Debt Purchasing

1H09 M&A Deal Volume in the ARM Industry is Up but Deal Value is Down Substantially from Last Year

2009-07-10T07:34:06-07:00

Rockville, MD – It remains an active market for mergers and acquisitions in the debt collection / accounts receivable management industry overall, however larger transactions have been hampered by the credit crunch and economic recession, according to Kaulkin Ginsberg, the industry’s leading M&A and strategic advisory firm. In the first half of 2009, there were 21 announced transactions with a total deal value of $103 million – compared with 15 deals valued at $1.43 billion at this point last year.

The major discrepancy in deal value is due to three large transactions that closed in the first half of 2008; industry buyer NCO Group acquired Outsourcing Solutions, Inc. for US$325 million; Investor AB purchased 50 percent of Lindorff Group for US$558 million; and Exponent Private Equity LLP acquired Lowell Holdings Limited for an estimated US$394 million.

So far, 2009 deal activity has been almost completely driven by larger ARM companies acquiring smaller ones, whereas 2008 deal activity in the first half of the year also included first-time strategic and financial buyers making initial platform acquisitions. Of the 21 transactions completed in 2009, only two involved a financial or strategic buyer – the rest were industry buyers, defined as larger ARM companies, former owners, or current/former executives.

“The numbers don’t reflect the level of interest in the market,” said Mark Russell, Director at Kaulkin Ginsberg. “We are seeing a consistent level of seller and buyer interest, but many of the deals are dependent on the buyer’s ability to obtain debt financing – which has been difficult in the current market – and on the seller’s willingness to accept some form of deal structure in order to bridge the gap between the seller and buyer’s value expectations.”

Liquidation rates have declined in all market segments over the past year, impacting the financial performance of some ARM companies and thus affecting deal value and/or terms. In addition, most small transactions are not publicized and involve companies generating less than $1 million in annual revenues. Russell added that ARM companies that are in distress still present good acquisition opportunities for larger ARM companies, and that is driving interest from industry buyers seeking to obtain new clients or personnel, gain a time zone, or to expand into a new vertical market.

Looking ahead to the rest of 2009, Russell anticipates more of the same. “Most deals will involve industry buyers, as first-time strategic and financial buyers are just going to be even more selective and take longer to close deals.” He noted that there might be a slight uptick in strategic and financial deals closing in Q409, because sellers already in the market will be motivated to close before the end of the year to avoid the potential increase in capital gains tax.

About Kaulkin Ginsberg
As the leading strategic advisor for the accounts receivable management industry (ARM), Kaulkin Ginsberg has completed over 125 M&A transactions valued at over $3 billion. For ARM service providers, services focus on analysis, growth, and exit strategies. For credit grantors, the focus is on optimizing receivables management strategies. Kaulkin Ginsberg's media division, publisher of insideARM.com, is the worldwide leader in providing timely news and insight on the recovery of debt in all industries. Read more about Kaulkin Ginsberg at www.kaulkin.com.

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FTC Issues Advisory Opinion to ACA International Regarding FDCPA - FCRA Conflict

2009-07-02T06:00:14-07:00

WASHINGTON, D.C. - The Federal Trade Commission (FTC), for only the fourth time in its history, recently released an important advisory opinion to ACA International clarifying a conflict between the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA).

“We’re delighted to have received this rare advisory opinion from the FTC clarifying a critical matter to ACA’s membership,” said Valerie Hayes, ACA International’s Vice President of Legal, Compliance and Government Affairs. “It's a testament to the dedication and ongoing advocacy efforts of our members to ensure that key policymakers, regulators and legislators are hearing - and responding - to our concerns."

The complete advisory opinion from the FTC is available on ACA’s Web site.

ACA International is also hosting a teleseminar on July 9, 2009 to discuss how the new direct dispute and accuracy and integrity rules affect the credit and collection industry.

