ConsumerFi Podcast: The New Administration’s Impact on the Auto Sales and Lending Industries with Hudson Cook’s Eric Johnson

Transcript

[00:00:20] Welcome. Today to the show, a long longtime industry, ally, and, uh, co member of the national automotive finance association, board, Eric Johnson, Eric, I’ll let you do your introduction to kind of tell folks, you know, who you are and what you do at Hudson cook. Although I’d really be surprised if, if everybody doesn’t already know, but, but welcome Eric to the show.

[00:00:45] Eric Johnson: [00:00:45] thanks for that. Now people are probably tired of hearing. Hearing me, maybe not seeing my face as much since we haven’t been able to see each other in person as much. But, um, yeah, I’m a partner with Hudson cook. I’m in my, actually in my Oklahoma [00:01:00] city office right now. Pardon the mess behind you? Um, or behind me or other?

[00:01:05] Um, I practice primarily in the automotive sales and finance space for, uh, for our firm, although. Yeah. Being in Oklahoma, anything dealing with consumer credit, I will handle that as well. It’s just kind of Jack of all trades. What do they say, Jack of all trades master of none, but try working on trying to get that master certificate

[00:01:25] Joel Kennedy: [00:01:25] one of these days, if you haven’t already earned it.

[00:01:28] I don’t know. At least from exposure, you know, Eric is, is, has been a fantastic ally to the industry from an educational standpoint. Certainly with the conference tracks and, and moderating things and just being outspoken and articles. But also I had the fantastic, uh, uh, uh, luxury of having you as my instructor for the, uh, uh, compliance management, uh, certificate that I earned through the NAF as well with you and Patty Covington.

[00:01:57] And I hope Patty is doing well as well. [00:02:00] Yup.

[00:02:00] Eric Johnson: [00:02:00] Yup. Doing well. Yep. Glad, glad that you’re able to get these certificate. And, uh, we were just talking about plans for next year and we’ll see if we’re able to do it. Virtually, you know, via zoom or, or if we are able to do it in person. So we’ll, we’ll

[00:02:16] Joel Kennedy: [00:02:16] just have to see how things go.

[00:02:17] Yeah. So, so if anybody, I mean, that was one of the things. And what we’re going to talk about today is, is Eric, uh, published a recent article, uh, kind of looking into the tea leaves as to what, uh, the Biden Harris administration could mean. From some very important and relevant posts that impact all of us in consumer lending and in particular auto finance.

[00:02:38] And I just, Eric, you laid it out so nicely and it’s just, he’s just a very clear thinker and communicator. Um, the name of the article is what does he Biden Harris administration mean for auto sales and finance. And it was produced in non-prime times. Uh, it’s available online and it was put out on December 7th.

[00:02:57] So I say, Eric, would he say, we just dive right in. [00:03:00] Yeah, you

[00:03:02] Eric Johnson: [00:03:02] bet. So, you know, do you want me to give you a kind of a summary? Do you have

[00:03:05] Joel Kennedy: [00:03:05] questions? I mean, obviously, you know, something, something, uh, motivated you to write the article and, you know, were there a lot of people asking questions and you just said, man, I’m tired of having the same conversation over and over again.

[00:03:18] Might as well just write an article and refer them to that. Like what was kind of the motivation behind this?

[00:03:24] Eric Johnson: [00:03:24] Yeah, it’s a great question. I, it’s probably a little of both, you know, A large part of, I think of what we do and the type of law that we practice is thinking about not only where we are today, but where we may be in the future.

[00:03:39] And then of course getting questions from clients about, um, you know, what should we be thinking of? What should we be doing to better protect ourselves in the coming. Uh, you know, six months coming year, you know, three, four years. Yeah. Um, and that was really the motivation for putting this [00:04:00] article article together.

[00:04:01] And it’s kind of, kind of, uh, evolved and shaped even from when I released that, um, that initial draft to the NAF that was published. Um, I mean, we have new things to look at and to think

[00:04:14] Joel Kennedy: [00:04:14] about as well. Yeah. So there’s, it seems like it’s a very interesting time. Uh, I try to keep tabs on what goes on on the Democrat side, uh, through some friends that I have that are, are very aligned with that group.

