<ul> <li data-leveltext="" data-font="Symbol" data-listid="12" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1"><span data-contrast="none">Alerts on new rules and guidance</span><span data-ccp-props="{"134233117":true,"134233118":true,"201341983":2,"335559739":160,"335559740":336}"> </span></li> </ul> <ul> <li data-leveltext="" data-font="Symbol" data-listid="12" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1"><span data-contrast="none">Subprice and discrimination compliance update</span><span data-ccp-props="{"134233117":true,"134233118":true,"201341983":2,"335559739":160,"335559740":336}"> </span></li> <li data-leveltext="" data-font="Symbol" data-listid="12" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1"><span data-contrast="none">The regulators' view on lender best-practices</span><span data-ccp-props="{"134233117":true,"134233118":true,"201341983":2,"335559739":160,"335559740":336}"> </span></li> </ul> [toggle title="TRANSCRIPT"] <div class="transcript-scroll-box"> 00:00So this is the third poll of the day, again, sponsored by white Clark group, How have your loan approval rates changed in the past 12 months and by pretty significant margin remain basically unchanged. So kind of consistent approval rates is is the feedback from this poll. I also did before we get into this next session, I did want to share with you just bring your attention to big wheels. So that's in case you don't know what that is. That's our ranking of the top 100 lenders in the nation. It also includes analysis on the market and a forecast for originations and you could check that out at big wheels data.com. Now we turn we turn our attention to the regulator's Roundtable. we're privileged to have not one but two moderators for this panel Mark Edelman and William Hoffman Mark Edelman serves as chair of McGlinchey Stafford's National Financial Services compliance practice. He's been with McGlinchey Stafford since 2001. Previously, he was with bennish, friedlaender, Copeland and Aronoff. His practice has a particular focus on motor vehicle financing and leasing for captives and independent finance companies Buy Here Pay Here dealers and related finance companies. his law degree is from Ohio State University. And William Hoffman joined royal media in 2016 as an associate editor for auto finance news, and has covered a wide range of industry trends from new vehicle ownership models to CFPB consent orders prior to Joining AFM he covered music technology and culture for several publications including the Tennessee in and Cleveland scene magazine. He is a graduate of Ohio University. So this is your Ohio moderating team. We're not going to talk about the Indians at all. Please, gentlemen, take it away. 02:21 Thank you, JJ. I know that this is the point of the day where people you know, turn their eyes the cocktail reception, but I think this is important panel, and we'll be able to keep your attention up here. Just a reminder to submit questions through the app. This event is really about you know, answering your questions of these regulators here and getting answers for you guys. So please submit your questions there. You can do it on the app or through slider with a code. p 366. I want to start by introducing co moderator Mark Edelman, consumer financial services attorney for McGlinchey Stafford. Mark, can you give us a little bit of your background and expertise? 02:57 Sure. Thanks for having me. And thanks everybody, for 03:01 Staying for what I think is the marquee panel. This is your chance to actually see the people who not William in me, but Calvin and Marcella who are really the people who are at the cutting edge of regulation in this industry from the federal level and who have day to day interaction with with a lot of you in this room. I have the privilege of chairing McGlinchey Stafford's 25 lawyer consumer finance practice. We are a national law firm. We represent financial institutions, lenders, depository institutions, mortgage lenders, and in my case, I do a significant amount of work in the personal property finance, particularly auto financing and leasing and we, you know, are very pleased to provide day to day compliance advice as well as working with our clients in preparing For a number of the examinations that my two panelists to the right are involved with, and sometimes also to the extent there are any investigations, also working with them as well. So it's my privilege to be here, both on this panel and to be able to speak with you today. 04:17 And so, you know, it's been another big year for compliance and auto finance, yet there's also sort of a growing sense of stability. lenders have bumped up their compliance management systems, the rules of the road have become a little more clear as many have accepted that investment compliance is a you know, part of doing business in this industry. We like to think events like this assist you all in that process. However, we know the questions are main new technologies are being added challenges for protecting consumer privacy. ancillary products have come under scrutiny at the dealerships, and there's a new administration bringing added challenges to the landscape. You know, in fact, just this Tuesday night, we had a vote in the Senate to repeal the CFPB arbitration rule which we'll touch on in a moment here. So, you know, welcome Calvin Hagen's, Deputy Assistant Director for originations office supervision policy for the Consumer Financial Protection Bureau, and Marcella Sigler Attorney for the Federal Trade Commission. So thank you for joining us. Can you both maybe start by giving a brief overview of you know, what you cover in the industry and what your roles are at the respective agencies? Marcel? May we start with you? 05:24 Sure. I'm Adi Salah Segura. I'm an attorney in a regional office of the Federal Trade Commission in Los Angeles. In the regional office, we are somewhat generalists. And so I have brought cases in deceptive advertising in mobile payments in the area of mortgage, foreclosure rescue scams, debt collection, and other debt consolidation credit scams. So I've been with the agency since oh eight. 