The FTC states in its opinion a debt collector does not violate § 805(c) of the FDCPA, which prohibits a debt collector from communicating with a consumer after receiving a written request to cease communications except under certain circumstances, if the consumer directly disputes information in his or her consumer report after sending the cease communication request, and the debt collector informs the consumer of the results of its investigation.

In December 2007, federal agencies with authority to promulgate rules and regulations implementing the FCRA issued a notice of proposed rulemaking regarding the accuracy and integrity of information furnished to consumer reporting agencies (CRAs) and the circumstances under which a data furnisher is required to investigate a direct dispute from a consumer concerning the accuracy of information contained in his or her consumer report.

ACA submitted comments in February 2008 in response to the proposed rule, and among other things, specifically requested the rule make two clarifications. First, the rule should clarify the act of responding to a consumer dispute is not an attempt to collect a debt under the FDCPA. Second, the rule should clarify a consumer who requests a debt collector cease communication under § 805(c) of the FDCPA, but subsequently sends the collector notice disputing information in his or her consumer report, has revoked his or her cease communication request for purpose of allowing the debt collector to respond to the consumer’s notice of dispute.

With the imminent release by the agencies of the final rule concerning the above-described obligations of data furnishers under the FCRA, the FTC released its advisory opinion addressing ACA’s concerns over the statutory conflict between the FDCPA and FCRA.

The FTC states in its opinion that if a consumer directly disputes information in his or her consumer report with a debt collector after sending a written cease communication request to the collector, the debt collector does not violate § 805(c) of the FDCPA if the collector’s communication to the consumer is solely to inform the consumer of the result of the debt collector’s investigation or to inform the consumer his or her dispute is frivolous or irrelevant in compliance with the rules under the FCRA.

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ARM Firms to Get New Regulator Under Treasury Proposal Issued this Week

2009-07-01T07:52:00-07:00

Calls to transfer the administration of the Fair Debt Collections Practices Act (FDCPA) to another federal regulator intensified this week when the Obama administration, through the U.S. Treasury Department, on Tuesday unveiled its plan to create an independent consumer protection agency.

The Consumer Financial Protection Agency Act of 2009 would give the new agency the authority to oversee all consumer protection laws and write new rules to protect consumers against deceptive and unfair practices. The act specifically defines the FDCPA as an existing law that would fall under the purview of the new agency. Furthermore, it proposes to amend the FDCPA to replace current regulator the Federal Trade Commission with the new agency in most language.

The proposal confirms speculation last week that the debt collection law would fall under the authority of the new agency ("Proposed Consumer Financial Protection Agency May Oversee FDCPA Enforcement," June 25).

"This agency will have only one mission – to protect consumers – and have the authority and accountability to make sure that consumer-protection regulations are written fairly and enforced vigorous,” Treasury Secretary Timothy Geithner said when he unveiled the legislation.

Sen. Christopher Dodd, chairman of the Senate Committee on Banking, Housing, and Urban Affairs, immediately praised the legislation saying, “the Administration is addressing the colossal failures that led to the economic crisis with a bold and aggressive plan. Creating an independent agency whose sole focus is protecting consumers - be it credit card holders, anyone with a bank account, or families with mortgages or student loans – is really the key to creating the foundations for a stronger economy.”

The Federal Trade Commission (FTC), however, which currently regulates FDCPA, doesn’t appear ready to relinquish oversight of the debt collection law. In a report last February, the commission requested that Congress to give it the authority to make and implement FDCPA rules.



Kathleen Day, spokeswoman for the Center for Responsible Lending, a non-partisan, non-profit research and policy group, said she doesn’t expect the FTC or any agency overseeing consumer protection laws to abdicate their authority easily.

“A lot of agencies will fight,” to retain their authority, she said. “That’s what happens when changes comes in Washington.”

But Day said she believes there’s a lot of momentum on Capitol Hill to make the agency a reality.

“This (economic bailout) is a big crisis and taxpayers are really mad. Regulators abdicated their role in protecting consumers to the banks. You can’t have safety and soundness if you abuse the consumer,” she said.

