Vermont Legislature SmartTranscripts:

[Speaker 0]: Hey. Good afternoon, everyone. This is the Vermont House Committee on Commerce and Economic Development. It is Friday, February at 01:04 in the afternoon. So turning our attention now to h three eighty five. And this is Joe Valente from Primary Financial Regulation. Joe, good afternoon. Thanks for joining us.

[Joe Valente, Director of Policy, Vermont Department of Financial Regulation]: Thank you. For the record, Joe Valente, director of policy at the Department of Financial Regulation. I will briefly discuss indirect auto lending since that topic came up last Friday when we were discussing the bill, and then I'm happy to take questions anything on else. And I appreciate your flexibility. We are in another committee later today. So I think the question that came up was around whether the presence of indirect lending, whether it's for vehicles or something else, changes the the framework that we need for the core stat law or bill. And I think the short answer there is no. Fundamentally, there's really no change that we would anticipate, depending on whether a loan is direct or indirect. And so indirect auto lending or indirect lending in general, what it is, is that you may have an automobile. You may also have something like furniture or a TV that there are goods where you are the customer is negotiating with a merchant. And as part of that negotiation, the merchant is completing the sale and then selling or transferring a loan agreement to the actual lender. Often in the vehicle context, it may not be the car dealer that is making the loan, but the car dealer is working with other lenders to arrange financing. And again, it can be not just vehicles, can be other kinds of products. Indirect lending can be secured or unsecured. There may be situations where it's just easier as opposed to, you know, repossessing someone's furniture. Maybe we're going to do this as an as an unsecured loan. And again, that that merchant is responsible for sort of starting that process. But the person, the customer ends up interacting with the lender in the ordinary course of business, making payments on that loan. We were able to find online one contract between a lender and car dealers. We don't know how representative it is. It was a lender that operates in New Jersey and New York, so not quite specific to Vermont. But to get a flavor of what these contracts entail, similar to what you heard last week, the merchant is held responsible if certain conditions are not met. One example that we saw in the contract was if the customer it turns out the customer did not have the legal capacity to enter into the contract. The lender would would kick that obligation back to the dealer similarly if the loan fell into default. Now sometimes it may be that the loan itself is the obligation is going back, but there are other ways these are arranged through reserve accounts in some situations or or other. It's really going to be specific to the contract between the lender and the dealer or the other merchant. The reason for that is that the lender is taking on some higher risk because that lender was not present when the deal was made with the customer. They're not sure of who the customer is. They're relying on the merchant to verify that person's identity, verify that person's credit characteristics when making that loan. And they don't want to be in a situation where the merchant is just looking to drive sales and put that risk on someone else. So it does require due diligence on the part of the merchant to understand the customer and what's going on and the lender the lender and the dealer do or other merchant exchange that risk. So when it comes to the course debt bill, I think one of the things that was raised was option two of the three options that were presented that would prevent a loan that where it wasn't clear that this was a case of course debt, that the lender would be able to collect on that loan, but would not be able to sell or transfer the debt in that scenario. And I will say from the outset, we do not have a preference between those three options. We think they all have their pros and cons. If your concern is around indirect lending in particular, I don't think number two, going with option two changes anything because even if the loan would remain with the lender, the lender could choose to penalize the merchant or the dealer in other ways. Like I said, whether it's through reserve account arrangements or whether it's through changing how they do business. Fundamentally, there is a potential loss here and it's up to whether the dealer or the lender carries that loss. As I said, we found one contract. These arrangements may vary from merchant to merchant or lender to lender, and it's up to the merchant or the dealer to work with lenders to see what kinds of arrangements are cost.

[Rep. Michael Boutin (Member)]: So a question regarding that because number two says she can't sell her tree. Right. Which would then allow the debtor to send a letter to the creditor and say, don't contact me anymore. So at that point, it just becomes a debt that's there that's not being collected on. It's there and but it's not actually through the car car dealership. Right? Right. So the car dealership wouldn't be able to attempt to collect the debt. Correct? Because they're technically not the the relationship is with the the creditor and the debtor.

[Joe Valente, Director of Policy, Vermont Department of Financial Regulation]: Right. Once the once the loan is you know, it's executed and it goes to the lender, the normally, the dealer is not involved from that point forward. If the loan falls into default, some of these contracts do say that the lender can try to can either, you know, call back the loan, give it back to the dealer, or they can, you know, hold the dealer liable for that loan. But they couldn't transfer it back if we went with option two. They couldn't transfer it. They could still hypothetically, they could penalize the dealer in other ways.

[Rep. Michael Boutin (Member)]: But they wouldn't be able to the dealer would not be able to attempt to collect it from the individual because because they're not a party to it. Correct?

[Joe Valente, Director of Policy, Vermont Department of Financial Regulation]: That would be my guess, but I'm not not positive on that.

[Speaker 0]: K. Other questions for Joe? Thank you, Joe. Alright.

[Rep. Emily Carris Duncan (Member)]: Andrea?

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: Yes. Hello.

[Speaker 0]: Good afternoon.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: Good afternoon. Thank you very much for the opportunity to testify in strong support of h three eighty five together with the proposed amendment that I will discuss. My name is Andrea Bob Stark. I'm a senior attorney at the National Consumer Law Center or NCLC, and I'm also a proud alumni of UVM. Go groovy UV. All right. I would like to address

[Speaker 0]: I wish we could pretty much tell what year you were there.

