Bill Exempting Lawyers from FDCPA Draws Ire of Texas Law Professors

Three law professors from Texas took aim at H.R. 4550, the "Practice of Law Technical Clarification Act of 2017," looking to exempt lawyers from the definition of a "debt collector" when engaged in the practice of law. The bill looks to amend the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of a “debt collector,” and to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, according to the bill summary. In a commentary yesterday in The Monitor, Profs. Mary Spector of Southern Methodist University Dedman School of Law (Dallas), Genevieve Hebert Fajardo of St. Mary’s University School of Law (San Antonio) and Neil L. Sobol of Texas A&M University School of Law (Fort Worth) write that, if passed into law, the bill "would remove important consumer protections in the debt collection process by giving attorneys a pass on accountability for unfair and deceptive practices under the federal Fair Debt Collections Practices Act if they file a lawsuit against an alleged debtor." The bill was originally introduced as H.R. 1849 by Rep. David Trott (R-Mich.) in April, and a hearing was held in September by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Trott announced in September that he was retiring at the end of his term. Rep. Vicente Gonzalez (D-Texas) re-introduced H.R. 4550 by the same title and language in December. No hearing or mark-up is currently listed on the House Financial Services Committee schedule for the bill. Click here to read the bill text.

Click here to read the full commentary.

South Dakota House Judiciary Delays Action on Education Transfers in Bankruptcy

The South Dakota House Judiciary Committee will reconsider a bill mandating that transfers from parents to public colleges and universities for their child’s education cannot be voided in the event of bankruptcy, South Dakota Public Radio reported. Guilherme Costa, general counsel for the South Dakota Board of Regents, says that South Dakota House Bill 1059 ensures that bankruptcy trustees would be unable to get funds back from public colleges and universities. The South Dakota House Judiciary Committee yesterday decided on a voice vote to bring the issue up again at a later date, when an expert in bankruptcy law is able to testify. Click here to view the text of the legislation.

Mulvaney Requests No Money for CFPB, Will Use Reserves

Acting Consumer Financial Protection Bureau Director Mick Mulvaney has requested "zero" funding from the Federal Reserve in the second quarter and instead will use reserves to fund the agency, National Mortgage News reported. Mulvaney sent a letter yesterday to Fed Chair Janet Yellen stating that the CFPB already has $177 million in reserve, enough to cover its $145 million second-quarter budget, and therefore it does not need any funding. "This letter is to inform you that for second quarter of fiscal year 2018, the bureau is requesting $0," Mulvaney wrote to Yellen. Mulvaney said that since the bureau had a $177.1 million reserve balance at the Federal Reserve Bank of New York, he determined that "no additional funds are necessary to carry out the authorities of the bureau for fiscal 2018, Q2." Those funds were set aside by former CFPB Director Richard Cordray in case of emergencies, but Mulvaney suggested he didn't see the point; there is no statutory authority that mandates that the CFPB maintain a reserve.

Commentary: Examining the RICO Lawsuit in the Weinstein Case

The Racketeer Influenced and Corrupt Organizations Act (RICO) is among the federal government’s most powerful tools to combat long-running criminal organizations, according to a New York Times commentary on Tuesday. Unlike most criminal statutes, RICO contains a civil component that allows it to be used to turn ordinary business disputes that would be filed in state courts into federal cases. A recent complaint that shows how broadly the law can be applied to areas far outside organized crime is the RICO lawsuit filed in December against Harvey Weinstein, the Weinstein Company and its directors, and others. The complaint accuses them of helping Weinstein cover up a pattern of sexual harassment through what it calls the “Weinstein Sexual Enterprise.” The class action, filed on behalf of women who dealt with Weinstein, claims that the enterprise was designed “to harass, threaten, extort and mislead both Weinstein’s victims and the media to prevent, hinder and avoid the prosecution, reporting or disclosure of his sexual misconduct.” A likely initial challenge by the defendants in the Weinstein case, according to the commentary, will be a motion to dismiss on the ground that the defendants cannot be shown to have done anything more than occasionally help Weinstein deal with the fallout of various episodes. In Boyle v. United States, the Supreme Court held that there must be three structural features to establish this type of enterprise: “a purpose, relationships among those associated with the enterprise and longevity sufficient to permit these associates to pursue the enterprise’s purpose.”


A new ABI podcast will examine the risks and benefits of a restructuring by the Weinstein Company. Tune in next week to find out more!

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