[00:04:28] And, and, and from what I’m hearing, it sounds like, um, you know, I don’t want to paint my own bias on it, but it sounds like. Biden’s come in. He has a realistic understanding of how things function when you have to play certain people. And there’s a contingent that is, you know, uh, the sensationalized version, like the social media versions of, of, of politicians that represent the, the really more extreme version of, of that, that party.

[00:04:56] And they’re just not going to be satisfied unless they, you know, he, he [00:05:00] puts forth the most. Um, you know, the people that are most aligned with their values. And yet it sounds to me as though, at least from starting to look at, because what do we have to look at so far? We have, we can look at his cabinet placements.

[00:05:13] And so on the cabinet placements, you know, uh, you know, people were talking about Liz Warren for treasury. Um, you know, other other posts could be maybe commerce or any kind of monetary type thing. From what I’m hearing. He’s, he’s, he’s shooting for diversity, but I think he’s trying to place people that have well credentialed, you know, and they are well credentialed, I should say.

[00:05:36] And he has some, some realistic view toward saying, I have to have some Republican support for these people as well. Is that what you’ve said is that how you’re kind of reading it as well?

[00:05:49] Eric Johnson: [00:05:49] Yeah, I am. I mean, I think it’s a really, I grew up through a very interesting time, a very interesting transition, um, uh, transit transition [00:06:00] teams, as well as the names of the, of the Canada post.

[00:06:02] I mean, for example, you know, putting Lanta, Leandra, English in charge of the Trent, the CFPB transition team is very interesting.

[00:06:11] Joel Kennedy: [00:06:11] Um, tell us, tell us a little bit about her. I’m not familiar with, with the Andrew angel. She

[00:06:16] Eric Johnson: [00:06:16] was, um, you may remember one of her Cordray resigned back in, what was it? November, 2017.

[00:06:21] Okay. Um, he resigned and then on his way out the door, uh, pointed his, um, pointed her as the acting. Uh, um, and do you remember.

[00:06:35] Joel Kennedy: [00:06:35] Didn’t they kind of like, did they kind of like lock her out of her office and stuff? I mean, it was, it was almost comical, right?

[00:06:40] Eric Johnson: [00:06:40] Yeah. I mean, you’ve got her on one hand and you’ve got Mulvaney is showing up with his box of donuts, you know, the next day.

[00:06:47] And it’s like, who is the director? And we had the lawsuits that are the lawsuit that went on for a few months and then eventually she, uh, withdrew her suit. [00:07:00] Um, And has, I think been, been an capacity in New York for, for ever since then, but, but she’s now leading the transition team. Um, so I th it’s, it’s real interesting.

[00:07:13] You’re right. I mean, with Biden kind of, I got to see Biden is kinda like the old guard and have you’re right. He’s been there forever knows. Knows how things work, um, knows how to get things done. Both. Republican and Democrat side, but then you’ve got, um, the Harris team and some of the more, I think the more liberal components of that wanting we want change and we want it now.

[00:07:35] We want it very, very quickly. Um, to me that the election that’s coming up in January in Georgia that would decide control of the Senate is, is very crucial because it really not only does it decide control of the Senate. But it could ultimately decide who they might propose as a new director who can get a proposed and then get confirmed by the Senate.

[00:08:00] [00:08:00] If the Republicans maintain control of the Senate, you’re going to have somebody that’s that arguably would have to, uh, withstand that confirmation process. If they get control, if the Dems get control of the Senate. Then, I don’t know. Would you see Richard Cordray again? Would you see Elizabeth Warren or maybe one of her disciples, like, like rep Katie Porter in there, you know, you could see some very liberal directors, the proposed

[00:08:31] Joel Kennedy: [00:08:31] that’s right.

[00:08:31] And you know, one of the things that’s, that’s kind of strikes me is when they post people to the CFP PB specifically, I think there’s the biggest difference in my mind. Is assigning which credentials really matter for somebody to be in important posts. You have people that run under the moniker of a community organizer, um, that.

[00:08:58] Can be running the thing, [00:09:00] uh, versus me saying, I, I think I’d prefer to have somebody who has some familiarity with how financial markets work and how economics work, uh, at least within the confines of the U S um, what do you think, w what have you thought about that? About what type of credential, uh, Joe Biden would be looking for?

