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“A Penny Saved is a Penny Earned”
― Benjamin Franklin, born on this day in 1706

New CSBS Paper: Overview of Debt Collection

CSBS has released a new policy paper that describes the U.S. debt collection industry. It includes the history, process and supervision of debt collection in the country. 

The paper, Overview of Debt Collection, is the fifth in a series on reengineering nonbank supervision being developed by CSBS to examine the nonbank financial services industry and how it is supervised. State financial supervisors are the primary regulators of nonbank financial services companies operating in the United States. 

Key Findings:

  • According to the Federal Reserve Board, the amount of US. household debt stood at $15.6 trillion at the end of 2018
  • Student loan debt has increased more than 150% since 2007 to more than $1.6 trillion, replacing credit cards as the highest dollar volume of non-mortgage consumer debt
  • Future trends in debt collection include automation, litigation and consolidation of collectors
  • As of June 2019, more than 1,800 companies held debt collection licenses in 10 states through the National Multistate Licensing System
  • Twelve states and U.S. territories claim jurisdiction over student loan servicing as of December 2019, while another nine states have laws pending 
  • The supervision of debt collectors, debt relief and student loan servicing is an emerging area within the state regulatory system

You can read the latest paper here. Prior papers - Introduction to the Nonbank Industry; An Overview of State Nonbank Supervision; Overview of Nonbank Mortgage; and Overview of Money Services Business - can be found here

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In the Media

Fed nomineesThe New York Times and others covered President Trump’s announced intention to formally nominate Judy Shelton and Christopher Waller to the Federal Reserve Board of Governors.

“Ms. Shelton, a critic of the Fed who has long supported backing the dollar with gold or some other anchor, has spent the intervening time tweeting her support of Mr. Trump’s administration and its policies. Mr. Waller, executive vice president and director of research at the Federal Reserve Bank of St. Louis, has kept out of the spotlight.”

Debt collection regulation – The American Banker reported on plans from New York and California to increase state oversight of debt collectors.

“California and New York have been among the last holdouts in bringing debt collectors into the state regulatory fold. Neither state currently licenses debt collectors. While consumer advocates say the states could fill a regulatory void left by the CFPB, some debt collection advocates say new licensing regimes could in fact help their industry.”

BSA/AML compliance cost – Efforts by community banks to pool resources to help defray AML compliance costs was covered by the American Banker with input from Thomas Fite, director of the Indiana Department of Financial Institutions and CSBS survey data.

“Resource sharing could reduce banks’ BSA-AML compliance costs by 30% to 50% annually, said James Sills, president and CEO of the $267 million-asset M&F Bancorp in Durham, N.C., and chairman of the NCBA’s shared services committee.”

From Tom Fite: “If you had a group of six to eight banks ... you’d probably get into some efficiencies that make sense. We really need some banks to come forward and start seeding the field a little bit."

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