06:03 And I'm Calvin Hagen's from the CFPB. My area of responsibility is I like to refer to it as all things originations, mortgage, student, auto and credit card. I've been with the bureau a little over five years. But I've been in the industry for almost 30 years. First part of my career I spent at the Office of the Comptroller of the Currency. And so I do understand the balance sheet, profit and loss, and debits and credits. So I like to refer to myself as an examiner by profession. We don't always have to know the answer. But we do have to know the good questions to ask. And that's what I like to do ask questions. 06:46 Great. Well, we want to start off with sort of the elephant in the room that you know, the CFPB is arbitration rule, which would have prevented companies from putting a mandatory ban on arbitration or Causes there prevented people from doing class action lawsuits. So can you tell us a little bit about you know, what the CFPB is? view on that is this week and where your mindset is? 07:13 I knew that question would come up. 07:15 So I'm gonna handle it directly on. There's not much I can say about that the rule was issued Congress acted. And I think that's where we stand. One thing I would say is, there's plenty of other rules out there. And there was an impetus behind why the arbitration rule was put forward. What I always encourage industry participants to do is to look at the underlying reasons behind a proposed rule and see if those practices are present. And to the extent that they pose undue risk in your institution, look for ways to reduce that risk or eliminate that risk. 07:55 Calvin, do you think from an examination perspective, there will be a greater emphasis On a review of the arbitration provisions to look for potential huge gap concerns within the language, 08:09 I don't see that as being a supervisory focus for 2017 or 2018. But I will tell you that our approach to examinations is that we go in with our eyes open, and wherever the facts leaders, that's where we go. So we asked a lot of questions to make sure that we understand the process and the risks that we see in institutions. And depending on what we find we take appropriate actions. 08:36 And Marshal answers understand that, you know, there's a certain changes happening within the FTC that you wanted to discuss your Can you maybe talk about some of the priorities that you're seeing for agency in the coming year? And you know, what lenders here should know about? 08:50 Sure. And first, I have to give a disclaimer we all do at the FTC that I'm here. I'm speaking on behalf of myself. I do not speak on behalf of the Commission. Any one commissioner and I still don't know There must have been some scenario where someone held someone to a statement they made and said, You have spoken on behalf of the Commission, but I don't know what that situation was. Well, our acting chair, Chairman olhausen, really made a priority to refocus on our conduct in investigations, especially with respect to civil investigative demands. These are civil subpoenas issued sometimes to a target that we're investigating. And sometimes they're issued to a third party about a target that we're investigating. As lenders who work with dealers, you know, if you know our work at all, you know that it's primarily focused on the dealer level conduct, which is mostly we're focusing a lot on deceptive statements. So the folks in this room probably won't deal with us as a target but maybe it by way of a third party ca D and so Commissioner olhausen really put forth an effort to streamline our Ci DS to make sure every ci D, which is basically a subpoena has a statement about the subject of the investigation. We've tried to make that more clear so that when you're reading it, you know who is being investigated about what. So if you're a third party receiving it, it should be clear that you're not on the hot seat, but who is on the hot seat. We've also tried to streamline the requests to make sure that we're only getting information that we need as opposed to all the information we could possibly get. Hopefully, if anyone has received any of these CDs in the last few months, you've seen a difference in the size of the package. And this is something we've always done. We've always negotiated with recipients to limit the scope potentially, on what is produced if it's overly burdensome to produce. And what I'll say is, you know, my advice to industry receiving one of these things is communicate with us. You know, we're always dealing with industry. information, which is why we're issuing this CD in the first place. So we need some information about how you keep your records or your data, data storage, who are the principal custodians that might have the information we need. We need to have that discussion up front, so that we're comfortable when we limit say, or even modify a request, we feel comfortable that we're getting the information we need. I know to recipients these things can seem kind of scary and overly burdensome, and they don't really want to talk to us. But what I would urge is when you're receiving one of these just just call us up. And I mean, it is required