[Rep. Emily Carris Duncan (Member)]: Anyway,

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: I loved it. But okay, I'd like to address the question of what should happen if there is a dispute as to whether a claim is coerced debt and what happens if a creditor determines that the debt was not coerced. When can they start collecting again? We support an amendment that upon such a dispute and only when there's that dispute, the creditor would engage the court for determination before collecting, before commencing collection activities. Right now, a survivor submits documentation and the creditor disagrees that it's coercedent, someone still makes that determination. The only question is whether that determination is made by a financially interested party behind closed doors or by a neutral court with rules, standards and accountability. Creditors are already doing what they should do, reviewing these claims, And we commend them and applaud them for coming to the table and discussing this bill and for doing that. This provision doesn't change that. It simply says that if a creditor believes the table is not the table, the debt is not coerced debt, the dispute should be resolved the same way every other disputed obligation is resolved in our legal system by a judge. So putting the burden on survivors to initiate this litigation is not neutral. Survivors are often dealing with housing instability, safety concerns, trauma, and financial collapse. Requiring them to file suit means many valid claims will never be heard. That's just the way it is. And I refer you to the report I submitted and our testimony, the written testimony I submitted that shows that the biggest barrier in gaining relief from core step for survivors is access to the legal system. So requiring judicial determination when core step claims are disputed also benefits the creditors as much as the survivors. So internal denials leave creditors exposed to allegations of arbitrary decision making, regulatory noncompliance, and future civil liability. A court ruling provides a clear independent record that the creditor acted lawfully and in good faith, creating a safe harbor against later challenges. It protects the creditor. Far from punishing them, this process offers certainty, consistency, and protection, outcomes that self policing alone cannot provide. There could even be language that if a creditor or a creditor shall not be subject to civil liability for actions taken in reliance on a final judicial determination regarding a claim of coerced debt, providing a safe harbor for creditors who do go to court and get a determination if they feel that it is not coerced debt. This requirement ensures a fair process. Court involvement turns a subjective internal decision by a financially interested party into an objective compliance asset. As we know, not all creditors and debt collectors are alike. Many will have internal processes to properly review these claims like the local Vermont credit unions and banks, but some may arbitrarily deny them if there is no oversight and will not have any process in place to provide a fair and accurate review. This process keeps creditors out of the role of judge and jury and places fact finding where it belongs before an independent court. As the credit union representative pointed out yet, in Wednesday's hearing, this would be a very rare situation. And so thus, it would not be an undue burden. It's very rare that this would occur. It's very rare that they would have to employ this relief. When a financial when financial freedom, housing, and safety are at stake disputed facts belong in court, not in an internal review process with no oversight. I also heard that there was some concern, with the impacts on the lending market if this bill is passed. I'd like to address that quickly if there's still interest in hearing about that. Sure. Sure. Okay. Concerns about market impact are raised with nearly every consumer protection proposal. Historically, we hear the same warnings about reduced credit, higher costs or uncertainty, but in most cases, those effects don't materialize once the rules are clear and narrowly targeted. We've not heard of any of these issues in the states where coerced debt bills have been passed. This bill is very narrowly tailored to address coerced debt, which by definition is not voluntary lending. Legitimate lenders already rely on consent, underwriting and fair dealing. This bill targets abusive situations without changing the rules for ordinary credit transactions. There's no evidence that protecting consumers from fraud reduces responsible lending. In fact, when survivors are trapped by coerced debt, their credit is damaged, making them less able to participate in the credit market. So this bill would actually help restore borrowers to the market over time. We respectfully urge the committee to advance H-three 85. We appreciate with strong gratitude all of the work and thoughtfulness and time you have put into this bill to make it right. And passing this legislation will provide meaningful life changing relief to survivors, strengthen economic stability, and ensure access to the relief survivors need to move forward with their lives. Thank you. Happy to answer any questions.

[Speaker 0]: Thanks, Andrea. Any questions? Andrew, if we if we require the holder of the debt, financial institution not be able to sell the debt, At some point, they're going to wanna collect on that debt, and they're going to go to court. And if if they if there's the issue of whether or not they believe that the debtor was it was Corus debt, that would then put it into the court and the court would make that determination at the same time as well, I would assume.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: So you're saying if a lender believed it's not course debt and wanted to collect on it through the judicial process, wanted to sue the debt, collect on it, then yes, the survivor would have to come forward and defend that as coerced debt, if indeed it was coerced debt. But a big goal of ours with the model bill was to keep this out of court. And so I think 99% of the claims or more that will be submitted to creditors will not be disputed. I mean, think the credit union representative, thought that as well. Yeah. So that so keeping it out of the court system to begin with and only going to the court when that there's a dispute so that a, a judicial board can decide that.

[Speaker 0]: Right. So I guess what I'm getting at is that, you know, we instead of selling the debt to a debt collector and and and they're trying to take it to court to, you know, the original holder of the note decides that they're gonna collect on it. They've been trying to collect. They can't. They go to court. And there is that dispute, and that's when it would get taken care of. Right?

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: It would get taken care of at that point if the survivor was able to access the judicial system, was able to get an attorney to defend against that allegation that this is her debt and then raise the the defense that is coerced debt. So what we would like to do is shift that burden to the creditor. And, also, I don't think I think it was transfer sell or what was the other language that they couldn't do? And it doesn't mean they can't hire a debt collector to collect on the debt and bring the lawsuit. So ultimately, the person in charge may be a debt collector who really doesn't have any process in place to process these claims or maybe doesn't even know about the law or is not gonna be a fair and arbitrary decider. And then they'll have to they'll bring the the the lawsuit against the the survivor. I think it was

[Speaker 0]: really Before it gets to that point, if someone brings up the defensive coerced debt and provides all the, you know, everything that we're requiring, that would be before it would go to a collector, I think.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: It would be, hopefully. I don't know, you know, it could be to the collector too and the collector would have to abide by this as well.

[Speaker 0]: And the

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: collector would have to review that documentation too. I just fear that if we wait for a lawsuit, that the collector is going to be attempting to collect on this debt all along if they just determine arbitrarily it's not coerced debt and there's no consequence for that and they can just continue to harass the survivor to pay this debt. So that's my fear. It could take months or years before they actually file a lawsuit. And during that time, if they're allowed to start collection again, just based on their decision, then they will be connecting with that survivor and trying to collect that debt all of that time.

[Speaker 0]: But there's rules on on how they they go about that collections as well.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: There are rules for debt collectors. The creditors, it's it you know, the Fair Debt Collection Practice Act doesn't protect original creditors or doesn't apply to original creditors. So for debt collectors, sure, but it doesn't mean they can't continually attempt to collect that debt with letters and phone calls and whatever language, you know, that's not abusive or harassing, but it could lead to that level with their continued attempts to collect.

[Speaker 0]: Michael?

[Rep. Michael Boutin (Member)]: Are so you're saying that gets back to my comment that I made about you would send a letter to the creditor and then would stop collection process. Is that correct? So if I get a loan from the bank

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: You know, I heard your question about the FDCPA, right?

[Rep. Michael Boutin (Member)]: Yeah, I'm surprised. I thought it applied for collections and that

[Speaker 0]: Oh, yeah.

[Rep. Michael Boutin (Member)]: So if I take out the debt and it's not allowed to be transferred from the original creditor, If I send a letter to them as do not call, write all of that, you're saying that that doesn't they can just take that and do nothing with it?

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: Correct. Under the FDCPA, it only applies to debt collectors and not the original creditor. So that's a big gap.

[Rep. Emily Carris Duncan (Member)]: Yeah. I'm

[Rep. Michael Boutin (Member)]: I'm very surprised by that. I

[Rep. Monique Priestley (Clerk)]: Yeah. Yeah.

[Rep. Michael Boutin (Member)]: Also, I believe that when a collector is involved, they have to transfer the debt. So if if you if you get a collection agency, I'm pretty sure you have to transfer the debt.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: I don't think that's always the case. It might be in many cases, but you can hire collector to collect a debt for you and you don't have to transfer them the debt. They can be your agent and collect that debt for you.

