Ramming Bow Contracts

Have you heard of Ramming Bows? Or did you know that they describe a category of boilerplate contract provisions?  Until a couple of weeks ago, I had not either.  That was when I came across Glenn West’s two delightful blog posts at the Weil Gotshal & Manges site (here and here). Glenn is a senior partner in the Private Equity/M&A practice at Weil. And in his spare time, he writes wonderfully witty blog posts and articles about wide range of legal issues; many of which are about the bizarre world of sophisticated boilerplate contracting.  Even if you have no interest in contract law, let alone boilerplate contracts, I suspect that you will enjoy his writing.  It is insightful about the way in which contracts get produced and evolve in the real world and, even better, is funny.

What Is "Credit"? AfterPay, Earnin', and ISAs

A major issue in consumer finance regulation in mid-20th century was what counted as “credit” and was therefore subject to state usury laws and (after 1968) to the federal Truth in Lending Act. Many states had a time-price differential doctrine that held that when a retailer sold goods for future payment, the differential between the price of a cash sale and that of credit sale was not interest for usury law purposes. State retail installment loan acts began to override the time-price doctrine, however, and the federal Truth in Lending Act and regulations thereunder eventually made clear that for its purposes the difference was a “finance charge” that had to be disclosed in a certain way. 

 

Today, we seem to be coming back full circle to the question of what constitutes “credit.” We’re seeing this is three different product contexts: buy-now-pay-later products like Afterpay; and payday advance products like Bridgit, Dave, and Earnin’; and Income-Sharing Agreements or ISAs (used primarily for education financing). Each of these three product types has a business model that is based on it not being subject to some or all “credit” regulation. Whether those business models are well-founded legally is another matter.

 

Let me briefly recap what is “credit” for different regulatory purposes and then turn to its application to the types of products.

Elizabeth Warren & the Dow Corning Bankruptcy: Nothing to See

The Washington Post has a story about Senator Elizabeth Warren’s involvement in the Dow Corning bankruptcy that implies that Senator Warren was somehow working against the interests of personal injury victims. That’s rubbish, and it’s frankly irresponsible reporting that fundamentally fails to understand the bankruptcy process and leaves out a critical fact.

Bankruptcies are complicated, so let me relate the Dow Corning story and then what we know of Senator Warren’s minimal involvement. Bottom line is that this is a complete nothing burger, much like the previous Washington Post story with the shocking headline (much mocked, and now amended) that then-Professor Warren had billed [a below-market] rate of $675/hr for her legal work. 

Here's the properly related story in a nutshell: Senator Warren did some minimal work in support of a deal to ensure compensation for tort victims that was supported by the overwhelming majority (94%) of those tort victims and that was approved by a federal court. That’s a good thing that deserves praise, not some implicit shade.  Alas, the Post doesn't bother to mention the tort victim support for the plan. 

Venezuelan Debt: Soft Power Matters

Mark Weidemaier and Mitu Gulati

Last week, we did a post about a set of creative but long shot defenses that Venezuela’s Interim Government has invoked to defend against lawsuits by creditors holding defaulted debt. Basically, the government wants a stay of creditor enforcement efforts. The plaintiffs want summary judgment—i.e., a relatively quick entry of judgment, without a trial or significant fact-finding. The Interim Government’s defenses have equitable appeal but questionable (although not zero) legal merit. The defenses included the contract law defense of Impossibility and the customary international law defenses of Necessity and Comity. Impossibility rarely works, especially when the defendant’s argument boils down to, “I’m out of money and need time to work out a deal with my creditors.” Necessity and Comity may not even apply in cases arising from a sovereign’s default. However, the Interim Government’s legal team persuasively emphasized their client’s impossible situation—recognized as the legitimate representative of the country but unable to access its resources.

Judges have power, and much of this power is of the “soft” variety that comes, not from the ability to resolve substantive disputes, but from professional status and authority and from the ability to control process. Here, the judge has given the Interim Government a bit of the relief it wanted, in the form of a relatively favorable scheduling order.

Equal Treatment in Sovereign Restructurings

Mitu Gulati & Mark Weidemaier

Last Friday, the Venezuelan government (at least, the representatives of that government recognized by the U.S.) issued a set of broad principles it intended to follow when it conducted the debt restructuring that is going to be necessary as soon as Mr. Maduro is given the proverbial boot from office.  One of those principles is going to be “equal treatment” of the various claims denominated in foreign currency – PDVSA bonds, promissory notes, Venezuelan sovereign bonds, arbitral awards and so on.  For those who are familiar with sovereign restructurings, the use of this broad equal treatment principle is going to be familiar (for example, Greece used it in 2012 when faced with an array of different types of debt instruments).

Our question is why.  The different debt instruments that Venezuela has – PDVSA bonds, sovereign bonds, Prom Notes, etc. – have different legal terms.  Some have stronger creditor rights and others have weaker ones. And that probably means that the current investors paid different amounts to buy them.  If investors paid different amounts for stronger versus weaker legal rights, doesn’t it stand to reason that the ones with the stronger rights should be offered a higher payout in a restructuring? And if they are not paid different amounts, isn’t that an invitation to the ones with stronger rights to engage in holdout behavior?

