What Could Trump’s Presidency Mean for the Debt Collection Industry?

Donald Trump pulled off a surprising win yesterday. And defying some expectations, both Houses of Congress will remain in Republican control. While many Republicans in Congress many not like Trump very much, they would likely agree with his opinion that the financial services industry is grossly over-regulated.

There’s not a whole lot of policy detail on http://www.donaldjtrump.com. And, it seems that every single link that is supposed to lead to more information (i.e. a press release or text of one of his speeches), is now re-directed to the home page of his website. Perhaps as a matter of policy, all policies are now under review. But, here is what there is on key topics related to the ARM industry:

Trump on Regulations

From his website:

• Ask all Department heads to submit a list of every wasteful and unnecessary regulation which kills jobs, and which does not improve public safety, and eliminate them.
• Reform the entire regulatory code to ensure that we keep jobs and wealth in America. 
• End the radical regulations that force jobs out of our communities and inner cities. We will stop punishing Americans for working and doing business in the United States.
• Issue a temporary moratorium on new agency regulations that are not compelled by Congress or public safety in order to give our American companies the certainty they need to reinvest in our community, get cash off of the sidelines, start hiring again, and expanding businesses. We will no longer regulate our companies and our jobs out of existence. (emphasis added)
• Cancel immediately all illegal and overreaching executive orders.
• Eliminate our most intrusive regulations, like the Waters of The U.S. Rule. We will also scrap the EPA’s so-called Clean Power Plan which the government estimates will cost $7.2 billion a year.
• Decrease the size of our already bloated government after a thorough agency review.

He cites an April 2016 study by the Mercatus Center at George Mason University that the U.S. economy today is twenty-five percent smaller than it would have been without the surge of regulations since 1980.

Trump on Business Taxes

From his website:

The Trump Plan will lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax. This rate is available to all businesses, both small and large, that want to retain the profits within the business.

It will provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent. It eliminates most corporate tax expenditures except for the Research and Development credit.

The annual cap for the business tax credit for on-site childcare authorized by Sec. 205 of the Economic Growth and Tax Relief Reconciliation Act of 2001 would be increased to $500,000 per year (up from $150,000) and recapture period would be reduced to 5 years (down from 10 years).

Businesses that pay a portion of an employee’s childcare expenses can exclude those contributions from income. Employees who are recipients of direct employer subsidies would not be able to exclude those costs from the individual income tax and the costs of direct subsidies to employees could not be used as a cost eligible for the credit.

Trump on the Consumer Financial Protection Bureau

In May 2016 Trump said that “Dodd-Frank has made it impossible for bankers to function,” and that he would dismantle most of the reforms it put in place. It's not quite clear how a total dismantle would happen, as Congress would have to publicly support the elimination a consumer protection initiative. This seems unlikely, even for Republicans who would support the move.

The early October decision in PHH Corp. v. Consumer Financial Protection Bureau by the U.S. Court of Appeals, D.C. Circuit, gave President-elect Trump an assist; the decision held that the structure of the CFPB is unconstitutional, because its power is massive in scope, concentrated in a single person, and unaccountable to the President (allowing him to remove the CFPB’s Director only “for-cause”). To correct this, the court deleted “for-cause” from the Dodd-Frank language. Unless the PHH decision is overturned or stayed prior to Trump taking office, Republicans would likely push for Director Cordray to be removed fairly quickly.

It will be interesting to see what Cordray attempts to accomplish between now and January 21, 2017. One thought is that he might try to focus on finalizing those rules that have already been out for public comment – payday and arbitration.

With the completion of the debt collection SBREFA hearing in August, debt collection rulemaking had finally entered the next phase. It now seems likely that the completion of this rulemaking will be overseen by a new regime, which may well be a positive outcome for the ARM industry.

Another potential positive outcome for industry would be a Trump appointment of a new Federal Communications Commission Chairman, which could change the agency’s approach to interpretation of the Telephone Consumer Protection Act (TCPA).

For now, the uncertainty continues. But as it relates to the ARM industry, there is new reason to be optimistic that a more business-friendly approach is possible.

For more insight, listen to a podcast recorded this morning by Moss & Barnett’s John Rossman and Mike Poncin.