; NARCA Comment on CFPB Proposed Rule Defining Larger Participants In Nonbank Market
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NARCA Comment on CFPB Proposed Rule Defining Larger Participants In Nonbank Market

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									     April 17, 2012

     Monica Jackson
     Office of the Executive Secretary
     Consumer Financial Protection Bureau
     1700 G Street NW
     Washington, D.C. 20006

     Re:      Docket No. CFPB-2012-0005
              Bureau of Consumer Financial Protection Proposed Rule Defining Larger Participants

     Dear Ms. Jackson:

     These comments are submitted on behalf of the National Association of Retail Collection
     Attorneys (“NARCA”) in response to the proposed rule by the Consumer Financial Protection
     Bureau (the “Bureau”) published on February 17, 2012, defining Larger Participants in Certain
     Financial Product and Service Markets (the “Proposed Rule”), 77 Fed. Reg. 9592 (Feb. 17,
     2012). NARCA is a trade association dedicated to serving law firms engaged in the practice of
     consumer debt collection law. NARCA's mission is to preserve and protect the integrity and
     viability of legal collections with professionalism, ethical actions, and a service-oriented
     approach. In addition to applicable laws, state bar association licensing and certification,
     attorney members of NARCA are required to adhere to the NARCA Code of Professional
     Conduct and Ethics.

     NARCA appreciates the opportunity to comment on the important statutory and policy
     considerations raised by the proposed rulemaking, especially as it impact attorneys and law firms
     engaged in the practice of consumer debt collection law for their creditor clients.

       I.     Introduction

     Section 1024 of the Consumer Financial Protection Act of 2010 (Title X of the Dodd-Frank Wall
     Street Reform and Consumer Protection Act of 2010, 12 U.S.C. 5301, et seq.), grants the Bureau
     authority to supervise certain persons for compliance with Federal consumer financial laws. In
     addition to regulating nonbank covered persons in the residential mortgage, private education
     lending and payday lending markets, the Bureau has the authority to identify and then supervise
     nonbank “larger participant[s]” in markets for other consumer financial products or services.
     Although the statute provides the Bureau with no explicit direction to do so, the Bureau’s
     Proposed Rule includes law firms engaged in debt collection services within the proposed
     definition of “larger participants,” despite a specific exclusion under the Dodd-Frank Act with
     respect to the “practice of law.” 12 U.S.C. § 5517(e). NARCA members are licensed attorneys
     who are engaged in the practice of law from the moment their client refers a delinquent account
     to them until the matter is resolved to the client’s satisfaction through settlement or litigation.
     The Proposed Rule would improperly regulate the practice of collection law in a manner that is
     contrary to the intent of the lawmakers enacting the Dodd-Frank Act, as evidenced by the text of
     the rule and the relevant statutory history. The practice of law is inappropriate for federal
National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 1
     regulation and is an area traditionally reserved for the state courts and state bar associations.
     This distinction is crucial in order to maintain an independent legal profession as an important
     force in preserving the rule of law.

      II.     Regulatory Framework

     The Dodd-Frank Act from which the Bureau’s regulatory authority is derived specifically states
     that “the Bureau may not exercise any supervisory authority or enforcement authority with
     respect to an activity engaged in by an attorney as part of the practice of law under the laws of a
     State in which the attorney is licensed to practice law,” subject to two limited exceptions. 12
     U.S.C. § 5517(e). The legislative history makes clear that this exclusion was adopted to avoid
     “giving the new Bureau authority to regulate the practice of law [which] could materially
     interfere with and jeopardize sensitive aspects of the attorney-client relationship, including the
     attorney-client privilege and work product protection that enable clients to obtain sound legal
     advice from their attorneys on a protected confidential basis.” 156 Cong. Rec. 1347, 1349 (July
     15, 2010) (“Conference Report on H.R. 4173, Dodd-Frank Wall Street Reform and Consumer
     Protection Act,” Speech of Rep. John Conyers, Jr., as Chairman of the House Judiciary
     Committee and Dodd-Frank House Conferee). The limited exceptions to this broad exclusion
     include:

              •   Activity by a firm “that is not offered or provided as part of, or incidental
                  to, the practice of law, occurring exclusively within the scope of the
                  attorney-client relationship;” or

              •   Activity by a firm “that is otherwise offered or provided by the attorney in
                  question with respect to any consumer who is not receiving legal advice or
                  services from the attorney in connection with such financial product or
                  service.”