[Rep. Michael Boutin (Member)]: Okay. I'm just writing down notes because I'm gonna probably have questions for the baker in the room about this.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: The FTCPA was put in place for the debt collection industry and for debt collectors to level the playing field and prohibit unfair competition, where debt collectors were using harassing abusive techniques to collect on these debts, whereas other debt collectors were following the rules and not doing that, and then it promoted unfair competition. So the FDCPA was put in place in the seventies specifically for debt collectors.

[Speaker 0]: In

[Rep. Herb Olson (Member)]: terms of, we were talking about selling and transferring the debt, is assignment of the debt something different than that or you wanna be united with the transfer?

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: So transfer, assign, I mean, they could assign the debt to the debt collector and then the debt collector would have all of the rights and responsibilities, or they could just hire the debt collector to collect on that debt. They don't have to necessarily transfer or assign the debt to the debt collector for the debt collector to be their agent and to attempt to collect on that debt.

[Rep. Herb Olson (Member)]: Where it's not an assignment that they're just hiring a debt collector collector with a debt collector

[Chris D’Elia, President, Vermont Bankers Association]: be able to bring a

[Rep. Herb Olson (Member)]: lawsuit even though they don't have So that's a

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: great question. And I don't think so. I think they would have they couldn't in their name bring the lawsuit unless it was assigned to them. That's my understanding as far as standing goes in in court, but I don't know Vermont, you know, who would necessarily have standing, but I would think they would have to be signed the debt in order to bring the lawsuit.

[Speaker 0]: Thanks.

[Rep. Emily Carris Duncan (Member)]: Yeah.

[Speaker 0]: The questions for Andrea? Thank you, Andrea.

[Andrea Bopp Stark, Senior Attorney, National Consumer Law Center]: Thank you very much.

[Speaker 0]: Chris? Yeah. Maria, for walking work. You all left? There. Happy is just here at 05:00.

[Rick Segal, Office of Legislative Counsel]: Maybe at 03:30 or

[Speaker 0]: 05:00. I don't know.

[Chris D’Elia, President, Vermont Bankers Association]: I have to leave me. I'm not going through all of this. I've cut it down to about half of what I started out with today. For the record, Chris Delia, president of Vermont Bankers Association, thank you for the opportunity to again testify on March. Still working off of draft 1.13. I will just share with you that we had some fruitful conversations across the hall and judiciary. And at some point, you'll either see the language or they get position in the bill, and you'll see what ultimately was discussed over there. But I think there's only one or two items dealing with a definition of abuse and one other section that judge who testified had rewritten on the fly, and everybody's just waiting to see what that ultimately looks like. That should happen when you get back, I would gather. Just a few thoughts on, again, 1.13 and this whole conversation. I want to, if you will, again, reset with the statement that we've been consistent in our interest and desire to find a solution for the debtor. I don't think we've wavered from that at all since we've testified in two committees now. I think, yeah, it's fair to say that our responses to date would not in any way diminish the ability of a debtor to raise a claim, but we're trying to bring clarity. And you've often heard me use the word balance in this discussion with regard to the creditor community. And then, again, I think it's consistent with what I've said in our initial discussions that we have not pursued some of the more contentious issues since the beginning of of this dialogue about making the debtor go to court first, talking about secured debt, getting that out of the bill, or even the look back provisions that you've got as far as the implementation piece. But I wanna I I wanna go back to, like the debtor, we are not the bad actors here. We provided access to credit, and what was, done responsibly with underwriting standards, and and we feel strongly that we didn't do anything wrong, the debtor finds themselves in very difficult circumstances. The one that's created this problem is the perpetrator, and that's what's important for the judiciary discussions and how that's handled. There's been some conversation just in general terms about resources and who has the the resources to do certain things. And I just wanted to share with you some information that you probably would never be aware of, but I think it's worth adding to this discussion. And it's just as some more backdrop. In Vermont, we have a program what's called the IOLTA, and this is interest on lawyer trust funds accounts. These are accounts that are held at banks and credit unions. And in Vermont, those institutions pay a higher interest rate for the funds that transact through those accounts. Those funds are then sent to the Vermont Bar Foundation, And the Bar Foundation uses those funds in different ways. And the reason I know that is I sat 10 on the Bar Foundation board. I was treasurer for a number of years. I ran the IELTA committee and also did the grants program over there. I was a committee member for the grants program. And when I left about three years ago, we were generating roughly about a million bucks a year on average that was going to the Bar Foundation. And approximately 700,000 annually would be distributed to Vermont Legal Aid to support their activities and what they were doing in Vermont. There would be approximately $70,000 that would go to special grants that were submitted to the foundation from all over the state, to provide access to justice programs. And those would be looked at every year by the committee for the Barr Foundation. And then approximately, I think it was about 50,000, 45,000 went to the Bar Foundation Bar Association itself for their low bono program, which was lawyers that would charge minimal fees to provide legal services to individuals out there. And then a couple of years ago, and I I was reminded of this a week or so ago, it's not only what we do with regard to the IOLTA program. We as banks only banks have the Community Reinvestment Act, And that is a requirement that we provide funds back to the community to support community development efforts, all teams, nonprofits, etcetera. And, that's a few million dollars a year, give or take, a year that circulates back in the community. And one of the things that one of the banks did as part of their CRA effort was to work with the treasurer's office and the network a couple of years ago to fund a financial literacy program for individuals experiencing domestic violence, who were experiencing credit issues, etcetera, and needed to, find some relief. And one of my banks felt strongly enough that they, it was a worthy opportunity to provide support. I give you that background because, again, the discussions about resources, and those are things that you might not be aware of, but things that my banks are involved with and feel strongly about. So when I look at this bill in 1.13, again, subject to the two areas over in judiciary that we had mentioned earlier, I have two requests. And the first request is on page eight, line 14, and that's to remove the identification of evidence relied upon. And this is when we re after we've received the information from the debtor, we've gone through and review that information, anything that we add in our files, and we make the decision that, no. We do not agree it's course debt. We are more than comfortable with safe basis to provide that to the debtor. That is consistent with what New York and California require of their institutions. But identification of evidence relied upon, in the event that we have to go to court, we have no interest or desire to open up our files prematurely because there may be something in there that we need to utilize in the event that we go to court. And then the second thing that you all were just talking about, which is on page nine, lines three through six, and those are the or maybe it's lines three through more, and those are the options one, two, or three. We do not feel that we should automatically have to go to court. We could we would like option one. We could live with option two and not transfer the debt or or sell it or do whatever the wordsmithing is. But we feel that we should be given the ability to do the analysis, agree or disagree, and I would guess many of them will be in agreement. But in the event that there is no agreement, we should feel that we should communicate with the debtor the good faith reason and then have the ability to restart the collections. And if the debtor does not pay, then we move forward with a process at that point. So those are the two changes that we would like to see in draft 1.3. Obviously, we will look at any other drafting changes that are presented, and we will make a determination as to where we are with those, but that's where we're at at this point. And I know you have the fair debt collection. So in my conversations in twenty three years, I'm working with my compliance person, I've never had a banker say, we ignore fair debt collection practices or reg c, I think it is. Not once have I ever heard a banker say, we don't follow those procedures or follow what's in Vermont statute in Title IX?

