Spargur Latest to Join Prestigious FCIB Award List


A speaker at several NACM and FCIB events and a dedicated contributor throughout FCIB’s recruitment and online presence efforts, Patrick Spargur, ICCE, was the latest to join the list of FCIB Service Development and Growth Award winners.

Spargur, credit manager with Bally Technologies Inc., was honored at the 24th Annual FCIB Global Conference, held this month in Philadelphia. The award is designed to recognize the valuable contributions of volunteers are making to further grow and develop FCIB’s member services and to encourage more people to serve. For his part, Spargur has played an important role in FCIB’s LinkedIn groups, member recruitment and the FCIB website member discussion board, among other pursuits. FCIB Director of Business Development and Membership Ron Shepherd made sure to point out Spargur’s various charitable efforts during Global, including working with a group that serves Las Vegas residents badly affected by the city’s deep economic downturn and real estate bust.

“It is always great to receive recognition from your peers and those who you serve,” Spargur said. “FCIB is a very well-known and respected organization that has been instrumental in my career development. Their members and resources are invaluable to me as a credit professional.”

The last FCIB member to receive the Development and Growth Award on U.S. soil was John LaRocca, CICP, of Hitachi Data Systems Corp., in 2012.


-Brian Shappell, CBA, CICP, NACM staff writer

Visa, MasterCard Cap Merchant Processing Fees in France


Visa and MasterCard reached an agreement this week with the French competition authority to slash card processing fees for merchants. As of November 1, MasterCard will cut its interchange fees, referred to by the competition authority as interbank fees, by 49%, from an average rate of 0.55% per transaction to a maximum of 0.28%, and Visa will cut the same fees by 44%, from an average rate of 0.50% to the same 0.28% maximum.

The agreement applies only to merchants and consumer credit card users in France, but also puts the European Union's third-largest market in lock-step with a proposal put forth by the European Commission this summer that would cap processing fees on all EU credit card transactions at 0.3%.

"For both MasterCard and Visa, the amount of interbank fees is set collectively between each payment system and its respective members. While jointly setting the rate may not necessarily be reprehensible in itself, the amount of such fees must nevertheless by justified by objective factors," said the competition authority in a news release. "Ultimately it will be the consumers who will benefit from this reduction in interbank fees, through the repercussions on retail prices of the savings in bank fees that merchants will be able to obtain from their banks."

While the new rules are specifically geared toward consumer transactions, the European Commission's definition of a consumer does not necessarily exclude certain smaller companies, and the entity's directives are firm in the belief that certain "core provisions" of proposals and regulatory changes, such as those enacted by the French competition authority, should always apply regardless of the status of the user.

In either case, the approach taken by France, and the EU in general, to regulate the way in which credit card processing fees are set by the world's two largest card networks looks remarkably strident when compared to similar efforts in the United States. Merchants continue to fight for a reduction in fees via the U.S. judicial system, most recently in a hearing over the pending final approval of a $7.25-billion antitrust settlement against Visa and MasterCard that many merchants believe doesn't go far enough to reduce their processing costs.

Regardless of the agreement's final approval, in the hearing, held in the U.S. District Court in Brooklyn, presiding Judge John Gleeson wondered aloud if the fight over interchange fees in the U.S. would ever be solved without comprehensive federal legislation. While a proposal to firmly cap interchange fees was ultimately scrubbed from the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, similarly sweeping policy changes have been easier to come by in France and the EU.

- Jacob Barron, CICP, NACM staff writer

Fed Delay Presenting Opportunity for Emerging Markets?


