Further Developments on Georgia's Debt Buyer Bill

As a follow-up to yesterday’s story, “Georgia Bill Would Severely Restrict Collections for Debt Buyers,” we direct you to the Atlanta Journal-Constitution and it’s story: “Banks, tea parties team up to oppose developer bill.”

Georgia’s Senate Bill 448 is a complicated piece of legislation that would severely restrict collections for debt buyers. As Patrick Lunsford explained, “The bill would restrict the possible collections for a guaranteed account purchased by a debt buyer to the amount paid for the account. The legislation also contains language that would force debt buyers to reveal how much they paid for certain accounts.”

Georgia has had a very difficult time over the past few years, taking significant hits during the recent Great Recession. Many banks and businesses have suffered. Legislation like this often has the appearance of holding the banking and financial industry accountable — which is approved by voters — while often causing more harm with a series of unintended consequences.

insideARM.com had a chance to talk with David Rubinger, spokesman for DBA International, who calls the bill “fascinating political football.” Rubinger and others from DBA have been in Georgia, meeting with members of the House Banking Committee, lobbying hard against SB 448.

insideARM.com: What effect would SB 448 have if it makes it through the House?

David Rubinger: The entire financial services industry recognizes how bad this is for the Georgia economy. It would reduce the availability of credit in Georgia. If I was a banker, and you came to me to get a loan, under current law I could maybe secure your loan with a personal guarantee or some other form of collateral. With this new law, though, I now cannot sell that note into the secondary market. I can’t raise capital off of that loan to use to make additional loans. It takes away an important element of recourse: the ability to sell notes.

iA: What is DBA International doing in Georgia?

DR: Yesterday, several members of DBA went down to the Georgia General Assembly at the capital. We were able to meet with members of the House Banking Committee to explain concerns about the legislation. It would make Georgia the only sate in the nation where commercial notes are not able to be sold. As a result, you can’t raise capital, and if you can’t raise capital you can’t make new loans.

iA: What sense did you get from the House Banking Committee members you spoke with about their feelings of the bill?

DR: They’re carefully studying this bill. The members we spoke to understand our concerns. However, it’s at the discretion of the Committee as to what they want to do with this legislation going forward. That is going to be up to the Chairman to determine what the next steps will be.

iA: What’s on the agenda for you and your group today?

DR: Today, both sides of the issue will each get an hour to make their case. Rich Munroe, president-elect and state legislative chair of DBA International — will be speaking opposing the bill.