[Rep. Michael Boutin (Member)]: I don't know Title IX. Does that state that you can't communicate?

[Chris D’Elia, President, Vermont Bankers Association]: Title IX also has some practice language in there that is allowable and not allowable. Yes, for the communication. And Marie is gonna

[Rep. Monique Priestley (Clerk)]: Well, I just looked it up. I'm by no means an expert on this subject. But for purposes of the attorney, Vermont Attorney General's rules on debt collection, they define debt collectors being creditor who's trying to enforce a claim,

[Rep. Emily Carris Duncan (Member)]: so it would cover.

[Rep. Michael Boutin (Member)]: Okay, so if I send the letter out, you no longer can contact. That's the question.

[Chris D’Elia, President, Vermont Bankers Association]: I don't have the rule in front of me. Whatever the rule tells us we have to do, that's the rule that we follow. So if it's one notice and you're done, then it's one notice and you're done. Just don't have the rule in front of me.

[Rick Segal, Office of Legislative Counsel]: Again, Maria's, I think they'll like work to share with the committee. Okay. I've got a couple of questions. So if it if that's okay.

[Rep. Michael Boutin (Member)]: I'm very positive towards use the and collect, but you can't transfer. Think that provides a level of safety for debtor. So that's option two. Correct. So one that you don't particularly like, but are willing to settle. The question, part of the sheeting process, because I've had that sheeted before when I was younger and it disappeared. Does it also disappear from when you guys sheet it and you can't transfer it, if you can't transfer and sell it, if you sheet it? So, usually, the eschetement is you've got money that is available to somebody. And I I Yeah. Write it off.

[Chris D’Elia, President, Vermont Bankers Association]: It's not a debt that's transferring to the Yep. I know.

[Speaker 0]: That was great, though, wouldn't it?

[Rep. Michael Boutin (Member)]: I know. That that was really dumb of me, and I apologize. I will

[Chris D’Elia, President, Vermont Bankers Association]: I will talk with treasurer over the weekend and see if he can say that. He's got he's got 10% in Vermont.

[Rep. Michael Boutin (Member)]: My mistake. I meant I meant a write off. Yes. When you write it off,

[Chris D’Elia, President, Vermont Bankers Association]: do you report that you wrote what does it look like on your credit report when you write it off? Well, if we have debt that is uncollectible and we are writing off that debt, we have our obligations to report to the credit reporting agencies on that debtor, and that's what we will do. Internally, we will go through a process of analysis usually over a short period of time. I'd say short period, like sixty days, ninety days, one hundred and twenty days to determine whether we are going to write it off or whether we're going to continue to try and collect. If it gets written off, it as easily described, it gets parked over here, if you will. It's no longer something that we're actively collecting on. However, I think I may have said this one testimony. If if that person were to come into the bank two years from now and try and get a loan, now this pops up not as collectible, although maybe they made a opened up a savings account or something, then that could be collectible. But it becomes a flag that we're not gonna give that person another loan because they had this issue over here. And then it just it just there's it'll show financial statements. Our banking department will be coming in and looking at it through examination procedures and looking at uncollectibles, etcetera.

[Rep. Michael Boutin (Member)]: But how does it look on your credit report? Because they know that when

[Chris D’Elia, President, Vermont Bankers Association]: If if you're the debtor Yep. You're it's gonna show up in your credit report that you did not repay that debt. You're gonna have a negative credit report related to that, and that's gonna have an impact on your credit score.

[Speaker 0]: Okay.

[Chris D’Elia, President, Vermont Bankers Association]: And that's why this is designed this bill is designed, once the parties are in agreement, to remove that negative credit reporting in the event that you weren't paying it. It's I don't know if I had shared this with the committee, but we had a may have had a conversation. I know we certainly had conversations in the hall that the credit reporting agencies don't have a coerced debt code. Thank you. It's treated as a dispute transaction. And therefore, that if we send the information into them or if they receive directly from the debtor, it's gonna be under that code as disputed information, not CoorsDebt because they don't have such a code. Which Thank you. Somebody that's taking or that's looking

[Rep. Michael Boutin (Member)]: at the credit report would have to determine whether or not that's an issue. In theory.

[Chris D’Elia, President, Vermont Bankers Association]: I don't know how you would do that. Because there's nothing going to the it's only gonna show up as disputed. It's the credit reporting agency doesn't flag it as coursed.

[Rep. Michael Boutin (Member)]: And there was a the comment about collections. It's my understanding that when you engage a collection agency, you transfer the debt. Is that correct or incorrect?

[Chris D’Elia, President, Vermont Bankers Association]: I I don't have the answer for that. I don't know if we are hiring them to perform that service or whether we're or whether we're actually giving them the debt, and we are done with it. We've written that off. But if you're

[Rep. Michael Boutin (Member)]: I don't know. Hiring service and you have a do not contact me, you can't you would be able to start collecting it that way. Correct? I mean, you're hiring It a

[Speaker 0]: would be like, I'm the creditor

[Rep. Michael Boutin (Member)]: and this month I'm going to hire A and S Collections,

[Rick Segal, Office of Legislative Counsel]: which was a legitimate business twenty years ago.

[Rep. Michael Boutin (Member)]: This month I'm going to go with A and S. They get a letter, you get a letter or whatever, and then you say, okay. And then I'm gonna go to another collection agency. I don't think I think that would

[Speaker 0]: I don't.

[Rep. Michael Boutin (Member)]: That's because you're not actually transferring the debt. You're maintaining the debt. Correct.

[Speaker 0]: Going out and getting the money

[Chris D’Elia, President, Vermont Bankers Association]: collected. Never heard of a certain scenario like that where we're where we're shopping multiple collectors to try and get around something.

[Rep. Michael Boutin (Member)]: But even if you were, you would that would you would still be the maintainer of that debt. Right. If you were to communicate or even have somebody communicate to them, would that not be a violation of Well, the

[Chris D’Elia, President, Vermont Bankers Association]: the debt collector is still obligated to fair to follow the debt collection practices, laws, regulations, rules in Vermont as well as at the federal level.

[Rep. Michael Boutin (Member)]: I'm not sure I'm asking the correct the question.