There is suddenly a very intense conversation that is taking place within the ranks of the emerging markets. The Fed decision to delay the tapering process has been seen as something of a reprieve and now the question is what these nations can do with this break. The crux of the situation is relatively simply stated—the loose monetary policy of the U.S. was created by historically low interest rates and a series of extraordinary moves designed to bolster the economy by holding long-term rates as low as possible. This same tactic has been employed in Europe and in its most drastic form in Japan. The investor reacted to all this predictably. There was no real opportunity to make much of a return in the U.S. or European market so money took off for greener pastures and those were to be found in the emerging markets. To make matters that much more complex, there are restrictions on investment in some of these states, most notably China. The "hot money" in search of decent returns was essentially channeled into states such as Brazil, India, Turkey and others that soon became the darlings of the investment community. For the most part this influx of cash was welcome and it contributed to the rapid growth these nations were experiencing. Remember a few years ago when the BRICs were all the rage? At the time there was concern about the impact all this cash was having on inflation and the reaction of the central banks actually made things a little worse. The response to inflation was to raise interest rates and that just made these economies all the more appealing.

Then the Fed started to talk about reducing all this economic assistance and the investor's mood changed quickly. Now there is the promise of higher rates, and in markets that were considered more secure and reliable. The flood of cash out of the emerging markets threatened to be even more drastic than the flood in. That was until the Fed seemed to reverse course. The investors are now stuck in a kind of self-imposed limbo as they try to figure out the next move. For the time being the emerging markets are not seeing the exodus that was starting to occur. The question is what they should do now. The money that was finding its way into these economies has remained for the time being, but nobody expects this to last. The Fed will eventually taper and the hot money will flee in search of better rates and more security in the U.S. and Europe. This is going to happen, although it is not altogether clear when. How do the emerging market states prepare now that they have been given a short breather?

Analysis: There are not all that many options and they will be hard to put into effect in the short time that may be available. It comes down to two broad strategies. The first is to figure out a way to keep attracting that foreign investment despite the higher rates that may be developing in the U.S. and Europe. The second is to more dramatically expand the growth of the domestic economy—both in terms of consumer activity and domestic investment. The discussions right now revolve around what the foreign investor wants to see in these nations. It starts with a decent return and that has many central banks considering further rate increases as this makes putting money in these countries more appealing. The problem with that strategy is that higher interest rates will slow the development of domestic growth, as loans will be more expensive. If the plan is to bolster the growth of the private sector, it would make more sense to lower the interest rates, but that chases away the investor seeking higher returns. The country then has to make a choice. The fastest way to fend off decline is to concentrate on attracting the attention of the investor, but that just extends the vulnerability to that outside funding.


- Chris Kuehl, PhD, NACM Economist


This article was originally published in today's edition of FCIB's Strategic Global Intelligence Briefs. To learn more about FCIB, click here.

FCIB Global: Spotlight on Nations


A number of top experts served as speakers during the 24th Annual FCIB Global Conference, held in Philadelphia this week. Whether solo speakers like Peter Henry, dean of the Leonard N. Stern School of Business at New York University, or Kevin Hebner, senior foreign exchange strategist at JPMorgan Chase Bank or the International Payment Methods and Political Risks in Global Hot Spots panels that featured global business developers, veteran credit managers and insurers, many left important impressions on conditions in various key nations. The following is a sample of such observations:

China: While there have been issues with the slowing of the growth rate, change in leadership and social unrest from a populous that wants a bigger piece of the pie, the Asian powerhouse has shown a pragmatic approach and will stay among the most important world economies going forward.

Greece and Portugal: Both nations will likely need at least one more round of bailouts from the European Central Bank. Leaving the euro as a currency appears to be a real possibility.

India: It is among the nations most at risk for a crash, as its core industry sectors contracted at the worst pace in 13 years. It continues to lose some of its market advantages (cheap labor), but has a young and educated population as a major positive.

Indonesia: Resource nationalism is a problem that could keep international business away, and rising inflation is again a problem despite economic potential.

Italy and Spain: Trade credit payment delays continue to dog the reputations of companies in two of the key European economic nations. The debt issues will continue well beyond the short term.

Mexico: Despite concerns of a slowing growth rate, sensitivity to commodities pricing and U.S. economic cycles and drug-related violence, Mexico still stands out in its pro-business, sound framework and fundamentals.

Philippines: The often overlooked country boasts one of the best growth rates in Asia.

Vietnam: The high degree of political stability and problems in the banking sector are problematic.