that you meet and confer with us about what we're asking for what you're going to produce and how you can produce it, especially when it's coming talk when we're talking about electronically stored information. So you know, we're here to work with you and it's definitely it's coming from the top and I think it's already made its way down to the staff level and I've received feedback from people who've responded to say that, you know, it's a much easier process that they feel like there's more transparency baked in now. 12:07 Yeah, and I can come in having both from a historical perspective in a recent perspective working both with your agency and I know, Calvin, it's not your side of the house that works with CDs from the CFPB. But in both instances, I've noticed a much more pointed focus on the CDs. I think. Clearly from the CFPB perspective, early on in the auto finance industry, there was a knowledge or a learning focus to some of the CDs as well. And I think that the experience has been much more pointed and focused and clearly identified to the extent that the issuing agency is is able to identify the the issues that are on point and to Marcel has comment as well, about the meet and confer in the process. A ci D is a very laborious process. It is a it is very technologically driven in terms of the delivery of material. And it is, you know, for lack of a better phrase, it's very time consuming, and all consuming for the organization, even when it is pointed because it touches many aspects of your organization, both the compliance team, the operational team, but oftentimes Most importantly, your IT staff because a lot of the information must be delivered in certain format. And there's a lot of technology driven requests, including metadata and emails. And so it is a process in the meet and confer that Marcello referred to which is common to both the CFPB and the FTC is intended to identify issues with their response. I mean, no one's perfect, and sometimes the drafters intended something and when you're reading it, it doesn't It's not clear. And so when you're receiving a CD, the goal is not to guess what the issuing agency intended. And it is not like civil litigation where if something's not written, clearly you just respond, I'm not going to respond because it's not written clearly, you must respond. And so the goal is to work with the issuing agency to identify what's being asked narrow the focus, if the focus is overly broad, but also prepare for that meeting so that you've worked internally so that you can go to the issuing agency and say, this is going to require X amount of time to do we're not going to be able to produce it within two weeks. And here's why. And in my experience, the agencies are reasonable. Their goal is to get the information. That's why they're asking. That's why they've issued the CD and you know, but it is it is something that needs to be taken very seriously. With with the understanding that You know, there is something percolating at least in the minds of the issuing agency that they're trying to discover information to try to determine what further steps they want to take. 15:11 And do you have any response to that? 15:13 No, I mean, I think that's absolutely right. You know, it definitely it is the time to ask the questions. What do you mean by this? And this is how we interpret it. Is that what you mean? And, and that's the kind that's the level of back and forth. I mean, we're not going to get anywhere by stonewalling each other. 15:31 So Calvin, you know, end of last year, we had a list of priorities from the CFPB ATO sort of fell down on that less list a little bit. Not became as much of a focus for the bureau. Early certain aspects of it. Can you tell us a little bit about what you guys are looking forward to for 2018 what the priorities are going to be? 15:54 Yeah, for 15:56 auto origination and servicing we have that split So I do origination and my counterpart, Alison brown does auto servicing. So we work closely in developing the strategy, the supervision strategy. And what our objective is, is to understand the complete lifecycle of an auto loan. So before the loan is made all the way through the phase where the loan is either paid off or goes into repossession. So we will be looking at institutions based on risk and trying to do examinations where we've either conducted a servicing review already, whether it was this year or will be in 2018, or where we've done an origination exam so that we have the whole picture together. The other piece of that too is you've heard us talk about the compliance management system which is, you know, the cornerstone of our examination process where we expect institutions to have a process in place for them to identify and determine their level of compliance. Regardless of whether or not the bureau actually shows up for an examination. The degree and the formality of that compliance management system will vary based upon the risk in the institution, as well as the complexity of their operations. And I emphasize it should vary. The objective here is not to have one size program for every size, institution, or product offering. The other thing we do too is we use information from our other regulators in terms of issues that they may have found through their supervisor or enforcement efforts. And we use those as red flags or indicators for things that we should consider in the context of an examination. Meaning, we may ask questions about it, but it doesn't mean it's Either inaccurate or illegal, it just means we need information to understand the process and the institution's involvement in that activity. As you all