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The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry. Steven Pruitt, Managing Partner, Consultant to the National Installment Lenders Association (NILA). The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry. AGENDA.
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The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Steven Pruitt, Managing Partner, Consultant to the National Installment Lenders Association (NILA)
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry AGENDA • Overview of the 2014 Congressional Session • The Washington Regulatory Environment • 2014 Congressional Elections • Outlook for 2015: What to Expect next year? • The Future of the Dodd-Frank Act • What Can You Do??
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Overview of the 2014 Congressional Session • Days in Session • Legislative Activities • The Congressional Leadership Story • The President’s Financial Services Legislative Agenda
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Days in Session/Congressional Productivity
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Legislative Activities • House vs. Senate • 13,437 bills introduced to date in the 113th Congress • House voted on 1,012 bills: Senate votes on 172 • President has signed 125 bills into law
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Legislative Activities • Legislating and Oversight vs. Media Circus • Benghazi • Libya • IRS Targeting • General Motors Ignition Switch Recall • EPA and Environmental Issues • CFPB • Keystone Pipeline • The War on Coal • VA Scandal
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Congressional Leadership Story • Republican Civil War • Unexpected Changes to House • Leadership Team • Lack of Legislative Agendas? • Ability to Lead? • House-Senate Relations
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Congressional Leadership Story The Republican Civil War VS
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Congressional Leadership Story • Unexpected Changes to House • Leadership Team • Eric Cantor (VA) loses • Primary election to Tea • Party Candidate • Kevin McCarthy (CA) • elected Majority Leader • Steve Scalise (LA) elected • Majority Whip
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Congressional Leadership Story • Lack of Legislative Agendas • President signaled intent to use Executive Powers to • govern; has not presented a real agenda but jumped • from one issue/crisis to another • Congressional Republicans nor Democrats actually have • a governing agenda that is pro-active • Republicans focused on restraining government • intervention; but have not defined intervention or • restraint • Democrats powerless to act: can’t muster 60 votes in • Senate, don’t control legislative action in the House
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Congressional Leadership Story • Questions about the Ability to Lead • Speaker Boehner has not shown an ability to get his • Party members to take BIG votes; Tea Party having major • impact, only BIG bills that have passed (Agriculture, • Water Resources) passed with Democratic votes • Republican Leadership Team (Boehner, Cantor, • McCarthy) are rarely on the same page legislatively • Democratic Leadership Adrift; major questions about • direction and succession in 2014/2016; lack tools to • enforce Party discipline
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Congressional Leadership Story • House-Senate Relations • Very little consultation/communication between the two bodies • Different forces driving each body and Party’s political • outlook (ideological and generational) • Rules changes have made it difficult to coordinate • actions by both bodies • 2014 Elections impacting policy discussions-both bodies relying mostly on “messaging votes” • 2016 Presidential politics interfering with Leadership’s • ability to find common ground • Potential of Leadership changes in both Parties and • bodies has created a “Lame Duck” environment
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The President’s Financial Services Agenda • Announced Agenda • Fight all efforts to repeal or weaken Dodd-Frank • Fully fund/increase funding for all Regulatory Agencies • Reform GSEs-Fannie Mae and Freddie Mac • Move forward with implementation of regulatory • responsibility realignment • Continue rollout of new Rules and Regulations • required by Dodd-Frank
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The President’s Financial Services Agenda • Added Agenda Items • Initiate/accelerate Examinations authorized by Dodd- • Frank • Accelerate rule-making and regulations rollout • Begin enforcement activities • Expand scope of data gathering activities to enhance • regulatory reach • Increase promotion of regulatory activities-send a • tough message
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Washington Regulatory Environment
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Washington Regulatory Environment
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Washington Regulatory Environment • The Expanding Federal Consumer Lending Regulatory Agenda • Truth in Lending • Small-Dollar, Short-Term Lending (Pay Day, Lease-to-Own, Auto Title) • Online Lending • Ability-to-Pay • Disparate Impact • Fair Credit Reporting (Regulation V) • Debt Collection Practices (Regulation F) • Arbitration and Dispute Resolution • Ancillary Products • Financial Education (Literacy) • Disclosure Requirements and Practices • Customer Complaints (Process, Data Collection) • Enforcement • Operation Choke Point • Reforms to Military Lending