     12 U.S.C. §§ 5517(e)(2)(A) and (B). Further, the Act provides that there shall be no impact on
     “existing authority” “of the Bureau with respect to any attorney, to the extent that such attorney
     is otherwise subject to any of the enumerated consumer laws.” Id. at § 5517(e)(3).

                  A. Exclusion for the Practice of Law

     The Bureau’s Proposed Rule appears to assert that activities conducted by lawyers and legal
     professionals undertaken to effectuate the representation of creditor clients are not the “practice
     of law” because some of these same activities also may be conducted by entities incorporated by
     non-lawyers. See Preamble to Proposed Rule (suggesting that because debt collection agencies
     also send dunning letters, if the service is performed by a debt collection law firm, it is not the
     “practice of law”).

     The legislative history of the rule, however, is clear that the Dodd-Frank conferees intended the
     exclusion for the practice of law to be construed as broadly as the term “practice of law” is
     construed by state courts and state bar associations to prevent “regulation from a new source
     [that] would unavoidably conflict with the existing rules and lines of accountability.” 156 Cong.

National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 2
     Rec. 1347, 1349 (the “practice of law” exclusion was adopted because “our Committee was
     determined to avoid any possible overlap between the Bureau’s authority and the practice of
     law”) (emphasis added). More specifically, the legislative history explains that even the work of
     non-lawyers being supervised by lawyers is included within the “practice of law” as long as the
     state court or bar would regulate the activity:

              Section 1027(e) of the final bill . . . . excludes from Bureau supervisory and
              enforcement authority all activities engaged in as part of the practice of law
              under the laws of a State in which the attorney in question is licensed to
              practice law. To the extent that a paralegal, secretary, investigator, or law
              student intern is performing activities under the supervision of an attorney,
              and in a manner recognized under the laws of the relevant State as within the
              scope of the attorney's practice of law-and only to that extent-those activities
              also fall within this protection.

     Id. The American Bar Association, state courts, and state bar associations have long concluded
     that the high ethical standards applicable to lawyers apply even when a lawyer is engaged in an
     activity that may be performed by one who is not a member of the bar. See, e.g., ABA Comm.
     on Ethics and Professional Responsibility, Formal Op. 328 (1972) (citing Opinion 57 (1932))
     (“In carrying on law-related occupations and professions the lawyer almost inevitably with [sic]
     engage to some extent in the practice of law, even though the activities are such that a layman
     can engage in them without being engaged in the unauthorized practice of law.”); id. (citing
     Opinion 272 (1946)) (“‘In every case where a lawyer performs services for a client which could
     be performed by one not a member of the bar, nevertheless, in performing them in the course of
     his legal services he is acting as a lawyer and subject to the Canons.’”).

     Thus, when lawyers perform services on behalf of clients some of which could be performed by
     non-lawyers, they are always subject to regulation and oversight by state courts and state bar
     authorities. See, e.g., id. (“The lawyer may have a duty under DR 4-101 to preserve confidences
     and secrets, or information, acquired in carrying on the second occupation even though others
     engaged in that occupation do not have a similar duty. Similarly, the lawyer may, in connection
     with the second occupation, owe a duty as a fiduciary even though the relationship of others in
     that occupation to their clients and customers is not that of a fiduciary; see DR 5-101, DR 5-104,
     and DR 5-105.”).

     In enacting the relevant provisions of the Dodd-Frank Act, the House Judiciary Committee
     explicitly recognized that any Bureau rulemaking which affects lawyers must be consistent with
     the State supreme courts’ and state bars’ views regarding what activities constitute the practice of
     law:

              It is generally contemplated that the new Bureau will make rules regarding
              various aspects of its authority. Any determinations by rule, or otherwise,
              regarding what activities constitute the practice of law should be consistent
              with the views and practices of the State supreme court or State bar in
              question as to what activities it regards as part of the practice of law and
              oversees on that basis, giving appropriate deference to comments received
National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 3
              from the State supreme courts and State bars, supplemented with further
              guidance as appropriate from the other indicia set forth in section 1027(e)(2).