know, we actually use our complaints to help guide our examinations, scopes. So we take a two prong approach that one is complaints for the entire auto market. So we're taking the big picture volume of complaints and saying what are the issues that we're seeing in complaints? And then we take the more narrow focus and say, What are the complaints related to entity a that subject to the examination, and that's where we focus in on incorporating those issues into the context of the exam. Our examination manual is publicly available online. We use our experiences from prior exams, in auto origination and servicing to periodically update The exam manual, but we also use our experiences from other product lines. And the one that's probably most akin to auto is mortgages. Most people have mortgages they originate and they have to be serviced. They break make monthly payments. There is a possibility that some of the same practices that happened in mortgages on the origination and servicing side could happen on auto origination and servicing. So we don't necessarily see practices in auto, but we see them in other areas that we say is there a possibility that it could be happening in auto? So that's how we approach our work when it comes to auto origination and servicing. 19:47 And there's a lot of talk about, you know, improving compliance management systems. Can you give us some more specifics about you know, how lenders can improve their or what other ways lenders can serve, improve their compliance management. 20:01 Yep, here's the first one. Don't do it for the bureau do it for yourself. I don't need a compliance management system. But you do. So if you're going to spend the time and energy to develop one, make sure that it works. What we don't want to see is a very well documented compliance management system printed on thick paper that just sits on the shelf that hasn't ever been reviewed or followed. And you can always tell when that is the case, because we tell our examiner's asked about the compliance management system. I didn't say read what was on the shelf. I said ask the institution to describe their compliance management system and how it works. And just wait for the explanation. You're not there to criticize you're there to understand how the institution uses it. If you're going to develop policies and procedures, there's no regulatory requirement that you have policies and procedures. But if you have policies and procedures, make sure that they work very best for your institution. There's two approaches that can be used for this, or at least two, I should say. One is a very detailed policy and procedure, that I'll use the term very prescriptive about how things operate in a particular institution. And then there's the other approach where it's more big picture conceptually drafted. Either one of those are acceptable. But whichever one you use, make sure it works for you. As far as monitoring and corrective action, if you're going to monitor and issues are found, please follow up on it and correct them. Because guess what we do? We asked for those monitoring and corrective action reports. And we're looking to see if institutions are identifying issues. Before we get there, because it's in your best interest to do that, in case we never show up, you still have a responsibility. And then is there timely corrective action, linking the monitoring piece to the compliance audit. That's a balancing act. You know, if you're going to have stronger monitoring efforts, that may be an opportunity for you to have less on the compliance on it. Likewise, if you want to have less on monitoring, maybe you need more on compliance on it. So you use those two pieces in tandem training. You want your people current. You want them trained so that they can do the job that's before them, and they understand the risks and the regulatory requirements. The one thing I will say is, and this is we have seen this, and we continue to see this in some of the examinations where we'll see and An institution who will contract with an independent party to do an assessment about compliance management. And the third party will issue a report of some sort. With recommendations about do this, do this do this. And they the best institutions, actually take those reports and put together an action plan that calls for a timeline to implement said recommendations. You would be surprised the number of institutions where we're finding, they go through all this effort of requiring or contracting with a third party, and they get the recommendations. There's no implementation. There's no plan of action about how it's going to establish a compliance management program. And the thing I want to emphasize here is, you know, it takes a while to establish a compliance Management Program. If you think that you can do this in 60 or 90 days, and you have nothing, I'm here to tell you, at the end of 90 days, you still have nothing. 