Comment on CFPB-2012-0005-0003

The rule’s recognition that bright line rule for setting thresholds is important to prevent some market actors from evading applicability, which is more important than avoiding duplication with other agencies. Also, any cost benefit analyses of the effect of the rule should take the unique mission of the CFPB into account among its benefits. Many of the economic benefits reaped are be long-term and indirect effects that are easily overlooked in traditional CBA. Relatedly, the broad definition of consumer in the proposed rule is important. The concern that supervising a sufficient segment of the market would burden small businesses because of market fragmentation has been assuaged by the proposed thresholds, particularly in the consumer reporting market, where only 7% of firms generate 94% of receipts and more than the three dominant firms are included. However, the consumer debt collection market threshold covers only the 4% of firms that generate 63% of receipts. Exemptions to supervision already account for activities that are not reasonable to regulate, and bringing in slightly more so-called small businesses into the consumer debt collection threshold would not significantly burden those businesses, given their already substantial size. The CFPB should strive to find rough parity between the two markets in the percentage of receipts supervised. The industry concern that smaller firms account for more risky behavior and are ill equipped with compliance mechanisms is a worthwhile question to investigate, given the role played by unreliable and ignored consumer reports in the acceleration of the housing bubble. The rule appears to have sufficient procedural safeguards built in to contest designations, though thirty days to respond to the initial letter is not much time. To better collect information, the CFPB could petition Commerce to create finer distinctions in the NCAIS codes so CFPB can appropriately scale its supervisory scope.