     156 Cong. Rec. 1347, 1349.

     Indeed, the self-regulation of lawyers by state courts and state bar associations serves an
     important societal function:

              Self regulation also helps maintain the legal profession’s independence from
              government domination. An independent legal profession is an important
              force in preserving government under law, for abuse of legal authority is more
              readily challenged by a profession whose members are not dependent on
              government for the right to practice.

     Preamble, ABA MODEL RULES OF PROFESSIONAL CONDUCT, ¶¶ 10-11. Consistent with this
     principle, a majority of jurisdictions that have considered whether state consumer protection laws
     apply to lawyers have concluded that they do not. Beyers v. Richmond, 594 Pa. 654 (Pa. 2007)
     (citations omitted). Further, courts which strictly adhere to the separation of powers doctrine
     hold that consumer protection laws do not apply to lawyers because “[a]ny encroachment upon
     the judicial power by the legislature is offensive to the fundamental scheme of our government.”
     Id. at 666 (quoting Commonwealth v. Sutley, 474 Pa. 256 (Pa. 1977)). The unique relationship
     between lawyers and the judicial system and the constant oversight by state authorities makes
     lawyer professionals different from non-lawyer professionals, and makes federal regulation of
     lawyer professionals improper, as the House Judiciary Committee recognized in inserting the
     “practice of law” exclusion.

     Except for the references to the “practice of law” exclusion, Dodd-Frank does not specifically
     identify lawyers or law firms as regulated parties under the new statute. As one D.C. federal
     court has recognized, where “Congress has left some ambiguity as to whether attorneys were to
     be regulated by not explicitly extracting attorneys” from the statutory definition of regulated
     parties, “the lack of clarity in the statute cannot reasonable be interpreted as either an explicit or
     implicit grant to the [regulator] to ‘cure the ambiguity’ by regulating attorneys given that the
     regulation of the legal profession has been left to the prerogative of the states.” American Bar
     Ass'n v. F.T.C., 671 F.Supp.2d 64, 74 (D.D.C. 2009) (concluding that a lawyer engaged in the
     practice of law did not become a “creditor” in the financial services industry), vacated as moot
     and remanded based on superseding statute, 636 F.3d 641 (D.C. Cir. 2011). For Congress to
     alter the usual balance of power between state and federal regulation on an issue such as this, “it
     must make its intention to do so unmistakably clear in the language of the statute.” Id. (citations
     and quotations omitted). Here, unlike in the American Bar Ass'n v. F.T.C. matter, Dodd-Frank
     does include a clear “practice of law” exclusion as well as unambiguously stated legislative
     intent that this exclusion be interpreted “to avoid any possible overlap between the Bureau’s
     authority and the practice of law.” Given this clear legislative direction, the Bureau should not
     be including within its proposed definition of larger participants parties engaged in the “practice
     of law.”



National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 4
                  B. Exception for Consumer’s Not Receiving Legal Advice

     The statute includes a second exception from the “practice of law” exclusion for activity by a
     firm “that is otherwise offered or provided by the attorney in question with respect to any
     consumer who is not receiving legal advice or services from the attorney in connection with such
     financial product or service.” The exception may be intended to apply to: (1) debt settlement
     attorneys; (2) attorneys acting as escrow agents; or (3) attorneys who sell products to consumers
     without selling simultaneous legal advice, e.g., do-it-yourself form sales contracts, leases or
     wills, among other options. However, the Bureau appears to be interpreting this provision to
     mean that all attorneys who represent clients adverse to consumers are somehow subject to
     Bureau regulation simply because the consumer is the defendant, without regard to whether these
     attorneys are engaged in “the practice of law.” See Proposed Rule at 9597 & n.28. The proper
     interpretation of the exception cannot be to gut the “practice of law” exclusion. Lawmakers
     could not possibly have intended that attorneys who represent clients adverse to consumers are
     subject to federal regulation just because these attorneys are adverse to consumers, especially
     given the clear direction provided to the Bureau to avoid regulation of the “practice of law.”