Legislation to create an independent body to look out for consumer interest was first introduced last March by Democrat Rep. William Delahunt of Massachusetts. Last week Delahunt reiterated his support along with others during a hearing on enhancing financial products regulation before the House Committee on Financial Services. Likewise, Committee Chairman Rep. Barney Frank said he wants the committee to pass legislation to create the agency by the end of July and hopes that a bill addressing the panel and other parts of the President’s financial regulatory plan will clear Congress this fall.

^pullquoteToo much regulation in an already heavily regulated industry will result in lost jobs and the states will lose a tax base. -- Stacey Schacter, DBA International Board memberpullquote^

Under the Treasury Department’s proposal, in addition to overseeing the FDCPA, the Consumer Financial Protection Agency would regulate the Alternative Mortgage Transaction Parity Act; the Community Reinvestment Act; the Consumer Leasing Act; the Electronic Funds Transfer Act; the Equal Credit Opportunity Act; the Fair Credit Billing Act; the Fair Credit Reporting Act; the Gramm-Leach-Bliley Act, and several other consumer protection laws.

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Bank Independent to Acquire Regions Banks ARM and Billing Unit

2009-07-01T07:47:20-07:00

BIRMINGHAM, Ala. – Regions Financial Corporation (NYSE: RF) and Bank Independent, a privately held community bank headquartered in Sheffield, Ala., jointly announced today that Regions Bank and Bank Independent have signed a definitive agreement for Bank Independent to acquire Regions Interstate Billing Service, Inc., a wholly owned subsidiary of Regions Bank.

Regions Interstate Billing Service, Inc. is a leading provider of accounts receivable management services to approximately 360 client locations in 31 states. With headquarters in Decatur, Ala., the company offers accounts receivable purchasing and billing services to clients that serve commercial customers. After the acquisition is complete, the company will be known as Interstate Billing Service, Inc. and will be a wholly owned subsidiary of Bank Independent. The company will remain headquartered in Decatur, Ala.

Macke B. Mauldin, president of Bank Independent, said, “Interstate Billing Service will be an excellent addition to our business model and will enhance our commitment to fulfill the credit needs of small businesses. This acquisition will allow Bank Independent to provide additional services to our businesses in North Alabama and also extend our reach to new customers. We look forward to welcoming the 84 professional billing employees to our Bank Independent Team.”

Tim Laney, senior executive vice president and head of Regions’ Business Services Group, said, “We are pleased to reach a definitive agreement with Bank Independent. While Regions Interstate Billing Service has been a good business for Regions, this sale is in line with our strategic plan to focus on our core banking businesses.”

The transaction is expected to close in the third quarter of 2009, subject to regulatory approval. Terms of the agreement are not disclosed. Morgan Keegan & Company, Inc. represented Regions Bank as financial advisor on the sale while Austin Associates, LLC represented Bank Independent.

About Regions Financial Corporation
Regions Financial Corporation, with $142 billion in assets, is a member of the S&P 100 Index and one of the nation’s largest full-service providers of consumer and commercial banking, trust, securities brokerage, mortgage and insurance products and services. Regions serves customers in 16 states across the South, Midwest and Texas, and through its subsidiary, Regions Bank, operates 1,900 banking offices and approximately 2,300 ATMs. Its investment and securities brokerage trust and asset management division, Morgan Keegan & Company, Inc., provides services from over 300 offices. Additional information about Regions and its full line of products and services can be found at www.regions.com.