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Washington Regulatory Environment • Growing Number of Federal Consumer Lending Regulatory Tools • Rulemaking • Studies (Data Collection), Requests for Comment and White Papers • Company Office Visits, Employee Audits and Interviews • Field Hearings • Consumer Complaint Hotline and Web Portal • Social Media-Crowd Sourcing, Facebook and Twitter Feeds • Agency procedural manuals • Changes in Supervisory Authority • Alliances with State Attorneys General
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry 2014 Congressional Elections • House of Representatives is not really in play • All 435 seats being contested • Democrats would have to win 7 seats “net” to regain • control • Only 18 races will define the outcome over control of • the House
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry 2014 Congressional Elections • The Senate is the Real Battle Ground • 33 Senate Seats and 3 vacancies • being contested • The current split: 21-D/15 R • Races in 13 States define the battle ground: • Louisiana Kentucky Virginia • Arkansas Georgia • North Carolina Michigan • Alaska New Hampshire • Iowa Minnesota • Colorado Oregon
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry 2014 Congressional Elections
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Look Ahead at the 2015 Congress • The Bad News • Republican Control doesn’t • necessarily mean “Pro-Business” or • “Pro-Industry Policies • Hensarling has not been particularly • friendly to small dollar, consumer • lenders • The Good News • House of Representatives expected to remain under Republican Control • Rep. Jeb Hensarling (R-TX) will remain as Chair of House Financial Services Committee-unless he runs for Majority Leader’s job
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Look Ahead at the 2015 Congress • The Bad News • Shelby has generally been “Pro- • Business” and “Pro-Industry”; need • to be concerned about Committee • composition following 2014 • elections • Brown has not been friendly to • small dollar, consumer lenders; but • will have difficult time moving • Committee to the Left, • compromising with Republicans • The Good News • Change in Senate control and • Chairmanship of Senate • Banking Committee • Chairmanship (Richard • Shelby, R-AL) will be the • biggest change for the • Industry • If Democrats maintain control of the Senate, Sherrod Brown (D-OH) will become Chair of Senate Banking
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Future of the Dodd-Frank Act • General belief is Dodd-Frank broadly got things directionally right, however, there are lots of places in Dodd-Frank where Congress got it wrong • Historically, with any major piece of federal legislation, Congress never gets it entirely right the first time • Many Groups pushing for Banking/Financial Services Committees to revisit Dodd-Frank in a rational way • Push today is for when Congress revisits Dodd-Frank, more work must be done on: • Transparency • Derivatives • The Volcker Rule • Refinement of the Financial Stability Oversight Council (FSOC) • Enhancement of the Office of Financial Research (OFR) • Review of efforts to designate financial firms as systemically important
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry The Future of the Dodd-Frank Act • A Dodd-Frank “technical corrections bill” creates/provides an opportunity to work for targeted changes to the original law • Consumer Lending Industry well positioned to request/advocate for limited changes to the way Regulatory agencies treat Non-bank, consumer lenders • Potential changes needed by consumer lenders include: • Obtaining a clear definition of Installment Lending • Rebalancing State regulatory roles • Realignment of complaint processing and investigations
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry What Can You Do?? • Write Letters/Emails • “Adopt a Congressman” • Develop ‘Relationship • Charts’ • Begin Pro-Active • outreach to and • education of local • media • Expand data collection • activities-Know your • customers and why • they are borrowing Stop Bitchin’ Behind the Barn
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry What Can You Do?? Customer Service Accounting Legal Technology Recordkeeping & Privacy Controls Upgrade Your Financial Services ComplianceActivities
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry What Can You Do?? Invest in more training for your workforce
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry What Can You Do?? Recruit/Invest/Re-Assess Political Allies
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry What Can You Do?? • Refocus Federal political giving on getting 2016 results • Texas Congressional delegation relations should become a • higher priority for the State Association-don’t assume how • they will act and vote in the Post Dodd-Frank era; • Neugebauer should be more of an advocate, Al Green can • become a friend • Enhance Company/Industry planning for business expansion • Industry needs a strategic growth plan • Understand that the consumer lending industry no longer • viewed as “Small Business”- industry impact now measured in • billions, not millions • Get into the 21st Century: grow your use and presence on • Social media
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry What Can You Do?? • Prepare for an early 2015 DC Fly-In • Develop a plan for regular visits to Texas Congressional • delegation District Offices • Host Store tours for your local Congressmen and his/her • local staff • Begin working on obtaining Local “Resolutions of Support” • for consumer lending • Expand engagement with local organizations around • Financial Literacy activities
The Pulse of Congress and Washington: The Impact on the Consumer Lending Industry Thank You !! Corporate Information Watts Partners 300 New Jersey Ave, NW Suite 650 Washington, DC 20001 PHONE (202) 207-2854 FAX (202) 207-2853 www.jcwatts.com