[00:09:19] Or is it, is this kind of something you think he may be a little bit more hands-off with and say, Hey, calmly, you take it and run with it.

[00:09:27] Eric Johnson: [00:09:27] That’s a good question. I don’t have any insight as to, you know, who’s calling the shots for the director. Um, I mean, but, but look at, um, our current director director, Kathy who really, you know, for all intents and purposes did not have experience in the financial services arena.

[00:09:45] I mean, it was more, you know, in the. Budgetary process of longterm, um, you know, person in DC, but she seems to have done pretty well. Um, leading the charge. I mean, not [00:10:00] as to the consumer advocates point of view, but for, they’ve been very active the last, you know, four or five months or so, and bringing these enforcement actions and, um, Uh, you know, educating consumers, but she’s been pretty, um, pretty good on that role, whether that’s somebody that, um, like whether Biden would bring in, um, or Harris would bring in somebody like that.

[00:10:25] I just don’t know. Um, I think it really depends on what happens in the Senate.

[00:10:31] Joel Kennedy: [00:10:31] Yeah. I, I, I often wonder about what type of horse trading would be in the interest of Biden to say, okay, fine. You can have this one. As long as I get somebody that I really like over at transportation or, or what have you,

[00:10:44] Eric Johnson: [00:10:44] when you heard, you heard his joke about if they, if they disagree?

[00:10:48] Um, if like by, instead of, uh, much, like if he, um, Obama would disagree, if he invited him, if he and Harris were to disagree, then he would. I, you said something like, you [00:11:00] know, come down with an illness and have to resign, kind of seen it in joking terms, but, um, I’m curious to see what happens if they do disagree on who might lead the director.

[00:11:11] Does he get to pick, does she get to pick. I don’t know.

[00:11:17] Joel Kennedy: [00:11:17] Um, you get into in the article, you get into thank you about what the agenda could be and you call out, you know, some of the social issues with racial equity and justice, as it pertains to financial programs and regulation that surround that, that got me immediately thinking about this HUD measure of disparate impact.

[00:11:41] That you know, was, was built for obviously for, for, for the mortgages, but then it was translated over into auto and you know, you, and I’ve spoken at great length about how there are pitfalls to this, right. Um, the, the methodology, um, Do you have, do you think that that’s going to come [00:12:00] back into play? I mean, I kind of wonder if it ever really went away, but do you think it’s going to have more relevance?

[00:12:06] Uh, obviously to support that?

[00:12:10] Eric Johnson: [00:12:10] I, I do. I think, um, I think they will certainly try, you know, and I had to go back into the history of it a little bit. You remember the, the CFPB is autofinance bulletin, uh, that they had issued that, um, that Congress actually. Uh, had disapproved under the congressional review act, um, and was eventually struck down.

[00:12:33] Um, and I think that strike under the CRA authority means that the Bureau shouldn’t be able to re revisit that via a, a rule or really even a bulletin unless they get approval from Congress to do so. So again, I think that plays into, um, if you have a. House that’s Democrat controlled and Senate that’s Democrat controlled.

[00:12:59] Then I think we could see [00:13:00] some legislation, uh, around disparate impact related to autofinance. Um, but if we have a split house and Senate, um, I think it would be real challenge to see another bulletin like that, or I I’m curious to see what, um, what they, what the Bureau could do in the disparate, desperate impact arena.

[00:13:22] You know, outside of regulation, outside of, of legislation.

[00:13:26] Joel Kennedy: [00:13:26] I think it’d be a real challenge. You mentioned linkages between this topic and the state’s ag. Um, what type of interaction would you be expecting? Are you expecting to see there, um, anything different than what we’ve been doing before in the

[00:13:44] Eric Johnson: [00:13:44] past?

[00:13:45] Well, I, I think I would see, I would expect to see probably increased, um, cooperation between the CPB and the state AGS. Um, you know, we’ve, we’ve seen some cases where the CPB would, would work [00:14:00] with the state. I think the lightest is, um, They worked with the state of Arkansas AIG on bringing enforcement action against an entity.

[00:14:08] I think, um, I would expect to see more, uh, cooperation between the Bureau and the, in the state AGS. I mean, to me, it’s almost like, um, it’s almost like Cordray 2.0, I think. Yeah. No, if you have, like I said, in the article, if you have nostalgia for the past, And the way it was before, where, I mean, it’s still regulation by enforcement.