Turkey: Still the gateway between Western economies and the Islamic world, but massive account deficits and heated divisions between secular and conservative citizens are imposing deep dangers for the key nation.

-Brian Shappell, CBA, CICP, NACM staff writer
 
To see more country breakdowns based on FCIB Global Conference speaker observations, among other coverage from the event, keep an eye out for the November/December issue of Business Credit Magazine, which will be available in late October.

Fed: Stimulus Continues, No GDP Surge Expected between 2015-2016


The Federal Reserve’s Federal Open Market Committee (FOMC) broke from its two-day economic policy meeting Wednesday with surprising news that it would not slow down on its asset purchase stimulus program despite some evidence of strengthening in the economy.

Kevin Hebner, senior foreign exchange strategist for JPMorgan Chase Bank, was among many experts expecting the Fed to start tapering. While speaking at a Tuesday session of the 24th Annual FCIB Global Conference in Philadelphia, Hebner said it was possible, as early as Wednesday and surely in the near future, that the Fed would reduce about $10 billion from the $85 billion per month it has been spending on Treasury and mortgage-backed securities, given improvements in some key economic indicators. The FOMC, however,  noted in its official statement that there are ongoing concerns with unemployment rates and escalating mortgage rates, along with “restraining” fiscal policy. As such, the purchase strategy, like the target for the federal funds rate, remained unchanged. Chairman Ben Bernanke indicated during a press conference that the Fed wants to see more improvement, especially “meaningful progress” in labor markets, and in more of a widespread, consistent manner, before the Fed changes course.

While many will focus on the asset purchase issues, Hebner said even more important was that Wednesday’s meeting included the first release of projections for 2016 by the Fed. To wit, the FOMC predicted growth of 2.2% to 3.5%, about on pace with projections for 2015 but well below the 4% Hebner said would constitute a better-than-“neutral” outlook. The prediction for overall 2013 GDP was 1.8% to 2.4%, according to Fed statistics. Unemployment was projected at a range of 5.2% to 6% for 2016, also very close to that of 2015, although it would still be a significant improvement from the 2013 projection of 6.9% to 7.3%.

“This is the most important FOMC meeting in at least a year or so,” said Hebner. “And it could be hard for people to make sense of it all.” Despite eventual tapering, Hebner predicted no hikes to the federal funds rate before 2015 in part because of continued issues in the labor market. Therein, the Fed left the target for the federal funds rate at a range between 0% and 0.25%. At least that much was widely expected.

-Brian Shappell, CBA, CICP, NACM staff writer

FCIB Global: Opportunities In, Lessons to be Learned From Latin American, Asian Nations


Sales are not the only thing the advanced economies can draw from their emerging counterparts, especially in places like Latin America and Asia. Some lessons in how to right their proverbial fiscal ships could also be on the list, said the first speaker at the 24th Annual FCIB Global Conference in Philadelphia Monday.

Peter Blair Henry, dean of the Leonard N. Stern School of Business at New York University and key member of President Barack Obama's 2008 transition team, said there are three key things the advanced economies could learn how to do from the up-and-comers:

1.    Embrace discipline
2.    Offer clarity
3.    Show some trust in other well-performing economies.

Perhaps the biggest takeaway of the three, especially for the United States and European Union, would be clarity. As Henry characterized it, those advanced economies have “anything but clarity.”

“Look at Latin America since 1994. The inflation has dropped like a stone,” he told attendees. “A number of third world countries [there and elsewhere] turned themselves around and became emerging economies when their leaders embraced a clear commitment to a change of direction.” In short, clarity fueled their surges in growth rates.

He, along with Export-Important Bank of the U.S. Director Sean Mulvaney, suggested that particular attention needed to be paid to improving Latin and Asian economies because of massive strides they have made. To wit, Mulvaney estimated that 20% of all Ex-Im activity involves Latin America, the most of any region in the world, and Asia is close behind. The potential impact is undeniable in both regions.

-Brian Shappell, CBA, CICP, NACM staff writer

Check back at the NACM blog throughout the week, this week's eNews (available Thursday) and the November/December issue of Business Credit for more coverage from FCIB Global.

