What the Election Could Mean for the ARM Industry

President Barack Obama won re-election Tuesday by a fairly narrow margin in the popular vote count, but by broad margins in the Electoral College. But other races may prove to impact the debt collection and buying industry more than the big one at the top of the ticket.

On a national level, the 2012 election was status quo. The Presidency, Senate, and House of Representatives all remained under the control of the incumbent party.

The biggest impact a status quo result will have on the ARM industry is that the Consumer Financial Protection Bureau’s (CFPB) supervision of larger market participants will go ahead as planned. Many in the financial services industry openly wondered if a Mitt Romney win, combined with a possible Republican takeover of the Senate, would mean a dismantling of the new regulatory body. But Tuesday’s results make it fairly safe to say that the CFPB will continue to operate as-is.

On the healthcare front, the Affordable Care Act — commonly referred to as “Obamacare” — will reach its first full implementation target date of January 2014. For more on the specifics of what full implementation will mean, read “Obamacare Wins Second Term – What’s Ahead?” on our sister site, insidePatientFinance.com.

With so much remaining the same, what change can be expected, if any? Tax policy will almost certainly change. And significantly, at that.

There is still a lot of arguing and work to be done, but President Obama ran openly on a platform that included tax increases on the highest incomes in the country. Even if Romney had won, his plan was to reform the tax code by way of limiting deductions, which probably would have led to high income earners actually paying more as their tax rates remained the same or were lowered. A new tax policy is almost sure to hit owners of businesses with certain types of incorporation, ARM companies included.

Even though Congressional elections netted out at status quo, there was a significant result for the collection industry. Elizabeth Warren unseated Sen. Scott Brown in Massachusetts in a high-profile race. Warren was originally tapped to head up the CFPB. Even though Richard Cordray was eventually appointed director of the agency, Warren was instrumental in its formation and early direction.

As a Senator, Warren will be in a position to influence legislation in a much more profound way – she will actually be writing it. In addressing supporters Tuesday night after her victory was announced, Warren told volunteers, “You did this for every family that has been squeezed and hammered,” keeping her theme of consumer protection.

It is premature, of course, to assume that Warren will target the ARM industry with legislation. But the possibility remains for the next six years. With a legislative reform of the Fair Debt Collection Practices Act (FDCPA) looming, a fierce consumer advocate like Warren is sure to influence any final bill.