                  C. Existing Legal Authority

     The Bureau broadly asserts that 12 U.S.C. section 5517(e)(3) provides a basis for this new
     regulatory authority, since the Bureau has been assigned responsibility for the Fair Debt
     Collection Practices Act. See Proposed Rule at n.28. The Bureau misinterprets section
     5517(e)(3), however. This is not an exception to the “practice of law” exclusion. It simply
     makes clear that the Bureau’s existing authority under other consumer statutes is not diminished
     by the Dodd-Frank “practice of law” exclusion. Importantly, and contrary to the Bureau’s
     assertion, the “existing authority” exception does not expand or create new regulatory authority
     over the practice of collection law to be exercised by the Bureau in this Dodd-Frank rulemaking.
     See 156 Cong. Rec. 1347, 1349 (“Section 1027(e)(3) makes clear that existing federal regulatory
     authority over activities of attorneys, either under enumerated consumer laws as defined in the
     bill, or transferred to the new Bureau from existing agencies under subtitle F or H of Title X, the
     Consumer Financial Protection Bureau title, is not diminished.”).

                  D. Exemption from Rulemaking Contemplated

     It is important to note that, in drafting Dodd-Frank, lawmakers explicitly provided the Bureau
     with authority to conditionally or unconditionally exempt from regulation any class of covered
     persons, service providers, or consumer financial products or services, from any provision of this
     title, or from any rule issued under this title, as the Bureau determines necessary or appropriate to
     carry out the purposes and objectives of this title, taking into consideration, inter alia, existing
     provisions of law which are applicable to the consumer financial product or service and the
     extent to which such provisions provide consumers with adequate protections. 12 U.S.C. §
     5512(b)(3)(A) & (B). Coupled with the “practice of law” exclusion, this provision supports the
     exclusion of law firms from the scope of the Bureau’s rulemaking, and clearly gives the Bureau
     authority to refrain from including law firms within the proposed definition of “larger
     participants.” The Bureau should revise the Proposed Rule to specifically exclude law firms
     from the proposed definition of nonbank “larger participants”.
National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 5
                  E. Rulemaking Standards

     Congress was aware that the Bureau’s sweeping authority to regulate all market participants
     offering or providing consumer financial products or services potentially could burden
     consumers and covered persons in ways not outweighed by the benefits of the subject consumer
     protection rule. So, Congress created a mandate that the Bureau must consider, in connection
     with any regulations promulgated under the Federal consumer financial laws, “the potential
     benefits and costs to consumers and covered persons.” This consideration must include the
     potential reduction in access by consumers to consumer financial products or services as a result
     of the rule and the impact of the rule on banks (other than “very large banks”) and on consumers
     in rural areas. In addition, the Bureau is required to consult with the appropriate prudential
     regulators or other Federal agencies prior to proposing a rule and during the comment process.
     Section 1022(b)(2).

     It appears the Bureau may not be giving due regard to the requirements for special administrative
     procedures set forth in 1022(b)(2). First, without substantiation, the Bureau states that benefits
     to consumers will result from larger participants’ “likely increased compliance with Federal
     consumer financial law.” 77 Fed. Reg. 9604. Yet, this “larger participant” rule and others that
     are likely to follow are not compliance rules. The Proposed Rule would grant authority to the
     Bureau to supervise and examine larger participants, but nowhere mandates that such larger
     participants must comply with any particular law or regulation. In effect, the Bureau appears to
     assume, without data or evidence, that regulatory imposition within its authority under Section
     1024(a)(2) will benefit consumers. On the other hand, the Bureau details the additional costs of
     compliance and response to supervisory activity, but states that such potential costs are
     “probabilistic in nature.” NARCA submits that a cost-benefit analysis under Section 1022(b)(2)
     is not properly conducted if premised on assumed benefits yet merely “probabilistic” costs.