Merchants Assail Visa-MasterCard Interchange Settlement in Final Hearing


Merchants continued their assault on a class-action settlement with Visa and MasterCard over interchange fees yesterday, making their case before the judge that will ultimately determine the agreement's fate.

In an all-day hearing in U.S. District Court in Brooklyn, presiding Judge John Gleeson, who granted the settlement preliminary approval last November, heard arguments for and against the agreement that will eventually form the basis of his final ruling that will determine the settlement's future. If approved, the agreement would provide $6.05 billion in direct payments and $1.2 billion in temporary interchange rate reductions to merchants, but it would also prevent businesses from filing similar antitrust suits in the future.

The curiously structured settlement would allow merchants to opt out of the lump payment and rate reduction portions of the agreement, which nearly 8,000 merchants representing more than 25% of Visa and MasterCard's card volume have already done. It would not, however, allow them to opt out of the parts of the settlement that preclude future suits against Visa and MasterCard over how they set their interchange fees, which most opponents to the settlement consider a fatal flaw.

"The proposed settlement is next to worthless," said National Retail Federation (NRF) Senior Vice President and General Counsel Mallory Duncan. "It does nothing to reduce swipe fees or keep them from rising in the future, it offers retailers pennies on the dollar for the damage that has already been done and it tries to tie merchants' hands from ever suing again. This is actually worse than no settlement at all because it further entrenches the monopoly held by the card companies."

NRF urged Judge Gleeson to "right or reject" the proposed settlement, by either allowing merchants to opt out of the entire agreement, not just monetary provisions, or reject the settlement. "As it stands, the settlement rewards the perpetrators and traps the victims," said National Retail Federation (NRF) Attorney Andrew Celli. "But it is not hopeless. It can be made fair. You have the power to make it so."

For their part, Visa and MasterCard argued that the legal release from future litigation included in the proposal is narrow in scope, covering only existing rules or similar rules the companies might propose in the future, but this has done little to assuage opponents' concerns.

Merchant groups like the National Association of Convenience Stores (NACS) have also called into question the size of the proposed settlement's payout provisions, considering the estimated $30 billion that Visa and MasterCard have earned from interchange fees every year since the lawsuit was filed in 2005, and the still exorbitant costs that merchants pay to accept credit cards even today. "Anti-competitive practices have resulted in our industry paying more in card fees than it makes in pre-tax profits every year since 2006," said NACS President and CEO Henry Armour. "The vast majority of our industry is made up of small businesses. In fact, 60% are single store operators. Because our industry pays such huge fees, $11.2 billion in 2012, NACS has had thousands of conversations with our members about interchange fees and discussed the problems and potential solutions in depth."

The proposed settlement, as a means to alleviate this burden, allows merchants to pass on their processing costs to their customers via surcharge, a provision that became effective in late January. But many have argued that this is an unworkable solution, both from a marketing perspective and because a growing number of states are considering surcharging bans that would make the provision useless. "The primary rules relief in the settlement, surcharging, is completely unworkable because of negative consumer reactions to surcharging, state laws that prohibit it and the level-the-playing field provisions," said Armour. "Most telling is the fact that since February when retailers have had the ability to surcharge under the settlement there has been virtually no movement in that direction. That is compelling evidence that the ability to surcharge has no value to the class."

Judge Glesson offered no hints as to when he might make his final ruling, but noted that regardless of whether the settlement is fully approved, the fight over interchange fees may not be solvable without comprehensive federal legislation.

- Jacob Barron, CICP, NACM staff writer

Industries to Watch: Coal Facing Regulatory, Demand Headwinds


The coal industry is in no way a new area of concern to market-watchers and creditors. But the challenges, from demand, home and abroad, to government intervention seem to be stacking up in the short term. But there may be hope, albeit of the cautious variety, of an export-led turnaround. It just isn't likely to be off NACM's “Industries to Watch” radar in fewer than one or two years.