About Bank Independent
Bank Independent, founded in 1947, is a locally owned community bank headquartered in Sheffield, Ala. With assets approaching $1 billion, Bank Independent serves its customers through 29 banking offices in 17 communities in six counties of North Alabama and is committed to providing its customers with the most convenient and innovative financial services available. These services include personal and business banking products as well as internet banking. Additional information about Bank Independent and its full line of products and services can be found at www.bibank.com

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Creative Financing for Debt Buyers

2009-07-01T07:47:19-07:00

I just returned from the DBA Executive Retreat, where I participated in a panel discussion regarding creative ways in which debt purchasing companies can access debt and equity financing to purchase portfolios. Here are some common themes that were discussed regarding the best types of financing and how to go about accessing it:

Financing options are not the same for everyone – Small and/or first time debt buyers do not have the same accessibility to debt and equity financing as more established/larger debt buyers. However with the right business plan and purchasing opportunities, money is still available. Small and first time debt buyers should focus on family, friends and other high net worth individuals within their business networks for equity financing, and also leverage their local and regional banking relationships for debt financing. However, when raising equity capital from individuals, debt buyers will want to make sure that they are doing so in compliance with securities regulations.

In addition, certain small and large hedge funds may also be willing to finance a majority of the purchase price (up to 80-90%) if the debt buyer can finance the rest. Larger, more established debt buyers may have existing bank lines and equity relationships that they can tap into for future portfolio acquisitions or leverage their historical purchasing performance to secure new debt and equity financiers. Senior debt lines are much harder to come by in today’s market even for the largest and most successful debt buyers, but mezzanine lenders, hedge funds and special situation funds could be viable alternatives (albeit more expensive options).

Most financiers will want to crawl before they walk – For new financing relationships, most debt and equity providers will want to test the relationship first with a few purchases before offering a line of credit or equity for the business. Debt buyers will need to get the financiers comfortable not only with the purchasing methodology and sourcing capabilities (strong preference made toward direct access) but also their analytics and underwriting procedures, all of which will need to be maintained in written form for the financiers to review. Once financiers become comfortable, the debt buyers will likely not have to provide them with as much due diligence information.

Debt buyers need to create a business plan – Particularly when seeking equity capital, debt buyers will be required to create a business plan that details the company’s history and performance to date, the background and expertise of the management team members, the core competencies and key investment considerations of the company, and management’s expectations of the company’s future financial performance in the form of a three to five year financial projection with detailed assumptions. The business plan should show investors how the debt buyers are leveraging their previous experience to build a growing and financially rewarding platform going forward.

Some non-traditional financing alternatives – Larger debt buyers, international lenders and other accounts receivable management companies (e.g. collection agencies, debt collection law firms, etc.) were also discussed as viable sources of financing particularly for portfolios that they have experience purchasing/collecting. As prices have declined over the past 18 months more of these types of players have expressed interest in purchasing debt in the U.S. International lenders are particularly attractive particularly those in Europe due to the exchange rate benefits. However, they are difficult to access and require U.S. debt buyers to travel to see them.

Overall, the lending and equity markets are still accessible but require debt buyers to work harder to obtain financing than three years ago. However, debt buyers with proven management teams, defensible business plans and attractive purchasing opportunities should be able to source the financing they need in today’s market.

Mark Russell manages M&A transactions for Kaulkin Ginsberg. To confidentially discuss your business interests, please contact Mark Russell at 240-499-3804, or by email.

Alabama Collection Agency Shows Appreciation for Soldiers' Sacrifice

2009-06-26T07:45:30-07:00

The Mobile, Ala. office of accounts receivable management firm West Asset Management (WAM) each year defies the negative publicity collection agencies typically receive with a patriotic deed that gives back to its country, clients and employees.

The program, started and coordinated by Talent Agent Mary Womack and HR Generalist Maria Clements, pays tribute to a soldier from the area who gave the greatest gift anyone could give their country and fellow citizens -- their life.

“We care about the loved ones that were lost. We do this to show our appreciation,” Womack told insideARM. “I don’t personally know our honorees, but I feel for the families of the honorees. When you feel so passionately about someone else’s pain or loss, you have a tendency to want to do something. And this is a result of being passionate about so many people that we’ve lost in Iraq and Afghanistan, male or female.”

A WAM committee selects a fallen soldier from the area from a list of soldiers killed in action. That soldier’s family is invited to a ceremony held on the company’s grounds.