[00:14:33] It’s where they measure their success in dollars that are recovered either for the, for the consumer or just straight up civil, monetary penalties. I think that’s, that’s what we’re looking at, um, in the next four years. Hmm.

[00:14:48] Joel Kennedy: [00:14:48] I, I struggled to think who the winners are in a, in a setup like that. Um, I mean, other than political points, because Eric, you know, th there were some [00:15:00] massive penalties that were levied.

[00:15:02] And then I know some people were able to battle it back to like a more reasonable figure, but, you know, that’s very costly. You’re going to have to be a very large organization with deep pockets to be able to afford to defend yourself. And then I. The money may be getting sent back in retribution to the consumers, but I never really saw, there was a really big push and I never really heard too much about that money flowing back out to these harmed consumers.

[00:15:31] And so to me, it was kind of like, Oh, you’re collecting all this money. That’s great. And then now you’ve upgraded your offices. Sorry. Sorry. I shouldn’t, I shouldn’t add that level of commentary, but I think by this point, everybody knows where I stand on the topic.

[00:15:46] Eric Johnson: [00:15:46] Yeah. A little bit of level of cynicism, but why?

[00:15:48] Well, I mean, I can see, I can see what you mean. I. You know, I think it’s just a difference in viewpoint. I mean, if you look at it from that lens of how quarter I looked at it, which, you [00:16:00] know, former ag, you know, we’re going to enforce, we’re going to enforce the law. We’re going to make it very painful for companies that, uh, that violate the law.

[00:16:09] And, and I think in his eyes, they, they saw a lot more people violating the law. Then I think Kroger does. Um, it’s just a different style and a different approach. Yeah. Um, Um, you know, again, that’s when she took the helm, she didn’t. I think she even said we don’t measure our success. Really. We may not measure it by, in terms of dollars going back to the consumer or dollars in penalty amounts.

[00:16:35] Right. They’re going to look at it more of an educational lens.

[00:16:39] Joel Kennedy: [00:16:39] Well, let’s, uh, you know, if you have no dollars collected, this doesn’t mean you’re not doing your job. You may have prevented so much of these bad actors from even playing. It made it hard for them that, you know, so you mentioned, you mentioned Cordray and, um, You know, he he’s best known for his performance on, on, uh, on jeopardy.

[00:16:57] But, uh, you know, [00:17:00] he, he did send this letter out, talking about, you know, specifically on the nose, Hey, you know, during COVID we need to put a moratorium on, on, on repossessions and let that stay through the recovery period, which is not very well defined. Um, right. There’s obviously disruption too. Uh, everything right.

[00:17:24] But the thing that I, I often wonder if that the legislators may, may, may really have an eye on, is it disrupts the supply chain? So if you’re not repossessing any of these cars, you’re, you’re, you’re cutting off the inventory flow through to the auctions and then. That inventory coming through to, you know, first-time borrowers people within files, you know, people with less than stellar credit.

[00:17:46] So now, now, now they’re going to have issues where they, there could be affordability. So, you know, there are real consequences to doing things like this, and we’ve seen it at the California. State level is at [00:18:00] the Illinois state level. Um, the companies that I’ve spoken to have been able to, in all fairness, they have been able to navigate through it.

[00:18:08] But at the same time, you’re seeing this attrition of, of companies wanting to do as much business in California, uh, leaving the state entirely. And so I wonder about consumer access at the state level for people like that as well. But anyway, so, so he laid out a pretty clear. Uh, mandate of what he, he would like to do.

[00:18:28] Um, do you think that that is supported by the party, by the folks on the Democrat side that would be taking over control of the CFPB? Or is this just the old, uh, kind of, uh, disenfranchised, uh, former guy, you know, speaking out, you know,

[00:18:46] Eric Johnson: [00:18:46] Yeah, no, I, I think some of them do, honestly, I think this is kind of their mindset on some of this.

[00:18:53] I mean, you know, he did lay out and this was early on, uh, early on in the pandemic. I think, I can’t remember the exact month, [00:19:00] but no, like April, may, June, somewhere in that timeframe where he laid out all of these different actions that he thought the bureaus should take. Um, so I, I do see. Some of the consumer advocates, certainly taking this position of.

