on or just before June 22, the last day the law would allow Mulvaney to stay in his temporary job. This date can be extended if Congress is considering a nomination.
According to numerous reports, President Trump is expected to name J. Mark McWatters, the current chairman of the National Credit Union Administration. The Washington Post reported on Friday that McWatters runs NCUA, which is based in Washington, D.C., from his home in Dallas, Texas, and that he is only present in the office a few days per month.
Many already complain that Acting Director Mulvaney is only on the job at the Bureau three days per week, because he has another full time job -- as Director of the White House Office of Management and Budget. It's unclear whether a full-time-but-remote tradeoff would be better. What's also unclear is whether McWatters -- or whoever ultimately becomes the permanent director -- will keep Mulvaney's new operating philosophy and infrastructure in place. If not, I suspect that could push off a debt collection NPR even further.