WAM, the ARM division of teleservices provider West Corp., gives the soldier’s family a plaque of appreciation for the sacrifice made by their kin, and a photo of the soldier is placed on a memorial wall in the office erected to pay tribute to family members of employees that have fought in war.

The program has commemorated three fallen soldiers since its start in 2007: PVT 1st Class Howard Johnson, II (2007), Specialist Steven Ray Givens (2008) and SSgt Harrison “Duck” Brown, honored the Friday before the most recent Memorial Day holiday.

In addition, the program raises money for calling cards to be dispersed to troops at war, and donates a generous sum to LaFlore High School’s JR.ROTC program. The WAM staff raises the funds through bake sales and other special initiatives.

Womack said, “These (JR ROTC students) are our soldiers of the future, and we wanted to show support to them as well.” This year the program raised $1728. Of that total, $500 was donated to the JR ROTC program.

The rest of the money went to the 217th MP Unit of the Alabama National Guard, based in Mobile. The unit will be shipping out to Iraq next month.

In previous years, WAM has given its donation to Veteran’s of Foreign War: Operation Uplink, a group that connects active duty troops and hospitalized veterans with their families.

Womack, a self-proclaimed “military brat” noted, “This program is something good for the community – it shows our company is not just here to employee people."

Womack said that the program affords everyone in the company with a chance to become involved in a worthy cause. In the last two years of the program, two employees have written poems to the families of commemorated soldiers. Employees also participated in the program by decorating their workstations in red, white and blue.

“Most businesses have a responsibility to do something in the community. You’re here in the community as an employer, but you have to give back something other than just a paycheck to the employees,” Womack said.. “I’ve never seen so much enthusiasm within our group as we have with this Memorial Day program. They’re so excited and so happy to do something. We’re just trying to do our little bit here in Mobile.”

Unfortunately, good deeds are also met with ugly realities. As Womack searched through the names of fallen soldiers she felt a thrust of reality’s double-edged sword with the number of female war casualties recently.

“I was actually tremendously surprised at the number of females that we’ve lost in the war,” she said. “It just never dawned on me. Here is a mother, a sister, a daughter that was killed over in the war. Not to be funny, but I watch a lot of television and you only see the males, you don’t see the females. It just caught me off guard to see the names and the faces and the pictures of so many females; it was surprising.”

This year, Womack thought it would be nice to present a certificate or other acknowledgement from President Obama to the selected family. She invited Obama to share in this event by sending a letter or certificate of appreciation. Although her requests were not answered, she plans to make the same request next year to First Lady Michelle Obama.

“This is a tradition we enjoy, and we hope it gets bigger a better each year,” Director of Operations Steve McDonald said.

WKRG.com

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WAM Director Pens Book Praising the Efforts of Soldiers in WWII

2009-06-26T07:31:03-07:00

The employees of West Asset Management (WAM) have recently shown an inclination for supporting members of the U.S. military, as workers from two Southern branches honor and teach about soldiers’ gifts of freedom.

Tim Drake, director of Business Markets Operations at Marietta, Ga.-based WAM, has written an historical account of the Second World War that includes his own personal touch as he delves into the experiences of his grandfathers -- Maurice Elmer Drake and Archibald Vance Houston -- in WWII.

Drake’s book, Inherited Freedom, attempts to teach the meaning of war, the privilege of freedom and the obligation that all non-military Americans have in preserving that freedom.

“It’s really a patriotic message,” Drake told insideARM. “I’m just really trying to get the word out to generations born since WWII. There are generations born that really don’t have a lot of knowledge about what happened during that time frame.”

Similar to the Memorial Day event at WAM’s Mobile, Ala. office (“Alabama Collection Agency Shows Appreciation for Soldiers' Sacrifice,” June 5), Drake also wants to point out the sacrifices American soldiers make to preserve our freedom.

“Others have paid the price so that we can enjoy the privileges that we have today,” Drake said.