[Chris D’Elia, President, Vermont Bankers Association]: Are you if can I turn for you? If you're saying one month, I use one debt collector. I say, we still retain the debt. Correct. But I contract with one collector. They send a letter, doesn't get a response. Next month, I go to another collector, send a letter, doesn't get a response. Third month, I go to a third collector. Is that what

[Rep. Michael Boutin (Member)]: And and you've received the letter from the debtor saying don't contact me. My guess is what I'm curious is you can't contact even if you're using a third party as long as you may know.

[Speaker 0]: If if correct. Okay.

[Chris D’Elia, President, Vermont Bankers Association]: That would that would be my understanding

[Speaker 0]: of Okay. I'm not aware of it definitely. Okay. Thank you.

[Rep. Michael Boutin (Member)]: Other people may not have understood that, how that worked in my mind. It did work in my mind.

[Chris D’Elia, President, Vermont Bankers Association]: Okay. So We got there. We did. Remind me of what I said.

[Rep. Emily Carris Duncan (Member)]: Yeah. Well, my last question, let me think of a few things. Sure. I'm curious about on the bank's side of things, if you're able to park a debt or write it off, does that count towards the bank's business losses?

[Chris D’Elia, President, Vermont Bankers Association]: Does it count toward the business losses? An accounting question that I would want to get back to you on, I don't know.

[Rep. Emily Carris Duncan (Member)]: Thank you. And then also my other question, if you can ask accounting people.

[Speaker 0]: Can we put a pause do you have to be somewhere, Chris? We put a pause. Rick's here. We have an amendment to six seventy four that we have to deal with, so it's gonna be on the floor when we come back. And so if we can do that and then come back to this, that would really help. I'll answer your question anyway.

[Rick Segal, Office of Legislative Counsel]: Rick Segal with the office of President of Counsel, Maria? At the chair.

[Rep. Michael Boutin (Member)]: Was my fault, not hers.

[Rick Segal, Office of Legislative Counsel]: I heard Maria talk. That's helpful. She has a little seniority on me. We're looking at H six seventy four. This is the bill you reported out in a week or two. There is a proposed amendment from your chair and vice chair. May remember that six seventy four creates the Vermont Sister State program and the committee, and it also in section two repeals the Vermont Ireland Trade Commission. All this amendment does is address the Vermont Ireland Trade Commission. It does not touch the sister state program or language.

[Speaker 0]: So tell me what appropriations they wanted to put this into their amendment, or are they asking us to do? It's a

[Rick Segal, Office of Legislative Counsel]: good question. They have few things they want to change with the underlying bill that relates to the sister state committee. They want to add in language that would allow the committee to rescind an agreement or cancel an agreement. They want to add language. There's the word diplomatic is in the bill and there was some questions about does that imply a federal policy where the president is the chief diplomat? Do you want Vermont to have a diplomatic relationship with another country? I said, that's maybe a good point. It's not a term of art, but I think most people think of diplomacy as a United States thing, not a state by state, but it's a policy choice. So that committee is having me work on that amendment. They didn't really have much to say about the individual amendment you presented. So I I don't know how they would actually want that structured.

[Chris D’Elia, President, Vermont Bankers Association]: They didn't

[Rep. Herb Olson (Member)]: seem to object to it,

[Rick Segal, Office of Legislative Counsel]: but I didn't get them on

[Speaker 0]: the record saying If they're They

[Rick Segal, Office of Legislative Counsel]: asked for a straw poll. Yeah. They didn't know if they

[Speaker 0]: were another amendment. They might as well put it all together.

[Rick Segal, Office of Legislative Counsel]: Yeah. Amber Boutin was there, so I don't if I if I misrepresent something.

[Rep. Michael Boutin (Member)]: Yeah. No. No. That's correct. I I think I sent you a text message what they wanted. Yeah. Which was

[Speaker 0]: a lot of straw votes, and that's what we're doing. And then Yep. Yep. But generally, we do a straw vote after they present the amendment. That's okay. Yeah.

[Rick Segal, Office of Legislative Counsel]: So this amendment, again, is just to the Vermont Ireland Trade Commission, which they didn't really have an opinion on that I used to call as to this amendment. So this amendment would unrepeal the repeal of the Vermont Ireland Trade Commission, but it does place changes into the statute. It would add two members of the commission. It adds the Commissioner of Economic Development or designee. And as the President of UVM or designee, so it would go from seven to nine. Subsection C, there's not really anything substantial here. It just changes I'd use this opportunity to clean up the statute. So, read easier, basically, that the members appointed by the three entities, the governor, speaker, and senate committee and committees. Those members would have terms of four years each, and they could be reappointed if they want to be reappointed by their appointing members. So no really substantial changes to this section. Subsection F brings in the state treasurer to be consulted and really coordinating in their report that they do annually. And you'll see why here in a moment. On page three, the in their reporting, there would be detailed accounting from the state creditor's office that would have the administrative expenses that have been paid with funds raised by the commission and also funds raised and donations grant requests received through the commission, including the name, country residents, and amount donated of each contribution. So kind of more detailed accounting required of the commission on an annual basis. Subsection G gives the commission that authority to raise funds through direct solicitation or fundraising. That doesn't change. However, there are some restrictions on how this is structured. There is a strikeout on line 15 that maybe would expand potentially how the commission can use that money they raise. So, we're moving the and to carry out its purposes as set forth in the chapter just for administrative expenses, which is defined here in a minute. So those funds that they receive are deposited into the state treasurer's office as a fund. Any monies withdrawn shall not be used for any other purpose other than payment of administrative expenses. So adding the word administrative. And shall be itemized and tracked for reporting purposes by the state treasurer's office. And then the state treasurer shall include the balance of the accounts in the annual reporting required pursuant to subsection F. Administrative expenses does not exclude any expenses related to campaign or election activity or food or beverages provided at official commission meetings. Does not include any other expense that is not specific to the administrative functions of the commissions. So again, kind of placing parameters on what these administrative expenses are not. They don't include those things. Members shall not receive any compensation. That doesn't change, but kind of clarifying that they cannot receive any compensation whatsoever or get expenses reimbursed from the state or from the fund managed by the state treasurer. Those are the statutory changes. There is a session law added, which requires a report due the December before. So this commission is set to repeal in 2030, I think June 30 or June 31. Not sure which months have 30. The last day of June of 2030 is when it's set to repeal. So now the commission would be submitting a report that December before 2030 to this committee and the Senate Economic Development Committee, summarizing their accomplishments since inception. A detailed analysis is how the commission has served its legislative purposes and an accounting on their funds raised and details on gifts received pursuant to their work. So this would give, hopefully, the general assembly a reminder, number one, that it's set to repeal. And number two, is it worth keeping this around? Should we do something else with it?

[Rep. Michael Boutin (Member)]: Administrative usage. Does that include travel?