24:13 So you need to kind of plan this out and do this in stages or in chunks. So if at the end of the day, it will take you 18 months to have a fully functioning compliance management program, say that up front. So that we know we shouldn't be evaluating the compliance management program before 18 months to determine the quality of it. Because you've already told us it won't be ready until 18 months. We may have periodic check ins through our monitoring efforts for the regional offices to see if you're on track. But we shouldn't be evaluating you on a program that we both know is not ready and justified follow up on an earlier comment about the communication in the dialogue. When we send out an information request, as we call it, which is a supervisory tool, if you see something in that document, that doesn't make sense. And I'll admit right now, there will likely be something in that document. That doesn't make sense. Please tell us don't assume that we know. Don't assume that, you know, just call us up and say, I don't understand what you're asking about. Can you explain it? Because we asked for a lot of information. And what I tell examiners is if you send out a request for information, and it's 18 or 19 pages, sooner or later, somebody is going to start on page one and say, we provided this What did you do with it? And they work their way through 19 pages. So we want to make sure that we're asking for information that we need and that we use. 25:57 greed. I know another big topic. That's been in auto finance lately has been the regulation of ancillary products. mersal. I know that's sort of an area that you know, you guys are looking into, can you give us sort of your mindset about, you know, regulation in that area? What you guys looking at it in dealerships and how it applies to lenders as well. 26:19 Let me just add one piece to that. Obviously, you talked about a third party receiving a CD, which would be most likely the acquirers of those ancillary products or the financing sources for them. So from the perspective of the financial institution, purchaser of the retail contract, who isn't there dealing directly with the dealers, from your perspective, what type of oversight are they looking for? And and I think we'll have the same question follow up from for Calvin in terms of what he's expecting his supervised entities to be doing with respect to the dealers and the sale of ancillary products, 26:53 the oversight from the lenders to the dealers are dealing with 26:56 Yeah, and what at a base level are you are you are concerned What you're seeing with the dealers? Right, 27:01 right. Well, so, I mean, as I'd mentioned before, we're mostly most of our casework is that the dealer level. And you know, even though we don't, we don't yet have we haven't yet brought a case just against the financing company. There are some analogs in some of our enforcement actions against these upstream entities that are upstream in the payment cycle. So for example, generally speaking, we have brought cases against payment processors, and other entities that have just blown past red flag after red flag. an analog can be found in some of our cases that we brought against the carriers t mobile and at&t, for example, which related to what we call mobile cramming. And this is an analog it's just by way of example, which involved basically unauthorized phone bill charges put on people's cell phone bills. Now they're not they're not hosting these kinds of charges anymore. As a result of a lot of our enforcement actions and it wasn't just the FTC but many state agencies and and others what what, what at&t and T Mobile were failing to do and and CFPB brought the cases against the other two Verizon and sprint. Now they weren't engaging in the frontline deception and getting these charges put on your phone bill, which often happened through some kind of affiliate marketing over a website. But they were there were issues with the way that they presented the allowed these charges to be presented on their phone bill. They were very nondescript or very confusing. They often look like taxes. The carriers also had they maybe they had some internal compliance procedures, but they weren't really using them. They were they were kind of like just there for show but they weren't following their own compliance procedures. And there were numerous red flags that these charges weren't authorized people months later saying that they never authorized the charging you know, asking to take them off. So they blew past red flag after red flag to the point where he said, you know, you know, there's a problem here, you shouldn't have been hosting these charges, too. I think the industry took in over a billion dollars worth of charges overall. And we also have brought cases against payment processors. Again, these are folks who are not making the front line deception, but they're processing payments going to deceptive companies who have who have made misrepresentations about you know, goods or services that they marketed. And, you know, so we see high levels of chargebacks. And so if you're going to have some kind of a compliance program that's gonna look at chargebacks. And you need to implement, you need to if you see spikes in chargebacks, maybe it doesn't reach the level of a certain percentage, but if you see a spike all of a sudden with a new dealer, you want to investigate that. So I mean, that's not to say we're never going to go after a financing arm but that's how we're going to look at these cases. We're going to look at the upstream Are you are you blowing past red flag after red flag and we don't do investigations like CFPB are But we but but we do look at the compliance systems in place to see if they actually had one. And if they were using them, 30:10 is there anything in particular relating to the sale of ancillary ancillary products or what are sometimes referred to as add on products that are is in your, in your radar right now, from the dealer side? 30:22 I mean, from the dealer side, you know, a lot of times we see with these add on products that they're hiding the terms somewhere in the paperwork, and they might be in fine print or Gee, the package or the jacket had the disclosure in it. But what but what we're learning from consumers is that in the f&i department, there are these oral statements being made misrepresentations be made so