Although Drake is not a member of the United States military, or any other armed services unit in the U.S., he is a concerned citizen devoted to teaching Americans about the importance of maintaining their freedom, and the role that WWII played in maintaining liberty.

“Freedom is inherited. Those of us who have not served really owe a debt of gratitude to those who have. We have people out there right now serving our country in the military that are insuring that our freedom remains intact,” he said. “People like myself and others have a responsibility to make sure that remains intact [by] voting and making sure the right people are voted into office, the right laws are passed and supporting our military.”

A member of the Military Writers Society of America, Drake also talks about WWII in local schools.

For more information or to get Drake’s books, visit: www.inheritedfreedom.com.

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Follow Mark Russell on Twitter at DBA Retreat

2009-06-26T06:37:04-07:00

Mark Russell, Director at ARM advisory firm Kaulkin Ginsberg, is at DBA International’s Executive Retreat this week in Napa Valley, Calif. He will be providing updates from the meeting via Twitter.

You can follow Mark directly from his Twitter feed (http://twitter.com/mrussellkgc) or check back here for live updates as prominent members of the debt buying community discuss matters of critical importance to their industry.

follow me on Twitter

Asset Acceptance Capital Corp. Chairman's Related Family Trust Enters into Pre-Arranged Stock Trading Plan

2009-06-25T07:16:43-07:00

WARREN, Mich. -- Asset Acceptance Capital Corp. (NASDAQ:AACC) , a leading purchaser and collector of charged-off consumer debt, today announced that a trust of which the spouse of its non-executive Chairman and founder, Nathaniel F. Bradley IV, is trustee, has entered into a pre-arranged, non-discretionary stock trading plan. The plan was adopted in accordance with guidelines specified under SEC Rule 10b5-1 under the Securities Exchange Act of 1934 and Asset Acceptance Capital Corp.'s policies regarding stock transactions. Rule 10b5-1 permits individuals who are not in possession of material, non-public information at the time the plan is adopted to establish pre-arranged plans to buy or sell company stock. Sales will be publicly disclosed through Form 4 filings with the Securities and Exchange Commission.

Under the newly adopted plan, beginning on August 12, 2009 and ending on August 12, 2011, the trust may sell Asset Acceptance Capital Corp. shares with a value up to $6 million. Shares sold at the minimum prices established under the plan for the trust would represent approximately 15% of Mr. Bradley's total beneficial ownership of Asset Acceptance Capital Corp. shares.

Mr. Bradley commented: "The plan was established to accomplish estate planning goals and to obtain diversification of assets for the trust. I believe in the Company's prospects for continued growth and success, as evidenced by my continued ownership of approximately 10.5% of the outstanding shares of Asset Acceptance Capital Corp., assuming all shares under the plan are sold for the trust."

About Asset Acceptance Capital Corp.
For more than 45 years, Asset Acceptance has provided credit originators, such as credit card issuers including private label card issuers, consumer finance companies, utilities and others, an efficient alternative in recovering defaulted consumer debt. For more information, please visit www.AssetAcceptance.com.

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Haynes and Boone Wins Turnaround Atlas Award of the Year for Marcal Paper Mills Asset Purchase

2009-06-25T07:16:43-07:00

CHICAGO -- A team of Haynes and Boone, LLP attorneys has been awarded the Global M&A Network's 2009 Turnaround Atlas Award of the Year for deals above $100 million.

The award, presented in ceremonies this week at the network's Hotel Allegro gala and dinner, honored the law firm's performance in the complex asset purchase and reorganization of Marcal Paper Mills, Inc., a fourth-generation family business bought out of bankruptcy by Highland Capital Management.

"We are humbled to accept this award on behalf of the Haynes and Boone lawyers," said Dallas partner and team leader Janice V. Sharry, who received the honor in Chicago. "Working with the highly skilled professionals from Highland Capital Management, we were able to convert the Marcal operation into one now outperforming projections, even in a troubled economy."