The list of experts warning of the short-term prospects for financial problems in the coal industry isn't short. NACM sources therein include Bruce Nathan, Esq., partner with Lowenstein Sandler LLP; Ed Altman, PhD, the Max L. Heine Professor of Finance at the NYU Stern School of Business and director of research in credit and debt markets at the NYU Salomon Center for the Study of Financial Institutions; and Adam Rosen, director of PricewaterhouseCoopers LLP's financial restucturing group.

Perhaps the biggest threat to the industry stems from safety disasters that have trapped and killed miners as well as environment concerns over pollution. The Obama Administration's regulatory efforts affecting coal mines has accelerated in recent years. This month, the administration and the Environmental Protection Agency leaked plans to ban construction of any new coal-fired power plants not designed to meet the highest technological standards for limiting emissions. That is a massive expense. Also pricey is the bevy of safety upgrades called for at dozens of existing operations.

Rosen, who represents the United Mine Workers of America in one of the most known Chapter 11 cases in the industry (Patriot Coal), said regulations have led to a quadrupling of temporary mine closures. The worst hit basins (industry term for region) are in Central Appalachia and Northern Appalachia, with 42 and 11 closures, respectively, so far in 2013 alone. 

“With all the environmental regulations being imposed, rather than spending hundreds of millions to get the plants up to code, they're just shutting down,” Nathan said. “That's a trend you are going to continue to see.”

Producers are also dealing with price softness from an enemy that will intermittently show itself for a long period into the future: natural gas. With natural gas and shale presently flooding the market and, thus, the prices of it dropping, there has been a downside effect on domestic demand for coal used for energy.

“Natural gas is a permanent concern for the industry and a real obstacle,” Rosen told NACM. “There are plants that have the ability to switch from natural gas to coal and vice-versa when the pricing changes. When natural gas is depressed, it makes for an unfavorable environment for coal.”

However, Rosen said natural gas prices have been strengthening, which is good for the coal industry. There have also been projections of improved demand abroad in places like Australia. But improvements there and in China, which relies heavily on coal to power steel-making plans, could be 12 to 18 months off, Rosen said. Even then, China is a wild card. Just in recent days, the government banned coal-powered plants in three industry regions, including part of Beijing, because of massive pollution problems.

In the meantime, Rosen and Nathan warn trade creditors with debtors tied to the coal industry to look closely at factors like their cash availability as well as, importantly, the other availability it has to borrow over the next one to two years. There is still opportunity with those in the coal industry that are prepared to withstand a year or two, at least, of troubled waters.

-Brian Shappell, CBA, CICP, NACM staff writer

Committee Recommends Ditching Identification Provisions on Virginia Credit Reporting Bill


A report prepared by an ad hoc committee formed to study a Virginia bill that would affect commercial credit reporting in the state suggested removing some of the legislation's most controversial provisions, including a requirement that commercial credit reporting agencies identify the source of so-called "negative information" to the subject of a report.

The committee, formed within the full Virginia Small Business Commission to study House Bill 2198, presented the report to the full Commission at its meeting this week. After briefly introducing and submitting the report, the Commission urged proponents and opponents of the bill to continue their work on the legislation with the ad hoc committee's report in mind. State Senator and Commission Chair Frank Ruff, Jr. (R) urged the bill's sponsor, Delegate Michael Watson (R), to be prepared to compromise on any final legislation that emerges from the debate over HB 2198.

Recommendations in the ad hoc committee's report indicated a great degree of trust in the commercial credit reporting world's existing self-regulatory format, wherein subject companies can already view their report should they like to, and errors are rare and inaccuracies are quickly addressed. The report also suggested that HB 2198 be more closely revised to resemble a California statute that both guarantees commercial credit reporting agencies the right to protect the identity of their sources of trade credit information and codifies a process by which the subject of a report may dispute information contained within their report.

For more details on HB 2198, check out this story in tomorrow's edition of NACM's eNews, released every Thursday afternoon.