it doesn't matter what your paperwork says. You say what they signed on the dotted line and somewhere in here, you see the disclosure. But if your f&i department is very loose with how they're describing this stuff, or they're blowing past it, or they're kind of glossing over then We're looking at the net impression, right? So for the FTC, where we look at deception as measured not like fraud, you can actually make an absolutely true statement. But the way you present it, whether it's hidden in a fine print disclosure, or you, you know, change words around to give an deceptive net impression. Sometimes you might use low costs up front, but there's actually a cost that's hidden somewhere. You would say, well, gee, it's in the paperwork, and they sign that paperwork, you know, buyer beware. But that's not how we operate. We look at the whole course of dealing. And if the consumer comes away with a net impression that, you know, this is the cost of the car, the car only and they don't know about the gap insurance or any other add ons, then there could be a case there if the f&i department is making these kinds of misrepresentations over and over and over again. 31:52 Calvin, from your perspective, obviously, the CFPB doesn't have jurisdiction over dealers but from a supervisory perspective Obviously, if it weren't for the dealers, the finance companies wouldn't have very many assets. So what what's your perception and and what are you looking at as it relates to the operations of the finance company and how they're monitoring and, and working with their dealer network? What what red flags go up for you? And what are you looking for in your examinations? 32:22 I'd say it's, it's the same red flags. 32:25 It's not rocket science on this stuff. And if when you see indicators of risk, it's incumbent upon you to follow up on those because that's the same approach that we're taking in the context of an examination. We're looking for outliers, things that, as I like to say, just doesn't make sense to me. I'm not saying it's illegal. I'm just saying it doesn't make sense to me and I'm gonna ask questions about it. I talked about earlier in the examination process. How are we ask our examiner's to make sure they understand the license. cycle of the transaction. So that if in that discussion and observation because we do spend a fair amount of time observing, whether it's a live transaction or a video recording of a sales transaction, to the extent that we notice things that may not be directly under the CFPB supervisory authority, we have an obligation to make referrals to agencies who have such enforcement authority. So we work closely with Federal Trade Commission and the states in the context of origination and servicing exams, so that if it's an area that we're not able to get to, we know the right folks to raise that issue with so that they can determine whether or not they're going to follow up on it. 33:51 And you look at 33:54 the whole topic about add on products or ancillary products, and it's not easy To Otto's, because it's happened in just about every other product line that we have, so that you don't have to be original. You just have to be alert. And so what I tell examiners if you've worked on a credit card exam, and they had add ons, what were the indicators in that type of examination to lead you to say, something's not right? And I said, Okay, and now that you're in an auto exam, and you think that they have add on products, what are the indicators that would lead you to say, that just doesn't seem right? Not saying that it isn't right? I said, it doesn't seem right. And that's where you have that dialogue of back and forth to make sure that we as examiners clearly understand the process. And please, please don't assume that we know everything. That's probably not anything that I'm telling you. That's new. But the idea is Explain it to us. It shouldn't be a game of where in the world is, and pick whatever the topic, but it really should be a free flowing dialogue, because we will react to the information and the facts that are presented. But if we don't have a complete story, we're going to lead, we're going to end up with an incomplete conclusion. So 35:29 I was hoping I get through this without coughing. But it's really important to have that two way communication in the exam context so that we understand what's being offered and who's responsible. We talked a little bit I can talk a little bit about the responsible conduct that if you're in a relationship with someone, and they're offering a product or service, nine times out of 10 you want that to be a profitable and a healthy They relationship meaning they're not doing things that would put you at risk, whether it's regulatory risk or reputational risk, because when somebody has a problem, they start grabbing it, everybody. And if you're involved, even to make sure your hands are clean, so do your due diligence on folks that you're involved with, so that you know what their practices are. So they're not unduly exposing you to risk. 36:26 We have some audience questions that I want to hit on. 36:29 What is the what is the CFPB view on level of income and income verification in auto industry? 