Repo Alliance – Action on the Hill

It has always been about you

On March 23, 2022, CURepossessor reported on the 11 House members that sent 7 questions to the CFPB about the inflammatory statements and guidance put out by that agency on Repossessions and their concerns over market imbalances which may cause lenders to place repossessions at an increased rate taking advantage of consumers and these market imbalances.

While Repo Alliance did not request this specific communication, any report implying that our activity has not influenced recent Hill action fails to understand the purpose and impact of the meaningful and sustained federal advocacy we have successfully undertaken. Our effort has not only focused on preventing bad things from happening to our industry, but also on educating policymakers as to the essential role we play in ensuring consumers have access to credit. We have worked hard to make sure that decision makers begin to view us through this lens, and not as an unpopular caricature at odds with their constituents. For the first time in the history of the repossession industry, we have a group completely focused and dedicated to the collateral recovery industry.

The Beginning/ Prior Focus

In 2020, after the House passage of the HEROES Act which would place a moratorium on certain repossessions, ARA sponsored Repo Alliance began educating key senators and representatives about the consumer harm a repossession moratorium would cause. When the immediate threat level subsided with respect to this provision, The Repo Alliance decided to begin this next phase of outreach earlier than we had planned. We met with staff from the Senate Banking Committee and the House Financial Services Committee. In total, we met with 43 congressional offices to ensure the repossession moratorium did not advance. Our efforts were successful.

INDEMNIFICATION AND RELATED LENDER MARKET ABUSE

In the summer of 2021, the Alliance, with support provided by HUNDREDS of agency owners and employees, decided in consultation with VSA to redirect our federal focus into broader, long-term matters of importance to the industry. After educating ourselves, soliciting input from our members, and having discussions about broader industry challenges, we agreed to focus on reverse indemnification and imbalances in contracts while monitoring legislation to be sure there would not be any form of restrictions on repossessions.

After intelligence gathering and strategic discussions, VSA advised the Alliance on the most successful approach to advance the topic of indemnification and contract imbalances and the ultimate threat to consumer protection and the laws meant to safeguard them. In essence, if indemnification is used to offload legal liability onto small repossession companies, there is little to no incentive to adhere to consumer protection laws. This message has resonated with lawmakers of both political parties, as well as with the agency assigned to address such issues.

During the second half of 2021, we developed written material to help educate federal lawmakers on the topics. In addition, VSA drafted legislation which would render reverse indemnification unenforceable in instances when a lender or broker/forwarder issues an order for repossession and the recovery agent recovers the vehicle identified. They have also provided an overarching narrative that speaks to the priorities of the current Administration, for Executive branch conversations.

In the time since, The Alliance and VSA have met with eight senior members of the House Financial Services Committee (which has jurisdiction over financial matters) both to “road test” some of our messaging, as well as to educate them on the threat of reverse indemnification and contract issues as a result of market imbalances. Those offices included:

•          Rep. Sylvia Garcia of Texas
•          Rep. Chuy Garcia of Illinois
•          Rep. Ed Perlmutter of Colorado
•          Rep. Al Lawson of Florida
•          Rep. Bill Foster of Illinois
•          Rep. Jim Himes of Connecticut
•          Rep. Joyce Beatty of Ohio
•          Rep. Stephen Lynch of Massachusetts

Those offices very clearly understood how one-sided indemnification is a recipe for disaster in the auto-finance industry, as it applies to consumers. More importantly, they recommended and encouraged us to approach the Consumer Financial Protection Bureau to educate them on the issue in hopes that they would be able to initiate regulatory action to address these issues.

CFPB MEETING

Following the feedback from Congress, the leadership of ARA, members of the Alliance and VSA met with the auto market experts at the Consumer Financial Protection Bureau. The meeting was very constructive and provided further insight to inform our strategy. CFPB indicated:

CFPB is concerned about the falling prices of a repossession.
CFPB urged ARA to provide them with concrete data to support our claims and how there is a nexus with consumer harm, necessary for them to take further agency action.
CFPB believes one-way indemnification is dangerous.
CFPB wanted to know how frequently lenders are sending bad orders which may lead to wrongful repossessions.

Following our meeting with CFPB, VSA, ARA leadership and the Alliance discussed the need to provide the Bureau with data in order to make the case that action is appropriate, and how we might best collect it. VSA suggested designing a survey of the industry, with questions meant to provide feedback on the most damaging issues resulting from these market imbalances, and their nexus to consumer harm. Harding Brooks assisted in getting the survey to the industry. The data we have compiled is powerful and will be invaluable to support our effort with the CFPB, as well as to our continued outreach to Congress, providing legislators with information necessary for them to explore the issues legislatively or continue to urge CFPB activity (formally or informally).

CONCLUSION:

The Alliance would never claim to take sole credit for every action taken in our space. We welcome and applaud any and all like-minded partners who devote their own time and energy to advancing our shared goals. Undoubtedly, we will only better our chances of success if there are additional voices aligned on these issues. What we do know is that all of our work educating members of Congress in meetings and with our industry specific materials over the last two years has undeniably helped to inform and provide a base of concern that now exists and is growing on the Hill. We worked consistently and diligently to make them aware of an industry many told us they had never heard from or met with before, planting the seeds necessary to begin a trusted dialogue. In the end, we would hope that all engaged in these efforts would be less focused on claiming credit and instead join forces where we can to applaud these Senators questioning of Rohit Chopra’s inflammatory and tunnel visioned statements. We are stronger if we all work to support our shared goals. From our end, the Repo Alliance is committed to the path we are on of sustained federal engagement to protect and advance our industry’s priorities because the one thing I can guarantee you – and we have said it a hundred times – is the old Washington adage:

“IF YOU ARE NOT AT THE TABLE, YOU ARE ON THE MENU.”

Thanks to everyone who supports the Repo Alliance initiative.