Should the ARM Industry Follow Banks’ Lead in Fighting Back Against Increased Regulation?

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Dave Camp, a Republican Michigan lawmaker who was elected to Congress in 2012, received a great deal of support from banks during the 2012 elections.  However, the chair of the House Ways And Means Committee has recently turned his back on his supporters and proposed a bank tax to be collected from U.S. banks. Rep. Dave Camp’s proposal would increase taxes on banks in such a way that would threaten the bottom line of major equity players, causing his high finance donors to balk at the proposal.   

In a 2010 speech before the Tax Council, Camp stated, "I aim to launch and fight the tax reform battle once again.  And I am well aware that this might ruffle those who have used the tax code to benefit particular industries or activities at the expense of economic efficiency, simplicity, and fairness."  With their feathers truly “ruffled,” Bank of America, Citigroup, Goldman Sachs, J.P. Morgan and other banks have joined forces to lobby against the tax burden that would directly affect the banking industry. 

For example, the Wall Street Journal recently reported that Goldman Sachs refused to attend a fundraiser held in March for the National Republican Congressional Committee due to Rep. Camp’s tax proposal.  After being pressured by banks to publicly denounce the tax plan, 54 Republican lawmakers signed a letter to Rep. Camp expressing their concerns about the tax.   

The concerted effort to join forces and fight increasing taxation and regulation that could harm the industry’s bottom line is something ARM insiders should take notice of.  As can be seen in the case of banks, if the ARM industry makes a concerted effort to protest regulation—including pressuring lawmakers and withholding political contributions—would it see the same success?  The question is: how much will the industry suffer before we begin fighting back? 

Local Municipalities Are Finding Creative Ways to Collect on Unpaid Accounts

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Due to decreasing federal monies allocated to cities and towns across the nation, a recent trend in the ARM industry is the acquisition of accounts from a municipality, as collection regulations allow municipalities to outsource their collections accounts.  However, the municipality is still responsible for supervising the collection process to ensure that all rules are followed and that citizens’ rights are protected in the process. 

These collections accounts can originate from multiple sources: overdue library books; court fees that are delinquent; parking tickets that have not been paid; and of course, municipal taxes that are delinquent.  In fact, most municipal accounts are based on collections of the latter category.    

There are creative ways that local municipalities can increase the effectiveness of their collections practices.  For example:

• The town of Norfolk, Virginia has recently begun garnishing residents’ state income tax returns to collect on unpaid parking tickets. 

• New Haven, Connecticut has made use of mobile infrared technology to scan license plates and check the owner’s municipal debts.  During the first six months of this creative approach, the city was able to collect $1 million dollars of money that was owed to it. 

• San Francisco, California decided to focus on corporations with a large number or drivers (for example, UPS) who owed money for parking violations.  In their collections attempts, they billed these companies monthly for infringements and booted the vehicles when the money wasn’t paid.  As a result, the city collected $1.5 million dollars in money that was owed.    

• Augusta County, Virginia hires third-part collections agencies to collect on unpaid library dues.  The result was approximately $100,000 collected—a number which represents more than half of the annual library budget for acquiring new materials. 

• Ohio’s Portage and Cuyahoga Counties use third-party collections agencies to collect on their unpaid accounts, but charge the agency fees to the debtor.  This program has also been highly successful in assisting the counties seeking to balance their operating budgets.