While in court, a consumer requested to discuss settlement. After the mini-Miranda, he asked if I was aware of the Holy Bible. When I advised him that the nuns at my grade school expected us to have read it he immediately broke into broad smile stating that he knew the matter would proceed “virtuously.”
Then, he produced a well-thumbed Bible, turned to Leviticus 25:8-13 and read to me its duty of debt forgiveness in Jubilee years. Since it was Jubilee year and because “America is Judeo-Christian nation” he was sure I would dismiss the case. When I suggested the Jubilee didn’t apply to modern entities, he considered me as a teacher addressing a particularly dim student, asking if I questioned the relevance of God.
Not surprisingly, I suggested we involve the judge but the young man switched from the Old Testament to the New, insisting that Jesus would forgive his debt. Unmoved, I offhandedly noted that even Jesus agreed that one should render unto Caesar his due. At this, the young man disgustedly announced that Jesus had broken bread with tax collectors but mentioned nothing about forgiving debt collectors.
That little vignette is amusing but his reasoning is not much different than the views of utterly agnostic regulators and legislators. As philosopher and economist Adam Smith noted, “[v]irtue is more to be feared than vice, because its excesses are not subject to the regulation of conscience.” Eschewing the Bible for civic morality, legislators nonetheless endow legislative and regulatory efforts with the virtue of protecting consumers from the black hats – us. And, because these efforts are driven by the “virtue” of preventing the poor from repaying legal debts, well, case closed.
Fighting For Time
We faced such virtue signaling just last year: We were part of a coalition that tried to bring veracity to virtue when faced with a legislative package that imposed automatic exemptions on banks, increased the income threshold for garnishments while virtually eliminating interest and slashing the lifetime of judgment. Put differently, it took longer to collect them but with less time to do it - the perfect arrangement for virtue signaling polls. Notwithstanding that Federal Reserve studies found that increasing collection regulations increased interest rates for the same vulnerable people the politicians hoped to protect. Never mind that, in some cases, increased regulation led to lost access to credit, because this was all in an effort to assist the relatively small group of consumers who default.
In the end, the collective lobbying efforts succeeded in thwarting the proposals… temporarily. However, with the advent of a new governor, these same bills are set to be reintroduced this month. So why now? In my mind, these bills are a reaction to what consumer advocates see as the neutering of the CFPB. When it was in place and creating regulations by litigation rather than by promulgation, closing down law firms on the basis of standards that didn’t exist at the time, the local actors were content to sit back and let the power of the federal government do its work.
Time for Vigilance
For our part, at the time, it was easy to identify federal intervention as the main concern and focus of our efforts. However, it also clouded us to the simple truth that regulation comes at all levels and legislation is simply regulation without an agency. Bills such as these should remind us that as a profession, we have to be vigilant on behalf of ourselves and our clients at all times and at all levels. We need to ensure we are organized locally, statewide and nationally. We have to involve all the actors in the effort – our clients, our vendors – to understand that regulations on us impact everyone connected to our firms, from process servers, to asset location services, to efiling and many, many more. Likewise, when we have a politically favorable climate, we can’t simply wipe our brows and be glad to be left alone. We must ensure we move to enact fair legislation.
And we have a good story to tell – readily available credit helps many, many more people than it hurts. The first loan you repay sets you on a path to financial independence. Denial of credit helps few and may permanently impact a consumer’s future. Where necessary, we are the conduit to communicate consumer hardship and, in getting old loans paid, we allow the consumer to reset their financial clock and look to the future. Not a bad day’s work but, unless we vocalize it, the virtue of what we do is lost.
Michael L. Starzec is a partner with Blitt and Gaines, P.C and is vicepresident of the Illinois Creditors Bar. He is a frequent speaker, writer and litigator on creditor’s rights.