[Rick Segal, Office of Legislative Counsel]: So you're looking at the definition. It does not include these things. Would you consider travel to be an administrative function of the commission?

[Rep. Michael Boutin (Member)]: I wouldn't, but somebody else might. And I just wanna just curious if maybe I'm being over concerned about that.

[Speaker 0]: I share, Michael, some of

[Rep. Jonathan Cooper (Member)]: your lack of clarity on that, what what is not administrative or is. It made me wonder if the funds in the account are specifically for administrative purposes, what happens if, as interest accrues, your resignations are made, it outpaces the amount of administrative expenses. Where does it go? How does that get addressed? And then would the in the act of soliciting donations or bequests, would it then be necessary to state that these are for administrative expenses only?

[Rep. Emily Carris Duncan (Member)]: Your first

[Rick Segal, Office of Legislative Counsel]: question remind me, sorry. Me your

[Rep. Jonathan Cooper (Member)]: first What happens to funds if administrative expenses are So below

[Rick Segal, Office of Legislative Counsel]: it it remains in the account and interest accrues, like any fund.

[Rep. Jonathan Cooper (Member)]: Okay. Is that do we tend to have funds that are just sort of growing? Yeah.

[Rick Segal, Office of Legislative Counsel]: Not That's for state government

[Rep. Jonathan Cooper (Member)]: very limited purposes for such for such such narrowly defined purposes, I guess, a little bit like

[Rick Segal, Office of Legislative Counsel]: Yeah. I mean, there we have all kinds of funds, hundreds of funds in the state government. I don't know. I can't speak to as specific as this. You're right. It's gonna be a pretty small fund, I imagine, or at least very specific fund. But And of course, a future general assembly can always change this fund and where the money goes and have it go somewhere else. But as written, it would have to be remain in that fund. Makes sense.

[Rep. Jonathan Cooper (Member)]: And the second question was about the expenses. Is in with the definitions of how the fund operates in soliciting Right. Right. Then is that sort of a requirement that just No.

[Rick Segal, Office of Legislative Counsel]: No. As far as how they solicit, they would

[Speaker 0]: not have to disclaim anything. They could, maybe they should, but they wouldn't have to. Just remember that with funds, there can't be any funds when the state can't miss them.

[Chris D’Elia, President, Vermont Bankers Association]: It's

[Speaker 0]: not funded by the state. I

[Rep. Emily Carris Duncan (Member)]: think, actually, on that point, can we control what their funds are doing if there are no state funds involved?

[Speaker 0]: Funds that are being administered by the treasurer.

[Rep. Emily Carris Duncan (Member)]: Okay. My other question is, so if this is Well, I guess if it's meant to do kind of be the entity that's doing the hosting duties and that sort of thing for the item and delegation, are they going to be able to functionally meet that?

[Speaker 0]: I think that that could be

[Rick Segal, Office of Legislative Counsel]: an administrative expense. That be an administrative expense. Okay. Thank you.

[Rep. Michael Boutin (Member)]: You may have just barely said it, and I can't remember that I wasn't really paying attention. The information that you can get about this fund is it subject to FOIA. Okay. Yeah. So if if there's anything that's written on it, it would be you could find out. We'd have to

[Speaker 0]: get the treasurer likes to give the detail of the county.

[Rick Segal, Office of Legislative Counsel]: Right. Okay. Yeah. So and also 74F.

[Speaker 0]: So Right. Both are true. And

[Rep. Michael Boutin (Member)]: what benefit is there for this account to be housed through the state in a special account? I'm looking at it.

[Rick Segal, Office of Legislative Counsel]: We we put language in that. I just didn't mean it to be funny. Just that we you have language saying this is the way it works and this is in statute provided. This is how it's gonna work. And so you can change it. If you don't like the way it's structured, you can clearly change this. I'm I'm just trying to figure out why somebody couldn't just do this without even involving legislature.

[Rep. Monique Priestley (Clerk)]: Yeah. It just wouldn't be a state.

[Speaker 0]: For cuts to go. What's the what is appropriations? Are they taking this up again today? Are they are they gonna take it up when we come back?

[Rick Segal, Office of Legislative Counsel]: Yeah. I'll have an amendment for them that I'll bring to you at some point, I assume, which I don't again, I don't know. I'll talk to rep Shai about how she wants the structure, if she wants yours amendment folded in or not.

[Speaker 0]: K. K. I don't I don't think it's premature for us to do a child vote right now until we end the whole thing. Okay. Thank you, Rutland.

[Rick Segal, Office of Legislative Counsel]: Have a good time any break. I'll see you all a week from Tuesday.

[Speaker 0]: Question two.

[Rep. Emily Carris Duncan (Member)]: Well, maybe the question is if it is possible to write off the bridge of losses, it cannot carry forward. If the debt can be, that can be written off, does that get applied? I'm sorry. My brain I did not

[Chris D’Elia, President, Vermont Bankers Association]: even up today. A crack on. I can give you an example. Yes. So if we policy for downtown tax credits, historic preservation tax credits. You have a credit program. The buyers of those credits are financial institutions in Vermont. We take those against our bank franchise tax in the state. If and pick a number, 300,000. If we only use $150,000 in year one, does the additional $150,000 carry over to year two? Is that

[Rep. Emily Carris Duncan (Member)]: Oh, no. I'm actually talking opposite. So if you have a bad debt that you're writing off, on your bank taxes, does that write off then count towards your your corporate financial losses? And then can those losses be carried forward?

[Chris D’Elia, President, Vermont Bankers Association]: Yeah, I think I understand what you're saying. So if all of the loss is not used in one year, can you carry it over to the next year?

[Speaker 0]: Mhmm.

[Chris D’Elia, President, Vermont Bankers Association]: Okay. And I would assume you wanna know how that transpires on state and federal income tax because state is franchise tax. Right. Feds are income tax. Okay. That'd be helpful. Thank you. I think I got opportunity.

[Speaker 0]: Recite, I would assume that if you were able to collect the debt, that becomes a tax code.

[Rep. Emily Carris Duncan (Member)]: Exactly, yeah. It doesn't become tax code again if you are able to collect it again.

[Chris D’Elia, President, Vermont Bankers Association]: Yeah. Yes, great questions. Don't know. Who represents the CPAs?

[Speaker 0]: Questions for Chris?

[Rep. Monique Priestley (Clerk)]: I make a statement. I just want to say thank you for working on this over the summer and this session.

[Speaker 0]: Good

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: afternoon, everyone. Can you hear me?

[Speaker 0]: I'm Yeah.

