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The Federal Reserve Bank of Philadelphia (the "Bank") hosted a meeting called " The Future of Consumer Credit Counseling" (the "Conference") on July 30 and 31, 2009. Overall, the event presented the opinions of guest lecturers from the academic community, the credit advisory sector, the creditor and regulatory community and policy makers. In the following you will find a short overview of the highlight of the two-day conference:
On the first day of the conference, a lecture by Michael Staten, Executive Vice President of the Take Charge America Institute for Consumer Financial Education and Research at the University of Arizona, and a research panel were presented. Staten's statement to the conference public was that, in his view, unless the industrial sector develops from its origins - which are seen as aimed at repaying unfunded debts to the creditor - to a means of learning, it will not outlive.
Mr Staten strongly cautioned that the old scheme (how it can be practised) is not viable and that, just as importantly, the industrial financing tradition needs to be modified. The Staten report provided the following suggestions for action that industries can and should take. Firstly, the sector should work with bondholders to extend the range of less-than-full-balance creditors' offerings to include the public sector indebtedness creditors' draft legacy creditors' equity and other legs-than-full-balance creditors' equity offerings.
Secondly, the sector should make use of the education character of its service and develop new ones. At the centre of the research panel was a recently published Credit Counseling Value Survey carried out by the National Bankruptcy Research Center and the MMI Financial Education Foundation.
Publication of the report took place in May 2009. 2% of all customers who were advised before insolvency was filed did not declare insolvency during the trial time. Summaries of the results of the study are available at www.mmifoundation.org/06112009. Asp; to obtain a copy of the report, please e-mail the National Bank of Canada Research Center at firstname.lastname@example.org.
On the second day of the meeting, three panellists took place. Session One: Credit Advice and the Economic Environment; Session Two: Questions of Co-ordination and Regulation; and Session Three: The second day provided a number of highlighting sessions for the topics of the conferences and also highlighted the difference between the credit advisory and ( "for-profit") credit regulation industries.
Ms. Alice Hrdy, Deputy Director of the Financial Practices Division of the FTC, debated the FTC's communication on the proposal to create rules under the Telemarketing Sales Rule for the provision of credit discharge service. Third ly, there would be a prohibition on "advance payment" similar to that under the US Credit Repair Organizations Act (the FTC suggests that no charges may be levied or levied until each indebtedness is actually paid).
A further culmination came from another US regulatory authority, Ned Pollock, Deputy Comptroller/Credit Markets risk in the Office of the Comptroller of the Currency of the Department of Treasury ("OCC"), which debated a heavily burdened bookkeeping question related to the date of acceptance by governments of waived debts (this happens when governments pay off debts at less than the full amount owed).
On the second day, a recurrent topic from the credit advisory sector was the need to foster innovation with sustainable, less than balanced alternative products from lenders and credit advisory firms in equal measure. Another shared topic raised by credit advisory professionals on day two was concerns about publicity, merchandising and other commercial practice in the credit regulation sector.
Regulatory industries were often on the defense side, articulating the reasons for the industry's characteristic pricing structures and commercial practice. Indeed, one member of the public - a Thomas M. Cooley Law School in Michigan scholar - once provided the public with a copy of a Southern Methodist University ("SMU") survey in aid of the public sector credit regulation sector.
Wesley Young of the Association of settlement companies ("TASC") also praised the good work of the members of this association and quoted a 55 per cent customer satisfaction rating. Discussions have been lively on the concept of'success' in the context of forgiveness, with Hrdy of the FTC finding that the newly suggested regime provides a strong concept for these objectives.
Lastly, Mark Guimond of the American Association of Debt Management Organizations ("AADMO") provided listeners with a copy of the bill drafted by AADMO that would prescribe that obligatory 15 per cent equity fees must be paid by lenders to credit rating firms. Robert Hunt, Assistant Vice President and Director, Payment Cards Center, Federal Reserve Bank of Philadelphia, concluded the conference with the following thoughts:
There is a need for better collection of information by industries - to find out what works and what doesn't. It is an urgently needed topic - industries need to find a way to provide less balanced goods, and this needs to be found out quickly. There is a need for the sector to find out how it can be a more efficient consumer lawyer; for example, how the work of credit advisors affects the domestic healthcare dialogues?
The Bank will provide attendees with a synopsis of the conference in the near term.