- Jacob Barron, CICP, NACM staff writer

Republican Lawmaker Wants Federal Review of Attorneys' Chapter 11 Billing Practices, Venue Shopping


A Midwestern senator has put American bankruptcy attorneys in his proverbial crosshairs over what he characterized as the possible “abusive practices” of some professionals in the industry. The lawmaker wondered in a publicly released letter if updated federal guidelines under Section 330 of the Bankruptcy Code would do enough to protect creditors while also calling for a review of forum (court) selection practices.

In an electronic letter to Gene Dodaro, Comptroller General of the United States, Sen. Charles Grassley (R-IA) requested a formal Government Accountability Office (GAO) review of fees involved in corporate bankruptcy cases, especially large ones. Grassley, the ranking member on the Senate Judiciary Committee, makes the request in advance of a coming guideline enactment for compensation and reimbursement terms in large corporate Chapter 11 cases. The guidelines, issued by the Department of Justice to assist the U.S. Trustees when reviewing applications for compensation and reimbursement, will be enacted on November 1.

“It is imperative, in a court of equity like the Bankruptcy Court, that Congress monitor whether large corporate Chapter 11 cases are ‘cash cows’ for certain professionals at the expense of creditors and debtors alike, thereby subverting Congressional intent,” Grassley wrote. He piggybacked the request with another to review the issue of venue shopping and whether it contributes to excessive fees being paid to legal professionals by creditors and debtors.

-Brian Shappell, CBA, CICP, NACM staff writer

Beige Book's Reasonably Upbeat Outlook Could Reduce Stimulus Efforts


The Federal Reserve’s periodic Beige Book economic roundup released this week found an economy expanding at a “modest to moderate” pace. None of the 12 districts reported major threats to growth, on the whole.

Consumer spending rose, as expected, in part because of the annual “back-to-school” shopping period that falls into the latest period (mid-July to late-August). Manufacturing, agriculture and real estate all showed renewed strength as well, according to Fed reporting.

“The latest assessment of the U.S. economy via the Fed’s Beige roundup suggested that there is room for some mild optimism about the rest of the year,” said NACM Economist Chris Kuehl, PhD. “That could very well provide the Fed with the ammunition it needs to reduce the size and the scope of the QE III effort.”

Kuehl found developments in the New York District particularly of interest. He characterized it as a barometer for the feeling of the typical U.S. consumer because of the sheer volume of visitors and transplants that travel or move to the area regularly. He summed up the overarching feeling in the district with the word “stability,” something long-sought before the growth rebound improved to more recent levels this year. In essence, there’s “good news” in Greater New York and much of the U.S. at present.

-Brian Shappell, CBA, CICP, NACM staff writer

News Roundup: While You Were Away...


In case you were out and about during the last week of August through the Labor Day holiday, as many Americans typically are, here’s a little of what has been going on. Check the Sept. 5 edition of eNews at www.nacm.org for extended stories on some of these items:

  • The National Association of Credit Management’s (NACM’s) Credit Managers’ Index (CMI) for August returned to the growth patterns of earlier this summer. The numbers look impressive again, and the index sits at 56.4. The August numbers are the best in over 18 months, and higher than the previous peak in June. Sales, new credit applications and dollar collections also surged in the August index.

  • (Not featured in eNews) Another statistical report suggested that Europe is starting to rebound from its prolonged downturn. Led by manufacturing, the Markit Eurozone PMI Composite Output Index rose for the second straight month, to a level of 51.5. It is the fastest growth rate for the region in more than two years, according to Markit. The firm cautioned that the turnaround, while positive news, will take a while to be felt and that problems such as unemployment and work backlogs could sit unchanged or slightly worsen while the recovery filters through euro zone.  

  • Municipalities saw things going their way in two important Chapter 9 cases. San Bernardino, California has been declared eligible for Chapter 9 municipal bankruptcy protection as a judge denied objections from the California Public Employees’ Retirement System (CalPERS). In Detroit’s Chapter 9 case, Judge it was ruled that constitutionality will not be considered when the eligibility hearing is held on Sept. 18. The date shows an accelerated timetable, as it was originally slated for October. In other municipal bankruptcy news, the City of Harrisburg, Pennsylvania likely will not attempt a filing for the second times because it and creditors tied to a failed trash incineration retrofit project  have forged a deal. That pact reportedly includes sale of the incineration operation, accepted upfront losses by its primary creditor and leading of parking structure operations for up to four decades.