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: Thank you. Well, thank you for allowing me to be here today. For the record, my name is Laura Byerly. I'm the director of the Victims' Rights Project at Vermont Legal Aid, and I represent the people this bill seeks to assist. And I represent them both in the civil family process as well as throughout the process of them being a victim and a witness in the criminal court. So I kind of help victims and survivors on all of the various legal processes, except I'm prohibited for helping them sue for damages. So so that's just for context and for the perspective from which I come. And I wanna thank all of you. It's just been amazing to see how much work this committee has put into this bill as well as the thoughtfulness and the time and for all of your efforts. I wanna thank you for for your efforts to be fair for both to both the creditors and our financial institutions while also recognizing the need for safeties and safety and relief for survivors. So thank you for that very much. But I also wanna take a moment to center who's gonna access this relief and where they are in their lives when they're most likely to do so. Okay? These are survivors who are either in crisis because paying minimums on course debt leaves them with little income for necessary expenses, or we're looking at survivors who are finally ready to take away from being taking that step away from being a victim into being a survivor, and they need to improve their credit. They're just beginning to break free from the isolation, the dependence, and the terror inflicted by the perpetrators. So this bill provides important relief for those survivors. The relief is critical, but so is the need for a fair process because justice without procedural justice is no justice at all. I would like to acknowledge that our local credit unions and financial institutions are not usually the problematic creditors here. If all the debts were held by our local credit unions and a statement of course debt with the appropriate documentation was provided, that would likely be enough to result in a robust process of investigation and reliable information returned on the status of that debt and why or why not the creditor believed it to be coerced. Unfortunately, most of these debts will not be collected by our local credit unions and our financial institutions, because most of these debts will be held by third party debt buyers and out of state companies that are notorious for bad record keeping but persistent in their collection actions. These these creditors are so notorious and so persistent that in 2015, we needed additional procedures for lawsuits on credit card debts to force those creditors to show that they actually owned the debt in order to bring the lawsuit. I've seen debtors who were sued by multiple creditors for the same debt and those who had to fight lawsuits lawsuits for debts that were merely recorded by a line item in a spreadsheet. The creditor history illustrates how essential it is for this community to ensure a robust process for reinstating a debt when a debtor meets all the initial requirements to show that that debt is coerced. The courts provide an independent and a fair review when interested parties disagree, and they can hold that against the standards of proof necessary to ensure a just determination. So legal aid supports the language requiring collection action to cease until the court finds the debt is not coerced. When the nature of the debt as coerced is disputed, it is the creditor who's likely to have the documentation relevant to that dispute. Victims, of course, may have fled their homes with very few belongings and fewer records. They likely won't have the vehicle or the credit card itself, much less the application or the receipt. The creditor doesn't have that excuse. If there is documentation on the creation of this debt, they should have it and be able to produce it. And the courts can find provide a fair and neutral valuation of that evidence. Again, I do wanna thank you. This bill goes a long way to provide survivors of domestic violence and our most vulnerable victims of exploitation a path forward. And I commend this committee for its work on this vital process, and I invite any questions or comments. Thank you.

[Rep. Jonathan Cooper (Member)]: Thanks, Laura. Jonathan? Laura, thank you. This is mostly a question about my ignorance of the process. Would the elements that are known to the creditor become known to the debtor through discovery? Is that I mean, is that sufficient?

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: It can be. I've had when it's a local bank, the discovery process is very different. But when we're talking about, like, a third party debt collector, the the what you get in discovery is often meaningless or so voluminous. I don't it's hard to parse out. But, yes, the discovery process would be a way that the courts would have to get that information exchanged.

[Rep. Jonathan Cooper (Member)]: But that process can be influenced by the actions of a creditor's reorganization to become challenging for purposes.

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: Right. So when the the courts are involved and we're doing the discovery process, you know, we might then have additional grounds to challenge the debt, not only on the basis of it being coerced, but because this debt is unproven or they shouldn't have been collecting on it in the first place. And so the other thing to keep in mind, and I think Grace also mentioned this, is that these are companies that really aren't going to care about Vermonters very much. So they're not going to be taking a deep dive or a really good look unless they're required to. Okay? So the information that they're going to do to evaluate whether to their information they're gonna look at to evaluate whether or not this is a course debt, you know, they really need to to step up and say what they did to evaluate that because we have seen time and time again that they are trying to collect on things that they shouldn't be able to collect on in the first place. So yeah. Sorry. And I just can I, just speak to, like, no contact request just quickly? Just for clarity, when a debtor provides a letter saying don't contact me, that just stops phone calls. It doesn't stop either the, statements or the, letters from a debt collector. And in Vermont, technically, it doesn't stop phone calls unless you've told from an original creditor under Vermont's Fair Debt Collection, Vermont's Consumer Protection Act, unless the the, you've told the creditor, don't call me within a certain period of time. So or you've told the creditor that continuing to collect this is is unconscionable or unfair because I have no resources from which to collect. So our our Credit Protection Act is a bit more expansive than the FDCPA, but it tends to limit it to calls. Just further.

[Speaker 0]: Thank you. I appreciate that. Question?

[Rep. Emily Carris Duncan (Member)]: You

[Rep. Michael Boutin (Member)]: brought up a, yeah, I don't know if it's a question, but you brought up a good point about third party collectors. They more than likely don't have any information. When twenty five year old information that I am going on for collections, they would just get a document that says you owe this. And how do you make a determination about whether or not it's coerced debt when the only thing you have is you owe this. So you don't have any documents.

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: But for fairness' sake, we've asked the debtor to provide documents and to provide a statement that says that this is coarse debt. So in that circumstances under this bill properly, what should happen is the debt collection should cease because they've know, there's nothing to refute the debtors assertion that this is coarse debt. And that should be the proper result from a third party debt collector under under those circumstances. The problem is that they're not very good at following that direction. And so that's why the courts are an excellent arbiter in saying, look, you have the opportunity to review this and you didn't make a meaningful look or didn't provide meaningful information about why it isn't a course debt. So the courts can uphold that burden shifting when the third party debt collector who's holding this debt and isn't keeping good records and isn't doesn't really have a good face faith basis for trying to resume debt collection. When we're seeing that happen, it's the courts that will be that are best suited for saying knock it off, essentially.

[Rep. Monique Priestley (Clerk)]: Thank you, Laura. I think you've highlighted one of the difficult issues that we've been struggling with, right? The folks at the table with us trying to come to an agreement are local folks, and they are the good actors. And we're asking, we're trying to find a standard that we can hold both the good actors and the less good actors too, right? And so I think, I understand, I don't understand. We'll talk to legislative council if there are standards that we can hold third collectors to separate from first party collectors to. I don't know what that looks like in law or if that's something that we have to look at down the road after we get more information. There's just so many variabilities here. But if you have thoughts on that or if you have knowledge on that, that would be helpful to hear.

