Major Banks Make Recommendations to Treasury That Could Impact Debt Collectors

Yesterday the Financial Services Roundtable (FSR) submitted a letter to Treasury suggesting its recommendations for how to grow the economy and create jobs. FSR CEO Tim Pawlenty (former Governor of Minnesota and Republican presidential candidate) said, "Improving the financial regulatory system, while protecting consumers, will grow the economy and expand opportunity for more Americans."

The recommendations include both executive and legislative actions, and support three goals:

1. Enhancing policy coordination among federal financial regulatory agencies
2. Focusing supervisory and enforcement policies and practices on material risks to promote financial stability and economic growth
3. Modernizing financial laws and regulations 

The recommendations include:

• Coordinate Regulatory Policies
• Set Prudential Standards Based on Risk Not Arbitrary Asset Thresholds
• Harmonize Cybersecurity Compliance Standards Across All Regulations
• Discontinue FSOC Nonbank Designations
• Promote Comprehensive Housing Finance Reform and Improvements to Mortgage Regulations 
• Improve Living Wills, Stress Test, CCAR and other Prudential Requirements
• Fix CFPB, Protect Consumers, and Enhance the Market for Consumer Financial Services
• Protect and Enhance Retirement Savings
• Align Supervision and Enforcement Practices with Financial Stability and Economic Growth
• Repeal Government Price Controls on Debit Cards
• Promote Strong Insurance Markets
• Revise Volker and Promote Strong and Liquid Capital Markets

More detail on each of the above can be found by reading the letter and its associated 100+ page recommendation report, here.

insideARM Perspective

The majority of these recommendations do not directly relate to the ARM industry, however a few may have an impact, including:

Harmonize Cybersecurity Compliance Standards Across All Regulations
The Administration should establish a more rational, integrated cybersecurity framework that would advance the mutual interests of government and industry in protecting and defending cyber space. FSR urges all federal and state regulators to harmonize their cybersecurity compliance approaches to determine rigorous and appropriate levels of preventative measures an institution should establish and maintain, while still maintaining flexibility for each agency’s unique statutory authority and areas of focus and oversight.

Cybersecurity has become a pain point for collection agencies and other vendors to major creditors, as they struggle to respond to audits from many directions, with disparate requirements -- but the same goals.

Fix CFPB, Protect Consumers, and Enhance the Market for Consumer Financial Services

Treasury should support reforms to the Consumer Financial Protection Bureau (CFPB) to align the mission of that agency with the Core Principles. Treasury should support improvements in the governance structure of the CFPB, for example, by creating a commission to ensure greater accountability in the management of the agency.

A change in the governance structure of the CFPB would likely affect the influence dynamic as the bureau continues its process of rulemaking for the debt collection industry. It is unclear exactly what that would mean, but given the significant influence that banks have, insideARM would guess that this would have an effect on the outcome of first party rulemaking.