[00:19:15] Look, you know, do what you can to stop the late fees, allow for these long forbearances or modifications of the, of the payments under the contracts. And then also, you know, stopping, uh, foreclosures, um, or evictions as well as repossessions vehicle repossessions. So, um, I can see them trying this in the early days.

[00:19:39] Uh, particularly if granted girls is fired and they put a new director in, or have one step up, I can see this as being a part of the play.

[00:19:48] Joel Kennedy: [00:19:48] You know, in, in the past couple years, our, our group with the NAF, we, we have opened a very nice dialogue that we have going with, uh, the CFPB with, uh, Johnny Mac and [00:20:00] Damian English, a couple other folks, Jack and I had the luxury of being able to actually meet them in person.

[00:20:05] Um, They, they actually called us and they asked us to kind of talk about what we thought the impacts of COVID were going to be very early on. I love that, and I hope that that continues through, um, whatever administration takes over. Um, so, you know, when I hear some of these more extreme, uh, examples of, you know, moratoriums, et cetera, Yeah, I think, you know, if I look back at what happened with COVID, I think, I think it could happen.

[00:20:35] It could work, but it would require a significant amount of, of, of kind of corporate welfare to help out the companies to make sure that they can keep staff on the payrolls and keep things going. And so it’s like, I really think, okay. If you’re of, if you’re a large organization, you’re a bank. Then you have other very large institutions that are able to securitize, then you [00:21:00] have other, uh, say larger institutions with, with over a hundred million dollars in debt lines available to them.

[00:21:09] As you work your way down, it becomes more and more difficult. If I have a a hundred million dollar line with a major bank and I own, I’m only allowed to extend a certain part of my portfolio. I have all of these covenants, all these other performance issues. Okay, I’m going to have to, I’m going to have to come up with more equity in order to stay alive.

[00:21:30] And as you get smaller and smaller, it becomes more and more difficult to do that. So, you know, that’s a little bit of commentary there, but, but my wish is that there’s, there’s gotta be some kind of a balanced view that says, look, you know, these are companies that are employing people and keeping people safe.

[00:21:48] We’ve. If you look across the industry, I mean, all industries, they’ve done a fantastic job of managing the work from home equation. And that is really in my mind, Eric really helped to control a [00:22:00] lot of the spread because there are a couple of people that I know personally that have had COVID occur. And unfortunately it’s been their offices, California auto finance companies, and it’s painful.

[00:22:12] It’s painful to have to go through that. Um, Anything else on CFPB because you know, you went into the FTC and I want to spend a little time on FTC and then DOJ as well, but, uh, on the, on the CFPB horizon, any other final thoughts on that?

[00:22:31] Eric Johnson: [00:22:31] Just, you know, in terms of, you know, what folks can do, I think is, um, you know, shore up those, those compliance management systems, get your policies in order.

[00:22:43] Um, and if, if things change at the leadership at the Bureau, you better be ready. Um, because I can, it may not be a very quick change at the Bureau cause that’s a big ship to change direction, but they will change [00:23:00] and folks better be ready, unfortunately, but it hearkens back to four years ago with Cordray.

[00:23:08] Unfortunately,

[00:23:09] Joel Kennedy: [00:23:09] it was painful. I feel like I still have the war wounds. Um, Hmm. Well, let’s get off of that. Let’s talk a little bit about FTC. So, um, not as, not something that’s maybe as spoken about as much as CFPB, but the FTC, um, has an interesting structure where the commissioner, and then they have a, uh, uh, I’m sorry, a group of commissioners, but then they have a chairperson as well.

[00:23:32] Uh, tell us a little bit about that and how, what the rules are that govern that.

[00:23:36] Eric Johnson: [00:23:36] Yeah. I mean, the way that in your right, the FTC is made up differently. Unlike the Bureau that has a single director, that basically just has almost an unfettered power in that one director position, the FTC has five commissioners.

[00:23:53] They’re nominated by the president. They’re confirmed by the Senate. Um, they have a seven year term. Um, but [00:24:00] what’s interesting about the command commissioners. No more than three can be up to the same political party. So you, you do have a balance of them Republican commissioners. Now the president gets to choose.