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: Well, just thinking through the process, even when we're talking about our local creditors, if there's a coarse debt situation, and we're talking about folks normally who have very limited resources. Right? So if they want to resume collections, this is most likely going to be headed to a court case anyways and towards seeking a judgment. And so if we're going to go in that direction anyways, and it's the best and safest and most protective option when we're dealing with the folks who are outside of Vermont, that that makes the most sense to be the option when the debtor has made a prima facie case and raised course debt as an issue. It's I don't wanna seek to punish the local creditors certainly because but I do think that they are most likely going to have to take that step of either but they're either going to have to sell the debt or they're gonna sue on the debt. So if we're going to be heading to court anyways, we might as, you know, might as well go in with this idea that we're going to adjudicate this claim of course debt and have the person has the original determination and all the documentation so that that claim can be adjudicated most fairly.

[Rep. Monique Priestley (Clerk)]: And then one other question. We have language about a good faith basis. We don't have anything in our laws that outlines what a good faith basis is. Is there more context that you can turn around what is expected from a good faith basis?

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: I don't have anything specific, but in thinking it through, just knowing what it is that the creditor was relying on, even if they can't provide private or, have to provide redacted information. This the idea that they're going to be providing something, especially to allow a debtor an opportunity to respond would be helpful. I mean, just to know where to look and to know that they're not just that they are actually taking the time to look. I mean, I think I see the good faith basis language as really just letting our the the creditors, the debt collectors, anybody who's trying to collect on a course debt, putting them on notice that they can't just say no. They can't not engage in this process and they can't not take this seriously so that this can have real meaningful relief for those who need it, are dealing with domestic violence and getting out from under it.

[Rep. Monique Priestley (Clerk)]: Thank you. Thank you.

[Speaker 0]: Questions?

[Rep. Michael Boutin (Member)]: So regarding the good faith definition, A letter, you know, not providing the actual documents, but a letter explaining what was used to make that determination.

[Speaker 0]: That

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: could be. I mean, ideally, would provide the documents with the information that needs to be redacted redacted, but at least a description so that eventually, if this goes to a court process, you know what to ask for in that discovery process. Right? You know what to say. Okay. Now I need to see the documents that you used to make this determination, or to dispute this, this claim. So, yeah, having as much information as the debtor can have as to why the creditor is acting in the way that they're acting really does help make this relief meaningful for both parties.

[Rep. Emily Carris Duncan (Member)]: Thank you.

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: You.

[Speaker 0]: Questions? Thank you, Laura.

[Laura Byerly, Director, Victims’ Rights Project, Vermont Legal Aid]: All right. Have a good weekend, everyone.

[Speaker 0]: Thank you. You too. Chris has an answer for Emily, but, Emily, he's not here. Why don't we take a short break, come back at 02:30, and then then we'll have a discussion on where we want to go. We have Bristol ask, and we'll take that up. I think the rest of the bill was, except for judiciary's pieces to it,

[Chris D’Elia, President, Vermont Bankers Association]: So phone a friend Yes. Phone a friend is a CFO of one of my banks, so they handle a lot of tax return information.

[Speaker 0]: So for your answer, a

[Chris D’Elia, President, Vermont Bankers Association]: charge off of a loan is not a direct line item deduction for tax purposes.

[Rep. Monique Priestley (Clerk)]: Okay.

[Chris D’Elia, President, Vermont Bankers Association]: The second item that she referred to is it can the charge offs can also have an impact on the amount of reserves that a bank is required to set aside. So as you have higher charge offs, you're gonna be required to have a higher reserve set aside. So no tax.

[Rep. Monique Priestley (Clerk)]: Thank you

[Speaker 0]: very You're welcome. Tax and cheaper. That's that ramifications, though. It does.

[Chris D’Elia, President, Vermont Bankers Association]: Right. Mean, who knows what that what that amount is or what the percentages, but the higher write offs that you've got, the more retailers you've got to set aside. And that's the regulators and their examinations will certainly be looking at that.

[Unidentified Committee Member]: How often do they look at that amount of reserves at an annual function or periodically?

[Chris D’Elia, President, Vermont Bankers Association]: Yeah. So it just depends on the exam cycle, but it could be anywhere from twelve to eighteen months that you've got an examiner coming in and looking at your institution. The examinations are with the FDIC, the Federal Reserve, and our banking department here for our state derivative banks. FDIC and the federal deposit insurance corporation, excuse me, and the bank, DFR alternate in the examination cycle because they have a partnership. So one year, may be DFR. Another year, may be FDIC. And then they come in, and they look at your documentation.

[Unidentified Committee Member]: K. And a follow-up, if I may. So would a write off like that only affect one cycle, or would it carry forward? Or Uh-huh.

[Rick Segal, Office of Legislative Counsel]: Mean, where

[Unidentified Committee Member]: I I imagine they look at a trend. Yes.

[Chris D’Elia, President, Vermont Bankers Association]: They would they would look at a trend. I would guess, but I'd have to phone a friend again to really get to the answer that you're looking for.

[Speaker 0]: For being

[Chris D’Elia, President, Vermont Bankers Association]: a millionaire. Yeah. I mean, it it it's a great question because they're not it's not like they're coming in every month and looking at that trend. So I would wanna phone a friend again and get that answer from you. I don't wanna misstate anything.

[Rep. Herb Olson (Member)]: Chris, I'm not sure if this is for you. So it's obligation to, or as drafted anyway, the obligation to have a good faith basis for your determination that it's not court. Would that be subject to regulatory examination by the regulator

[Speaker 0]: or? Maybe that's you.

[Chris D’Elia, President, Vermont Bankers Association]: Well, I would think, and you're right, you've got one of our regulators here, that, if they find write offs in your documentation, there's going to be a conversation and probably a discussion about new statutes you have to comply with, etcetera. And I would guess that they are going to look at that type of regulation and want to, I can't say dive deep, but probably look at it to say, you meet a standard there what they would consider a standard of a good faith basis?

[Rep. Herb Olson (Member)]: Yeah. I'm thinking of not so much from the financial aspect from the market kind of that kind of aspect of compliance with the economy.

[Rep. Michael Boutin (Member)]: That being

[Rep. Herb Olson (Member)]: kind of within that?

[Chris D’Elia, President, Vermont Bankers Association]: Yeah. I mean, they're gonna look at our, know, did we follow debt collection procedures? Did we if we denied I mean, I could almost think that it would be no different than reviewing a denial for a loan application. You have to provide certain information. You do certain things. The examiner comes in and says, yep. Check. Check. Check. You met all those. You get two checks. But the third one is, how come you didn't provide this information? And that discussion goes on, and the bank's gotta justify why they didn't do it. But I would guess if this were to go through, you'd have to have similar discussions with your examiners.

[Speaker 0]: Thank you. Questions for Chris? Thanks, Kim. Kim, we'll take a short break. So let's come back. I mean, let's call it five minutes, and then we'll have the committee disc