Three Interesting Articles on the OCC, Debt Collection, and the Military Lending Act

by Jeff Sovern

Yesterday the Times published speculations about who will replace John Dugan as head of the Office of the Comptroller of the Currency in its Reuters BreakingViews column.  The OCC will continue to matter even after the CFPB becomes a reality because of its power to declare state laws preempted as to federal institutions. An excerpt:

If President Obama is looking for a candidate already intimately involved in the transformation of the nation’s regulatory architecture, he could go with Daniel K. Tarullo, a Fed governor and an expert on bank regulation. But why would he want the job? Although the Office of the Comptroller of the Currency will pick up the powers of the thrift regulator, oversight of the biggest bank holding companies will be the purview of the Fed. In that respect, the O.C.C. could be a step down for Mr. Tarullo.

That paves the way for more of an up-and-comer, like Richard H. Neiman, New York’s top state bank regulator. Mr. Neiman knows Washington, too. He worked at the O.C.C. earlier in his career and serves on the Congressional oversight panel for the bank bailout. Even better, Mr. Neiman has private sector experience as head of TD Bank USA.

Following up on Deepak's post yesterday on the FTC debt collection report, today's Times included Automated Debt-Collection Lawsuits Engulf Courts about a law firm, Cohen & Slamowitz, of Woodbury, N.Y, that files more than 5,700 lawsuits per lawyer a year.  The article strongly implies that those are collection cases.  What makes it possible is software that merges court documents with information received from debt buyer-clients.  I wonder how that squares with the "meaningful review" requirement courts impose on lawyers under the Fair Debt Collection Practices Act.

Finally, Parade Magazine had a depressing piece this weekend about soldiers who have been scammed, titled  Red, White, and Scammed, which reported on how some lenders have gotten around the Military Lending Act's interest rate limits:

Some lenders abide by the cap but drown their products in fees—in one reported case, $452 of charges were piled on a $1000 loan. Others base their businesses offshore and call their offerings “revolving lines of credit”—both so they can skirt U.S. laws and charge 500% interest. In her Arlington, Va., office, Petraeus typed “ military loans” into Google. “I got about 2.5 million results from that,” she says. “A lot of them are predatory or just outright scams.”

Comments

[get out of debt advice]

You really offer great news on debt problems.Often the people who have debt problems are more desperate and for that they fall for scams.Too bad.....

[Debt Collection Service]

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[George rosenberg]

There are several low interest debt settlement companies that assist debtors to settle the debt within the time frame.

[James]

If the CFPB really contains the preemption language then the bill is terrible and I hope it never passes. The devil is in the details is the old saying and it pertains here. The OCC will preempt all state laws on consumer protection as soon as the press spotlight goes elsewhere and the financial industry co-opts the new head or his or her successor. That means that all consumer lawsuits will have to go to federal court where they will die a miserable death at the hands of the silk-stocking federal bench. What a shame. Lets see, get rid of 50 pesky state legislatures and we only have to worry about one person at OCC who has worked or will work for the big banks.

[Split Cents]

It seems like this software approach is due some beta testing: consumer advocates could always round up a handful of defendants, get them to start filing responses to complaints, asserting defenses, taking discovery, challenging entries of default and default judgments for lack of service, etc.

Not saying debtors should use courts to avoid paying, but the recent FTC report read along side the NY Times article seems to suggest that they often simply default. Just because you owe money, doesn’t mean you can’t at least respond to the complaint… Debt collection firms often make mistakes as well!