[00:24:12] One commissioner of that group, two to act as chairman, um, uh, the commission right now we have a Republican chairman. Um, so if Biden take office, uh, then he can certainly, uh, appoint a new chairman of the commission probably. And then it’ll be, um, you know, that balance will have shifted. So, um, we do have some commissioners that, um, That one, one commissioner, his term actually has expired, but he can actually hold over until we get a new commissioner.

[00:24:46] And then the next term, I think it expires next September 20, 22. So they were all pretty well appointed about the same time, um, and have been, um, very active as well as the last. [00:25:00] Past six months to a year or

[00:25:01] Joel Kennedy: [00:25:01] so. So, you know, for the near term folks, um, Eric, you did a great job summarizing this we’re really looking, you know, within the next six months, year, whatever.

[00:25:10] New commissioner, uh, can be appointed. And then there’s, there’s a replacement of a Democrat commissioner that they’ll probably replace with another Democrat commissioner. Um, and then you get into a little bit about FTCs actions in dealerships. So because I’m not a retail guy. Okay. Uh, I, I rely on, uh, information and other people to help me.

[00:25:32] Have that pulse has the FTC. How, how historically, how, how active have they been in, um, you know, regulating or, or, or working with the

[00:25:43] Eric Johnson: [00:25:43] dealerships? I mean, in terms of the franchise dealer. So I guess historically they have not been all that active. Um, now I think that’s going to change. Um, if you look at well, for example, Dodd-Frank gave the Bureau [00:26:00] or, or rather the FTC new authority to write rules that would govern franchise dealerships, they haven’t done so yet.

[00:26:08] Um, if you look at the Bronx Honda case settlement, um, there were two commissioners that had a, um, uh, a, uh, statement that was issued. As a result of that case, where they were calling for the Bureau to actually use the FTC, rather to actually use their authority to start writing rules. Primarily about, um, you know, loan, loan participation, or auto participation dealer participation.

[00:26:35] Um, and that, that was one of their, their focus. Um, so I, I do think that we’ll see the Bureau or the FTC, whether I keep calling on the Bureau, for some reason it’s stuck in my brain. Um, I, I do think that we will see increased focus by the FTC on, you know, primarily dealer type stuff like safeguarding. You know, red flags, uh, privacy policies, all the things that are just [00:27:00] squirrely right away in the FTCs purview, um, that will then possibly impact finance companies as well.

[00:27:06] But it’s going to really focus more on, uh, on dealer centric

[00:27:10] Joel Kennedy: [00:27:10] type issues. Yeah. Yeah. And I see those kicking up more and more. You have so many more regulations that you have to deal with, uh, from consumer data. And, uh, with omni-channel where there’s, you know, these just seamless handoffs from my start off the buying process on some app that then flips me over to a dealership.

[00:27:30] And now I’m in their loan origination, you know, uh, ether and, and all my data’s like travel along. No, these are the places that I personally have concerns about these things, you know, I don’t, I don’t, I try not to write down things like, you know, personal identifiers, you know, or have them all in the same place.

[00:27:49] And sometimes you just don’t have a choice when you’re trying to get credit.

[00:27:54] Eric Johnson: [00:27:54] That’s true. Yeah. Well, in the, in the FTC, I mean, we saw just last week, they filed a suit against, uh, [00:28:00] Facebook for in essence antitrust issues. And then before we jumped on our call today, I saw the FTC had sent a request to a lot of social media companies like Facebook and tech talk.

[00:28:12] And you know, about the. How they collect consumers information, how they use their data, their information. Um, so they, they certainly do taking a lot more active stance about consumer data and that protects, you know, the use of that data, that protection of the data. Um, so I can see that translating over into, you know, a dealer go into it to a consumer or a consumer going to a dealer rather, and the use of their data collection, how it’s use, how it’s stored, all of that.

[00:28:44] Joel Kennedy: [00:28:44] So to close it up, we have a department of justice and, um, you were calling out the fair lending and the racial equity as being kind of the, the, the big issues are, or may drive the mandate for them. Um, in your article, you [00:29:00] kind of called it out some of the similar things with the FTC. I mean, where do we kinda, where do we delineate, uh, you know, Concerns as, as lenders.

[00:29:09] Uh, do I focus on the FTC mandates versus DOJ?