In Greece, for example, both the local-law governed Greek sovereign bonds and the foreign-law ones were offered the same deal.  Almost of the local-law bondholders took the deal, but relatively few of the foreign ones did. End result: Greece paid out the foreign-law bonds that refused the offer in full.  The same was true for a bunch of the Greek guaranteed debt. 

In Barbados, in the restructuring that is ongoing, the domestic-law bonds have taken the offer made by the government. But that same offer has been turned down the foreign-law bondholders; presumably because they think their instruments are worth more because of their stronger legal rights.  Wouldn’t it be efficient to offer the foreign holders more rather than getting mired in years of litigation?

There is undoubtedly a logic to the equal treatment principle.  We are wondering what it is. Efficiency? Maybe the logic is that if, for example, Venezuela were to offer the sovereign bonds requiring 100% of the creditors to approve of the restructuring a few cents more on the dollar than the ones requiring 75%, the whole process would get mired in disputes over whose bonds had stronger or weaker legal rights? Or maybe the logic is that investors will either hold out or not. Put differently, maybe there really is no marginal investor (i.e., one who, in exchange for a few extra pennies, might choose not to hold out and sue). Investors either have an appetite for litigation (in which case they aren’t interested in accepting restructuring terms) or they don’t (in which case there is no need to compensate them for rights they don’t have the appetite to assert). But again, we are speculating.

As a final puzzle, why are some bonds exempt from the equal treatment principle? The restructuring guidelines say that bonds backed by collateral will receive different treatment. But why? Why is a right to collateral different from a 100% voting right? Perhaps it is because some collateral pledges are relatively easy to enforce, such as the pledge of shares in U.S. entities. The PDVSA 2020 bonds are the primary example here. By contrast, a 100% voting right ensures the right to sue but doesn’t do much to help an investor enforce the judgment. However, the guidelines released by the Guaido team may have in mind something more than just the 2020s.

Yannis Manuelides Paper on the Limits of the "Local Law Advantage" in Eurozone Sovereign Bonds

Sovereign debt guru and Allen & Overy partner, Yannis Manuelides has a new paper (here) out on the “local law advantage” in Euro area sovereign bonds.  This paper, along with Mark Weidemaier’s paper from the beginning of the summer (here – and a prior creditslips discussion about it here), helps shed light the thorny question of which European local-law sovereign bonds should be valued more by investors: Ones with CACs or ones without them.  Given that there are billions of euros worth of these bonds with and without CACs being traded every day, one might have thought that there would be clear answers to these questions from the issuing authorities themselves.  There are not.  Further, some of the folks at the various government debt offices take the bizarre (to me) view that answering this question might somehow scare the market.

Evaluating Venezuela’s Guidelines for Debt Restructuring

Mark Weidemaier & Mitu Gulati

As reported in the Financial Times, Reuters, and elsewhere, Juan Guaido’s economic and legal team has released a report setting out guidelines for a restructuring of Venezuelan debt. The report, attached here, describes a process that can only happen if/when Maduro loses power and the U.S. government lifts the current sanctions regime, which effectively forbids most transactions in Venezuelan debt. The report is a brief three pages, but it offers intriguing clues about what a restructuring might look like.

Proposals to restructure the Venezuelan debt must accommodate certain basic realities:

- The country is experiencing a dire humanitarian crisis, which demands immediate attention.

- The debt stock is utterly, needlessly complex. Venezuela has somewhere in the range of $200 billion in external liabilities. Virtually all creditors are unsecured, and every creditor’s repayment prospects are tied directly to the government’s ability to monetize one asset: oil. For all practical purposes, every creditor is in the same position. Yet the debt is spread across multiple obligors (the government, PDVSA, etc.) and a bewildering array of obligations (bonds, promissory notes, trade credits, arbitration awards, and who knows what else).

- The government therefore needs time—time to focus on humanitarian needs, time to rehabilitate the oil sector, time to stabilize the political situation, time to determine the full scope of its debts, time for a new government to come up with a credible economic plan for recovery, time to persuade key foreign companies that they won’t be expropriated again if they come back and help in the recovery, and time to come to terms with its creditors. But…

- It may not have much time. Many creditors have been patient. But a few have already reduced claims to judgment and initiated attachment proceedings against crucial government assets, including U.S. oil operations. It is surprising that the litigation floodgates have not opened, but that could happen any day now.

- The next government is going to be highly vulnerable to creditor lawsuits, and particularly so in the United States. It cannot right its economy without selling oil abroad (and sales in the U.S. are typically the cheapest, given refineries and distances). But these sales generate assets in foreign jurisdictions, where creditors will try to seize them. This vulnerability, paired with the complexity of its debt stock, makes Venezuela more akin to Iraq than to more recent crises.