Marcal Paper Mills, Inc., was purchased out of bankruptcy in May 2008 with a transactional value of more than $184 million in assets and $149 million in liabilities. Before the close, the Highland private equity team worked for five months with Haynes and Boone to negotiate environmental settlements, obtain new labor contracts and reject unprofitable leases and contracts.

Ms. Sharry was assisted by partners Lenard M. Parkins of New York, Thomas J. McCaffrey of Houston, Art Carter of Dallas and Mary Mendoza of Austin, as well as Dallas associate Jody Absher. For Highland, Portfolio Manager/Private Equity Shawn Lederman was the deal team leader, working with Patrick Daugherty, head of distressed and private equity investments, and Carl Moore, restructuring counsel.

Highland leveraged its relationships to improve purchasing power and reduce costs. The post-closing turnaround plan included identifying improvement opportunities, upgrading the senior management team and creating organizational alignment around the key drivers of value.

The company, which now operates as Marcal Paper Mills, LLC, is restaging with an environmental focus to build on Marcal's 59-year heritage of being green. Since 1950 the company has used recycled paper to make its products. The new management is in the process of relaunching the Marcal brand with an environmental focus under the Small Steps(TM) name. The new brand challenges conventional wisdom that trees must be cut down to make tissue products.

Another Turnaround Award went to Haynes and Boone nominee Vector Consulting for its work in connection with the reorganization of ypOne. Michael J. Baratta, the CEO of Vector Consulting, worked with a team of lawyers led by Arthur A. Howard from Haynes and Boone's Houston office in implementing ypOne's turnaround plan.

"Mr. Baratta's ability to work through the complex operational and legal issues, while keeping the core of ypOne's management team in place, was critical to this successful turnaround," said Mr. Howard. "We were very pleased that Mr. Baratta and his firm were honored as the Boutique

Turnaround Consulting Firm of the Year."

The Turnaround Atlas Awards honors "brilliant leaders, victorious deals, firms and professionals from distressed M&A, restructuring and reorganization communities." Managing partners of the Global M&A Network have more than 40 years of collective experience producing financial programs in North America, Europe, Asia, Australia, Latin America, and Middle East regions.

"We are excited to bring together leaders, experts and dealmakers from distressed M&A industries to discover workable solutions during these tough economic times," said Ms. Shanta Kumari, managing partner and CEO of Global M&A Network. "Our goal is to connect business-building executives and honor achievements at the turnaround awards gala."

Haynes and Boone, LLP is an international corporate law firm with offices in Texas, New York, California, Washington, D.C., Mexico City and Moscow, providing a full spectrum of legal services. With almost 550 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by The National Law Journal. The firm has been recognized as one of the "Best Corporate Law Firms in America" (Corporate Board Member Magazine, 2001-2009), as one of "The Best 20 Law Firms to Work For" (Vault.com, 2008), and as a Top 100 law firm for both diversity (MultiCultural Law Magazine, 2009) and women (Women 3.0, 2008).

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Proposed Consumer Financial Protection Agency May Oversee FDCPA Enforcement

2009-06-25T07:16:43-07:00

Industries that must adhere to the Fair Debt Collections Practices Act (FDCPA) may soon have a new federal regulator. The Obama administration is recommending that the Federal Trade Commission (FTC) turn enforcement of laws that protect consumers over to a new Consumer Financial Protection Agency, the cornerstone of recently-announced regulatory changes in the financial sector.

The regulatory shift would include FDCPA enforcement, impacting all debt buyers and collections agencies, according to consumer advocates familiar with the plan.

The White House says the agency, if created by federal lawmakers, will have broad authority to regulate products such as mortgages, credit cards, and other consumer financial products and regulate all providers of consumer financial products and services.

Among other things, the new agency will be responsible for:

promoting concise and clear information for consumers
protecting consumers from unfair and deceptive practices
promoting fair, efficient, and innovative financial services markets for consumers
improving access to financial services

At least six consumer advocate groups support the creation of the new agency as the primary consumer protection czar.