[00:29:15] Eric Johnson: [00:29:15] Hmm. I mean, it depends on who your regulator is. Uh, you know, if your primary regulator say, if you’re a franchise dealer, then you would be looking to the FTC and what they’re doing, but also the DOJ. Um, if you’re an auto finance company, you’re going to look to primarily to see what the CFPB is doing, but also the DOJ, I mean, the DOJ.

[00:29:36] Um, you know, they can be referred cases from the CFPB, um, in primarily like, um, I’m talking here, you know, fair lending, um, you know, those types of cases, those can also be referred over to the DOJ. So it really just depends. I think it’s important to keep an eye on all three, uh, to see what each are up to, but it depends on [00:30:00] who your, your regulator is and, and.

[00:30:02] And what issues those regulators are going after or attacking it at any given time.

[00:30:11] That’s why I raised all three. Cause you just, sometimes you just don’t know where the shots may be coming from. You have to have your head on a swivel and be aware of what they’re looking at, what they’re doing and where the attacks may come. Yeah,

[00:30:26] Joel Kennedy: [00:30:26] yeah, yeah. And the, the, the regulation, I mean, it’s just.

[00:30:29] It seems to be coming so far, uh, so fast as well. You know, I saw something today on JD supra about, uh, California, uh, now is going to license, um, collectors or licensed collection agencies, which different topic we’re not talking about collecting on your debt properly, but, uh, but there’s just so many things that change.

[00:30:47] And look, I remember being, uh, working in finance, uh, trying to go after, I think it was North Carolina in Colorado. Like I, even though I was collecting my own debt, I had to basically designate. I had to like [00:31:00] qualify my senior vice president of collections to get them qualified, to be able to run the department.

[00:31:05] I thought this guy’s got 30 years experience doing this. Um, You know, I don’t really know, I need to send in a resume, but if that makes you feel better than, than great.

[00:31:16] Eric Johnson: [00:31:16] Well, and that, and that’s one of the things that we haven’t talked about, um, Maxine waters, but, um, on the heels of, of quarter issue in his letter, she also issued a, um, I guess it was a press release where I read it.

[00:31:30] She was laying out some things that she thought that the new administration should do.

[00:31:35] Joel Kennedy: [00:31:35] Oh yeah. A bunch of things she wants to unwind. She wants to unwind

[00:31:40] Eric Johnson: [00:31:40] that’s right. And, you know, fire director, uh, uh, chronic or, uh, she wants to, uh, resend this debt collection rule that the Bureau has just issued and.

[00:31:52] Put it, you know, a more fulsome rule in place that helps protect consumers against, you know, quote unquote abusive collection. [00:32:00] And, and I suspect part of that would be well, let’s focus on, you know, first party collectors, not just, um, third-party debt collectors, but parties that are collecting on their own deaths.

[00:32:10] I mean, you know, we’ll see what happens again in the Senate. Uh, but yeah, I can see that being a push again, if we get a change in the director, Kind of like what we saw with the payday lending rule, where they kind of, they kind of pull that rule back a bit. I can see that happening with the debt collection

[00:32:27] Joel Kennedy: [00:32:27] rule as well.

[00:32:29] I think, I think we’re in for some interesting times, Eric, I really don’t hope that we go back to regulation by enforcement because it was, I mean, that, that time to an auto lender. Felt like the tenor and the intensity and the confusion and the frustration that I think a lot of us feel today in our political climate broadly, we really felt like we were just getting kept getting hammered.

[00:32:58] And it was like, [00:33:00] we kept getting hammered and we’re like, do you really understand how this, how this stuff works? Right? Like you’re making us out to be this demon and we have to police all these other entities. Um, I much prefer the relationship that we have meaningful relationship with the regulators because you know, and again, I’ve got a biased point of view.

[00:33:22] I’m sure you do too, but. You know, you spend all day talking to two lenders that are calling you because they’re concerned about something right there they’re being proactive, or maybe they weren’t as proactive as they should have been that probably a control that they should had that wasn’t really in place.

[00:33:38] But if you, if you really talk to these folks, it’s like, Hey, well, I paid off this guy’s loan and I let this guy go and I helped him with a dealership issue with this other thing. And. You know, I, I don’t want to lose sight of that. I want to have a good, nice, big, full picture view. And I want to have a relationship with the regulators.