     The Bureau recognizes that the Proposed Rule, if adopted, may have impacts on consumers’
     access to consumer financial products or services. The Bureau apparently believes predicting
     such impacts on consumers will be difficult because consumers are not end customers in these
     markets. 77 Fed. Reg. 9605. However, here the Bureau may be missing the main impact on
     credit availability, that is, if the costs imposed by increased supervision are passed on to
     consumers (which is commonly the case directly with consumer reports and arguably indirectly
     with respect to debt collection activities), consumers may be less able to afford lawful and
     appropriate consumer financial products and services in the first instance.

     The Bureau should conduct the analysis required by Section 1022(b)(2) before finalizing the
     Proposed Rule.

     III.     Larger Consequences of the Proposed Rulemaking

     In addition to being contrary to the intent of lawmakers and diminishing the self-regulation of the
     legal profession, the broad reach of the Proposed Rule raises significant and troubling concerns
     for attorneys and the public. The Bureau’s apparent conclusion that debt collection services are
     not the “practice of law” has significant implications for law firms’ ability to act as law firms.
     This concern is not limited only to debt collection law firms.

National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 6
                  A. Unclear $10 Million Threshold

     The current proposal seeks to define as “larger participants” all law firms that collect $10 million
     or more in annual receipts from debt collection services. It is not clear which fee receipts of law
     firms are to be measured, however. It appears that medical debt collection receipts would not be
     included. 77 Fed. Reg. at 9597. NARCA is unclear as to whether the definition is intended to
     include fee receipts from mortgage foreclosure services, but believe that these fee receipts are
     not intended to be included. In addition to medical debt, other areas of debt collection that do
     not involve financial products should also be excluded from consideration of a "larger
     participant’s" annual receipts calculations. These industries include student loans, municipal
     debts, taxes, check, utilities and telecommunications, and general contracts including attorney
     retainer and fee agreements. These types of debt do not represent consumer financial products as
     defined by the CFPB, and like medical debt, any fees or revenue should be exempted from the
     Bureau's definition of large market participant. NARCA recommends greater clarity in the
     definition of the categories of annual receipts to be calculated so that regulated parties will be on
     notice of the measuring stick to be used.

     It is worth noting that debt collection need not be a significant proportion of a firm’s practice in
     order to qualify, and some large law firms, indeed some in the AmLaw 200, may unintentionally
     meet this dollar threshold based on fee receipts and be subject to the regulations. Certainly, if
     the Proposed Rule is finalized as written, every law firm would have to put monitoring measures
     in place to determine when the level is reached.

                  B. Potential Impact of Excluding Legal Services in Debt Collection from
                     “Practice of Law”

     Firms that practice debt collection law may, as a result of Bureau action, be unable to collect
     malpractice insurance coverage for liability claims arising out of these activities, as these policies
     insure only matters arising within the “practice of law.” This rule would call into question, for
     the first time, whether legal services performed on behalf of a creditor client are “practice of
     law” activities.

     Most importantly, application of the contemplated reporting and regulatory requirements rule to
     attorneys engaged in collection law has the potential to undermine the attorney-client privilege, a
     fundamental bedrock of our legal system. Given the lack of statutory protection for disclosure of
     privileged materials to the Bureau, it is entirely possible that a court may determine that the
     production of a client’s confidential and privileged documents by a law firm to the Bureau
     results in a waiver of the client’s privileges and confidences with respect to matters addressed in
     those documents.1 Such a determination would have a serious and detrimental effect on the
     attorney-client relationship and would create “another barrier for attorneys to build the level trust
     necessary for clients to feel they can openly communicate with their attorneys. And without the
     free flow of information between an attorney and client, surely the quality of representation an

     1
      Although the Bureau has attempted to address this issue through regulatory avenues, in its January 4, 2012 Bulletin
     12-01 and March 15, 2012, rulemaking, 77 Fed. Reg. 15286 (March 15, 2012), it is clear that Congress has not
     extended the specific, statutory, non-waiver protections enjoyed by other financial regulatory agencies to the
     Bureau. See 12 U.S.C. §§ 1813(q), 1828(x).
National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 7
     attorney can provide will be adversely impacted.” American Bar Ass'n v. F.T.C, 671 F.Supp.2d
     at 87.