36:40 What's our view on income verification, ability to repay? That's not something we're touching. And besides that, you have Prudential regulators who have responsibility for safety and soundness reasons behind 36:55 automobile lending. So 36:58 it seems so fundamental to me that nobody He's got to make a loan if the person doesn't have income, and the objective is you want them to repay. Do you really want us to get involved in that too? 37:11 To a certain extent that does go to a little bit of the dealer oversight. You know, there's been some instances of allegations of dealers financing transactions where they knew or should have known or modified results for transactions, is that something maricela that based on complaints that you may, for example, hear from an attorney general or some investigate that the Federal Trade Commission may get involved as well. 37:39 You know, certainly deception at the dealer level on on anything to close the dealer is something that we're interested in certainly, and you know, if it's a wink and a nod, just put this number down as your income or you know, you know, dealers just kind of blowing blowing past requirements, then you know, it could be something that we're looking into now, have we done a case like that yet? No. But I mean, certainly we wouldn't close our eyes to some ramp it deception going on at the dealer level, which is what I think is our bread and butter of our work right now. 38:13 And just to follow up from, from the lender perspective, or the finance company that acquires that, is there some diligence or some obligation that you believe they should have as well for policing those types of situations? 38:27 Well, I mean, again, there could be red flags, right. If you have car after car paint repossessed and resold, and repossessed and resold? Well, you know, that's a red flag. And you know, if you see that that's a pattern with a particular dealer, then you're going to want to look into that dealer. Now. You don't want to do it just because you think I want to avoid being the subject of FTC action or CFPB examination or action. You want to do it because it's good business. Right. And so I think it sort of goes without saying it's taken a lot of news right now. I know john oliver did a big piece on this. And 39:03 it's just it's just the right thing to do. Really? 39:07 Yeah, I would definitely agree with that, too. If you just think about this, think back to the mortgage issues a few years ago, and the very real falsification of applications and what are the due diligence efforts that are now in place to hopefully prevent or at least reduce that. You don't need to be a genius to think I can apply that to auto or student or payday or anything else that involves getting a consumer to repay. 39:42 Right, and then you know, obviously, the difference in the mortgage world is, in that situation, the lender was directly involved in the transaction and in the auto transaction, it's the dealer who is making that original transaction has the communication with the consumer gathers the information and the finance company. is a secondary purchaser of that already closed transactions. So it's a little bit attenuated. But I understand the concern that obviously, the proof is in the performance The proof is in is in identifying red flags and to Calvin's point earlier to having systems in place to not just say we have a red flag system that you know if something happens, but how do you react to it? And what are the steps that you take, particularly if it affects a certain dealer, that may be sending you a portfolio over time, that is not performing consistent with the way everything else does based on your underwriting standards. 40:39 There's a There's another question here. I want to sort of end on regards to debt collection, specifically mentions Miss messages directly through a car's console and how the CFPB would respond to that. And maybe you can talk you know more generally just about how you're viewing debt collection right now and repossessions and industry. 41:00 I can't tell you much about debt collection, because that's not my area of expertise. 41:06 That's your cousin. 41:08 person, right? 41:10 I mean, I have done debt collection cases. So if you are, I mean, there have been, we have had cases in the auto arena where a company acted as the servicer and did terrible things like, you know, disclosing the debt to third parties, you know, just violating the FDCPA all over the place. And, and then they also had parts of the portfolio where they were the creditor. So the FDCPA didn't apply, but the same actions violated the FTC act. So it's like, you're in trouble both ways. You know, you can't make deceptive statements to people to get them to pay you money. And if you think that you're saying something that sort of is kind of coming to a lot like if you're playing with that line of trying to trick people into paying you some money, don't do it. I mean, that's kind of it. 41:58 And I think that's an important point. Because the FTC act in the CFPB, his ability to investigate and examine unfair and deceptive and abusive acts and practices are always going to be there as it relates to consumer interactions. So regardless of whether the actual language of the statute itself applies to prohibited practice, if the practice itself is an abusive or deceptive practice, then you will find yourself talking with the colleagues of my two panelists to my right. 42:33 Great. Well, I know we didn't get hit all the questions that I'm sure they'll make themselves available in the cocktail reception to answer any of your questions further. Thanks so much for joining us. 42:42 Yeah, thank you very much. Thanks, guys. 42:46 We have the the reception now it's in the exhibit hall sponsored by alpha. Tomorrow morning. We started eight o'clock for breakfast and the workshop started at nine one for small Landing one for growth strategies again, let us know which one you'll be attending by visiting the registration desk. If you will see you all tomorrow at at nine o'clock and you know people just </div> [/toggle]