“It will have more authority and more power in many ways than the FTC because it will have only one job and that’s enforcing consumer laws,” said Ed Mierzwinski, consumer program director of U.S. PIRG.

Currently at least seven federal regulatory agencies are responsible for protecting consumers in the financial services marketplace. Five of the agencies also oversee financial institutions. To fund the Consumer Finance Protection Agency, the Obama Administration has recommended that the Office of Thrift Supervision be eliminated and its duties transferred to other agencies. Other regulatory agencies will also be affected.

Congress must approve the creation of the new agency. A bill introduced by Rep. Bill Delahunt (D-Mass.) to create and fund the agency is currently before the House Financial Services Committee. The committee held its first hearing on the bill Wednesday.

Mierzwinki, who testified Wednesday before the committee, said the FTC has a lot of competing responsibilities, including enforcing rules for children’s television programming, evaluating mergers and regulating violations of the Do Not Call List. He said the new agency will eliminate the conflict of interest some agencies face when trying to ensure the safety and soundness of a financial institution.



David John, a senior fellow of economics with the Heritage Foundation, said the government agencies that could be affected won’t give up their duties without a fight. Likewise, businesses and any other entity affected will lobby their lawmakers to reject or restrict the duties of the new agency.

“Every time a new agency is created that takes over parts of an old agency, there is resistance from the agency and the constitute groups affected,” noted John.

During testimony before the Congressional Financial Services Committee Wednesday, ABA president and chief executive officer Edward L. Yingling said that the banking industry fully supports effective consumer protection, but that creating a new consumer regulatory agency is not the solution to the current economic problems.

“Making improvements under the existing regulatory structures – particularly aimed at filling the gaps of regulation and supervision of nonbank financial providers – is likely to be quicker and more successful than a separate consumer regulator,” he said.

Adam Peterman, ACA International’s government affairs director, said the association isn’t necessarily opposed to having a new regulator, but it will await legislative language about how the agency will be composed and operated. He expects a bill outlining operational details to be introduced in late July.

Regardless of who provides regulation under the FDCPA, Peterman said the association should try to get Congress to modernize the laws governing the ARM industry to address its ability to keep up with technology and communicate with debtors by mobile phones, email, and text messaging.

DBA International –- a trade group that represents debt buyers -- told insideARM that the debt purchasing industry should not be grouped in with the new legislative proposals.

“Debt buyers are the only financial institutions which do not actually extend credit, therefore they should be separately addressed,” said Barbara Sinsley, general counsel for DBA International.

DBA International Board member Stacey Schacter added, “Too much regulation in an already heavily regulated industry will result in lost jobs and the states will lose a tax base. I am concerned that this initiative will not actually address the real consumer issues.”

John, however, said there’s a strong chance that the new agency will be created and businesses that will fall under its governance should prepare for change.

“For better or worse, a company can assume that change is coming. And change is always expensive and disruptive,” John said. “That’s true whether you’re talking about buying a new house, starting a new job or dealing with a new regulatory agency.”

Debt Purchasing

1H09 M&A Deal Volume in the ARM Industry is Up but Deal Value is Down Substantially from Last Year

FTC Issues Advisory Opinion to ACA International Regarding FDCPA - FCRA Conflict

ARM Firms to Get New Regulator Under Treasury Proposal Issued this Week

Bank Independent to Acquire Regions Banks ARM and Billing Unit

Creative Financing for Debt Buyers

Alabama Collection Agency Shows Appreciation for Soldiers' Sacrifice

WAM Director Pens Book Praising the Efforts of Soldiers in WWII

Follow Mark Russell on Twitter at DBA Retreat

Twitter Updates

Asset Acceptance Capital Corp. Chairman's Related Family Trust Enters into Pre-Arranged Stock Trading Plan

Haynes and Boone Wins Turnaround Atlas Award of the Year for Marcal Paper Mills Asset Purchase

Proposed Consumer Financial Protection Agency May Oversee FDCPA Enforcement