[00:33:55] And I hope that that continues because that was something that at least from my [00:34:00] estimation was just not possible under the Cordray administration. That type of relationship was just not in the cards. Yeah. I mean,

[00:34:08] Eric Johnson: [00:34:08] it is no way to, to help plan a business, help advise a business, whereas just it’s the old gotcha.

[00:34:17] Uh, type of approach, you know, it just, it just fundamentally feels unfair. And it’s just, I mean, I’m talking about the regulation by enforcement, but it’s, it’s Tuesday. It’s a new rule. Well, Wednesday here’s yet another rule it’s just, and you can’t plan your business like that. Um, you can’t advise. Advise your business or your clients like that.

[00:34:42] And it’s just, I I’m with you. I hope we don’t go back to that. And I think if, if we do, I think folks need to really challenge that like, like folks started to towards the end of Cordray’s, uh, tenure. Um, but boy I’m with you. It was a, it was a tough time. [00:35:00] For, for us as advisors and certainly for our clients as well.

[00:35:03] And we don’t

[00:35:03] Joel Kennedy: [00:35:03] go back to that either. Yeah. Well, Eric, this has been great. Um, folks, Eric, Eric Johnson with Hudson cook with us. He is one of the preeminent voices within consumer lending. Eric. Um, you mentioned in the article, you know, and I’d love to pre, to kind of punctuate this about the necessity for, uh, having a good compliance management system.

[00:35:28] Um, but. You know, please say a word or two about that and closing, but how do people get it? What’s the best way for folks to get ahold of you if they need guidance or, um, want to kick something around, um, phone email. Let’s go ahead and just, yeah,

[00:35:43] Eric Johnson: [00:35:43] sure. Uh, yeah, I mean, I, you can reach me by emails, just eatJohnson@hudcode.com.

[00:35:50] Um, or by phone four or five, six Oh two, three eight one two. Like most of us I’m pretty much always connected. I don’t think, I think during COVID times, I don’t know that [00:36:00] there’s an off button, so I’m pretty much always have no handy cell phone around or, or, you know, email constantly. But, but yeah, you’re right.

[00:36:09] To echo your concerns. I mean, if you don’t have a CMS on board, I still run into folks. The sometimes they don’t have a CMS, but by get a CMS in place, make sure it’s robust, make sure it tracks your, your actual policies and procedures. Um, um, you know, make sure you shore up your consumer facing documents.

[00:36:30] There are some things that you can take now that I think that will be really helpful. And getting your CMS in place and making sure it tracks your policies and procedures are really a must for the it’s like getting prepared for upcoming storm. You know, we just had some snow here getting, getting things, Batten it down, preparing for that storm.

[00:36:49] You know, you can weather the storm, but you’ve got to get prepared and plan for it.

[00:36:53] Joel Kennedy: [00:36:53] Yes. Well said Eric and having a good CMS is going to be good weather. Whether [00:37:00] we think that this administration is going to change or not, it’s just a great way to manage your business. And I’ve dealt with folks at that, that run very large finance companies, and they believe that as well, that having good CMS actually gives them more of an advantage and keeps them on the front foot.

[00:37:17] Eric Johnson: [00:37:17] That’s right. Yeah. Great point. It’s also a competitive advantage too, and it keeps, it keeps you out of trouble and keeps the ship sailing smoothly through unchartered or sometimes rough waters. So it can really help

[00:37:32] Joel Kennedy: [00:37:32] if you’re running an auto finance company and you want to be able to sleep at night.

[00:37:35] This is one of the things that will help it. It truly does. Yeah, exactly awesome. Well, everybody, Eric Johnson. Thank you so much. Eric Johnson of Hudson cook. Uh, we’re talking a little bit about compliance, but also, uh, reading the tea leaves. What to expect in a, in a bar and Harris administration. Eric, thank you so much.

[00:37:54] Eric Johnson: [00:37:54] All right. Thanks Rob. The consumer five

[00:37:58] Joel Kennedy: [00:37:58] podcast has been brought to you by [00:38:00] Northbridge loan software. That accelerates change. We’d also like to thank the national automotive finance association, the only trade association, exclusively serving the non-prime auto financing industry.