  • The American Subcontracts Association (ASA) filed an amicus curiae in a U.S. Supreme Court Case that revolved around a lawsuit of a withheld final payment from a general contractor to a sub, and that general contractor’s attempt to move the case to a Virginia court despite the small (five-employee) subcontracting being based in and doing all work on the project in question in the state of Texas. ASA came out against venue shopping perceived as a ploy to hurt small operations without the means to defend their cases far from home.
-Brian Shappell, CBA, CICP, NACM staff writer

Debate over HB 2198 Continues at Recent Virginia Small Business Commission Meeting


The Virginia Small Business Commission continued its study of House Bill 2198 last week with the meeting of an ad hoc committee specifically formed to study the legislation, which would affect commercial credit reporting in the Commonwealth. NACM was in attendance, providing the committee with a necessary perspective from commercial credit professionals that has otherwise been absent from the debate.

Led by Small Business Commission civilian members Owen Van Syckle and Robert Marcus, the meeting began with a discussion of the bill's intent by Delegate Michael Watson, the author and sponsor of HB 2198. Watson, along with two representatives from a local Virginia business that support the bill, noted that the legislation was designed to address a perceived gap in the rights of businesses to identify the source of so-called "negative information" on the commercial credit report. He said that businesses are denied the ability to improve their credit by the currently anonymous way that historical payment information about them is displayed in their credit report.

Richmond-area NACM member Doug Strobel of Titan America, who provided vital testimony at the Small Business Commission's last hearing in June, again offered the perspective of a trade supplier, explaining how he uses commercial credit reports and how he conducts an assessment of a potential customer's creditworthiness. Strobel also discussed how important credit information is to a credit report, and how such reports are integral to his ability to make a fast, accurate credit decision, once again making the case that HB 2198 could limit the amount of information available on businesses in Virginia by requiring commercial credit reporting providers to identify the source of "negative information" on a report.

Strobel added that the bill would a) dry up information on Virginia businesses, making it harder for them to acquire goods and services on terms; b) make credit reports on Virginia businesses less accurate, thereby delaying a credit decision which could in turn affect commerce in the Commonwealth; and c) place Virginia at a competitive disadvantage by restricting the free flow of credit information on businesses within the Commonwealth and not restricting the free flow of credit information on businesses located elsewhere. This last argument had, for the most part, never been made to the Small Business Commission and seemed to resonate with the members in attendance.

Following Strobel's discussion, Delegate John Cox (R), a member of the Commission in attendance at the work group meeting who had previously shown mild support for HB 2198, spoke out against the bill, specifically stating that he believes it would make Virginia a less friendly state for businesses and place Virginia businesses at a competitive disadvantage because it would restrict the free flow of credit information.

Former NACM National Chairman Jack Clark, CCE also spoke about how incorrect information is handled in commercial credit reports, explaining that such information is removed from a report as quickly as possible and that a business that routinely reports incorrect information on subject companies would be prevented from submitting information for violating the terms of this exchange, which specifically addressed some of the committee member's concerns about how this information is maintained. Also attending in support of NACM's position were Virginia attorney Jim Fullerton, Stacey Jones, CGA of NACM South Atlantic and Karen Gothard and Roger Troup from Ferguson Enterprises.

The ad hoc committee now will compile a report on HB 2198 that will be presented to the full Small Business Commission at their next meeting on September 10. It was unclear whether or not the report would be a recommendation for or against HB 2198 or simply a summary of the arguments, but NACM plans to submit more documents to the Commission ahead of its final considerations.

NACM continues to oppose HB 2198, as it does any bill that threatens the free and open exchange of credit information, and will be monitoring the legislation through the Virginia legislature. If you have any questions or comments about HB 2198, please contact Jacob Barron, CICP at jakeb@nacm.org.

- Jacob Barron, CICP, NACM staff writer