     The potential chilling effect on the attorney-client relationship was a consistent theme in
     comments NARCA received from its members about this Bureau proposal. As one NARCA
     member organization stated,

              The reason for the attorney/client privilege is to allow the free flow of
              information by and between a client and its counselor. If clients are
              concerned that anything that they send to us as their counsel is discoverable,
              then it is likely, if not certain, that clients will not send us their internal
              collection notes. Many times, these notes provide information for us that
              allow the attorney debt collector to know how best to deal with the case. That
              information, for instance, will tell us if the debtor has stated they are
              represented by counsel or if the client has been contacted by counsel.

     Another NARCA member organization noted the important role that debt collection law firms
     have in our society by protecting a creditor’s interests, through litigation, when consumers have
     the ability, but not the willingness, to repay their financial obligations. A disruption in this
     relationship has the potential to harm consumers by decreased access to affordable credit. As it
     described the problem:

              Creditors utilize debt collection law firms in order to protect the sanctity of
              the credit they extend to consumers. Without legal repercussions for non-
              payment of debt, our clients would be plagued by unaffordable default rates.
              In our consumer-based economy, it is more important than ever that
              consumers have access to affordable credit. If our clients cannot guarantee
              that the vast majority of accounts will be repaid in full, the extension of credit
              to ordinary consumers will have to be eliminated.

     IV.      Alternative Proposed Language

     For all of the foregoing reasons, NARCA believes that the inclusion of law firms engaged in the
     practice of debt collection law within the definition of larger participants is contrary to the terms
     of the Dodd-Frank “practice of law” exclusion, and contrary to the intent of the lawmakers, who
     clearly took an expansive view of the scope of the exclusion. However, if the Bureau intends to
     promulgate a rule that includes debt collection law firms as larger participants, it is imperative to
     the proper functioning of the attorney-client relationship that those activities that are regulated by
     state courts and state Bar associations be excluded. Thus, as an alternative to excluding debt
     collection law firms from the definition of larger participants, NARCA proposes amending the
     definition of “consumer debt collection” as follows (with additions shown in underline):

              Consumer debt collection means collecting or attempting to collect, directly or
              indirectly, any debt owed or due or asserted to be owed or due to another and
              related to any consumer financial product or service. A person offers or
              provides consumer debt collection where the relevant debt is either: (1)

National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 8
              collected on behalf of another person; or (2) collected on the person’s own
              behalf, if the person purchased or otherwise obtained the debt while the debt
              was in default under the terms of the contract or other instrument governing
              the debt. Notwithstanding the foregoing, consumer debt collection shall not
              include the practice of law by an attorney (or non-attorneys supervised by an
              attorney) in the course of an attorney-client relationship that is subject to
              oversight or regulation by the applicable attorney disciplinary authority in the
              jurisdiction(s) in which the attorney is licensed to practice law.

     12 C.F.R. § 1090.101(g) (proposed).

      V.      Conclusion

     NARCA urges the Bureau to use its existing authorities to revise the proposed rule to specifically
     exclude law firms from the definition of nonbank “larger participants,” consistent with the
     exclusion in Dodd-Frank for the “practice of law” and the intent of the lawmakers.
     Alternatively, if the Bureau does not exclude law firms from the definition of nonbank larger
     participants, NARCA urges the Bureau to amend the definition of consumer debt collection to
     exclude those activities engaged in by an attorney that would be considered the practice of law
     and be subject to the oversight of the appropriate attorney disciplinary authorities. Such an
     exception would help preserve the fundamental notion of attorney self-regulation, an effective
     tool in ensuring high standards of ethical behavior and a cornerstone of a democratic society
     based on the rule of law.

     Respectfully Submitted,

     Louis S. Freedman, President




National Association of Retail Collection Attorneys                   NARCA Operations
601 Pennsylvania Avenue, NW, Washington, D. C. 20004                  6151 Lake Osprey Drive, Sarasota, FL 34240
202-861-0706 | Fax 240-559-0959 | narca@narca.org | www.narca.org     941-373-1305
                                                             Page 9

								
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