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CBA Comment Letter re HR 2547 Comprehensive Debt Collection Improvement Act
Dear Speaker Pelosi and Minority Leader McCarthy,
On behalf of the Consumer Bankers Association (CBA), I am writing to urge you to oppose the Comprehensive Debt Collection Improvement Act (H.R. 2547) being considered this week by the House of Representatives.
CBA is entering our 102nd year as the voice of retail banking in Washington, D.C. and strongly advocates for polices that allow banks to continue offering well-regulated services to families and small businesses across the country. We are the only member-driven trade association focused exclusively on retail banking. Whether buying a home, financing an education, or launching a small business, our members partner with consumers to help them achieve their unique dreams. Our corporate members include the nation’s largest retail banks serving every part of the country, 85% of which hold over $10 billion in assets. CBA members are also the private sector lenders that make the majority of private education loans to help families finance a postsecondary education. At this time of extreme uncertainty, our banks remain in strong financial condition and continue to step up to serve the needs of consumers and small businesses.
The Comprehensive Debt Collection Improvement Act will have unintended or negative impacts on individuals and the banking services they pursue, including student loans. We have particular concern with the following provisions:
Title III—Private Loan Disability Discharge Act
The Private Loan Disability Discharge Act is unnecessary and would impose unhelpful bureaucracy into a situation where banks are already doing what the legislation would mandate. Currently, banks are discharging private student loans when the borrower becomes totally and permanently disabled. Adding a federal mandate with various extra steps and requirements will only hinder a well-functioning process and not provide any help to private student loan borrowers.
Title V—Ending Debt Collection Harassment Act
The Fair Debt Collection Practices Act (FDCPA) is not intended to apply to banks, though many voluntarily comply through normal business practices. The CFPB confirmed this in rulemaking last year.
Nonetheless we note that while the FDCPA does not apply directly to banks, it was modified last year to allow text and email communications between third-party debt collectors and customers under certain conditions. This change occurred in part because customers increasingly want to receive communications over text or email instead of phone calls or U.S. mail. The modifications did not impose a strict limit on those communications because it is hard to design a one-size-fits-all limit: what could be discussed in a 3-minute phone call could take 5, 10, or more text messages. The CFPB already has authority to punish debt collectors who abuse this privilege, and they have not hesitated to do so in the past. Provisions in this legislation requiring specific consent for texts and emails, and their frequency, will create confusing opt-in systems that will overall make it more difficult to reach customers over their often-preferred mode of communication.
In addition to these titles within the base bill we respectfully encourage members to oppose the following amendments that may be offered during consideration on the floor:
Amendment #1, Offered by Ms. Craig of Minnesota
Like with the provisions of Article III discussed above, it is already our member banks’ practice to release cosigners of private student loan agreements in the event of the death (or permanent disability) of the borrower.
Amendment #4, Offered by Ms. Bonamici of Oregon
This legislation, introduced in the 117th Congress as H.R. 1671, has never been the subject of a Congressional hearing or Committee mark-up. We are unaware of any studies or basis to support its new mandates. It is generally the role of state courts to set various evidentiary and pleading requirements for debt collections to proceed in their jurisdiction(s). These somewhat vague and inflexible conditions would supersede state and local authorities’ common practices and complicate proceedings already underway as judges and lawyers will have to work to define and abide by these new requirements.
Amendment #13, Offered by Ms. Omar of Minnesota
A study on the experiences of student loan borrowers is a worthwhile proposal that is better suited to the Government Accountability Office (GAO), which has ample expertise on conducting studies like this and would incorporate the CFPB’s views in their analysis. The GAO is further detached from the issue than the CFPB, which is directly involved in the borrowers’ experience they are tasked with evaluating here. The GAO is better equipped to conduct a holistic and unbiased study of the full range of issues affecting student borrowers.
Amendment #16, Offered by Ms. Adams of North Carolina
We remain concerned with any mandate to suppress negative consumer credit data, which dramatically complicates the underwriting process, raises costs for consumers and undermines the overall safety and soundness of the banking system. As the pandemic began Congress considered legislation that would ensure that people’s credit reports accurately reflected their current financial circumstances, while also ensuring that people are reported fairly if they have an accommodation from a lender. The result of this consideration was Section 4021 of the CARES Act, which required that lenders who have given consumers help on an account be reported to the credit bureaus as “current.” This language is working. We encourage you to avoid new policies requiring blanket suppression credit report information.
Thank you for your consideration and continued leadership. We look forward to working with you in any capacity we can.
President and CEO