- Finally, the U.S. government may prove a fickle ally. The most effective way to buy time for a Venezuelan restructuring would be for the U.S. and other key jurisdictions to block creditors from attaching Venezuelan assets while the government was engaged in good faith restructuring negotiations. This is what happened for Iraq, but will the Trump administration be able to collaborate with other key nations (China, Russia) to produce a solution similar to that designed for Iraq?  We don’t know.

These facts make for a very messy debt restructuring scenario. But that doesn’t mean the restructuring plan must be complicated. To the contrary, the proposal released by Mr. Guaido’s team attempts to simplify. (Note that the plan does not address debts owed to other nations, presumably including state-owned companies):

Timing and credibility: As noted, Venezuela needs time to address pressing humanitarian needs and, more broadly, to get its house in order. It also needs to persuade its creditors that it has accurately estimated its liabilities and repayment capacity. But the byzantine debt stock created by the Maduro regime, combined with the government’s long-standing refusal to engage with the IMF, means that creditors have little reason to accept the government’s estimates. Not surprisingly, then, the proposal envisions that the IMF will both provide emergency humanitarian assistance and play its usual role in assessing the country’s growth and repayment prospects.

Venezuelan Debt Restructuring: Making Impossibility Possible?

Mark Weidemaier & Mitu Gulati

There have been relatively few recent developments regarding Venezuela’s debt, as Maduro hangs on to power and U.S. government sanctions bar trading or restructuring of Venezuelan debt by U.S. persons. However, at least one important development has mostly escaped attention. Venezuela-watchers know that the U.S. government, along with many others, has recognized Juan Guaido’s team as the legitimate government of Venezuela. This had immediate implications for creditor lawsuits against Venezuela in U.S. courts. The first involved disputes over which legal team—the lawyers selected by Maduro or those selected by Guaido—had the dubious honor of representing the Venezuelan government. The answer (sensibly enough) seems to be that Guaido’s legal team calls the shots. But Mr. Guaido and his team represent a government in exile, without meaningful resources or real levers of power. Plus, no one denies that Venezuela has failed to pay its creditors. Normally, those facts lead courts to enter judgments in creditors’ favor and to let creditors attach government assets. What legal basis could a Guaido-led government have for resisting these lawsuits?

Court papers defending against the two latest creditor lawsuits reveal an intriguing and innovative strategy. The two cases are Pharo Gaia Fund Ltd et al. v. Venezuela & Casa Express Corp. v. Venezuela.  Both are pending before Judge Analisa Torres in federal court in the Southern District of New York. In filings made a couple of weeks ago (June 21, 2019), the lawyers for Venezuela (Arnold & Porter) raised three doctrines that one rarely sees in modern sovereign debt litigation for the simple reason that these ordinarily have little chance of success: impossibility, necessity and comity.

Libra and Financial Inclusion

Facebook’s proposed Libra cryptocurrency project has truly stirred up a hornet’s nest of controversy.  Critics have generally focused on Libra as a currency and the power of Facebook in society and its appropriation of users’ privacy.  

I think that discussion misses a key point.  Libra will be, first and foremost, a payment system.  It will be a payment system that happens to operate using a currency index, rather than a single country’s currency, and clear using blockchain rather than other clearing software, but it’s still a payment system, that is a system for moving value between parties.  The payment system aspect is what both makes me incredibly skeptical about Libra’s financial inclusion claims and about Libra’s prospects for success. 

Reparations Claims by the Herero and Nama Against Germany

About two years ago, in 2017, an intriguing lawsuit was filed under the Alien Tort Claims Act in New York. It was filed by members of the Herero and Nama tribes for the genocide of their ancestors that took place in what is now known as Namibia. In March this year, Judge Laura Taylor Swain, who readers of this blog may know from the Puerto Rican financial drama, ruled that the claims against Germany were barred by that nation’s right of sovereign immunity. As an aside, having oversight of the Puerto Rican debt debacle is not Judge Swain’s only connection to sovereign debt lore – she also sits in the judgeship vacated by none other than Judge Thomas Griesa of pari passu infamy. For accounts of the above mentioned class action by the Herero and Nama, see here and here. (Lawsuits on roughly similar grounds had been attempted earlier as well; see here).

This outcome is probably not surprising for anyone who has followed the fate of human rights litigation over the past few years brought under the Alien Tort Claims Act. Basically, under the direction of the Supreme Court, the possibilities for victims of human rights violations that took place overseas to foreigners with no more than minimal connections to the US (in terms of the claims themselves) have been severely curtailed.

My reason for bringing this up is that this is a history that I knew little about until I started coming across references to the genocide in Namibia in accounts of the Congo where, similar horrors were taking place in the 1890s and early 1900s under King Leopold of Belgium (Joseph Blocher and I have been working on the question of contemporary implications for international law of the transfer of control that took place after the genocide in the Congo (here)). Still though, these references didn’t give me anything close to a sense of how horrific things had been there.

That is, until I came across this case and began reading the filings in more detail. And one of the most interesting pieces I’ve found is by German scholar Matthias Goldman that both uses original archival research to describes the events that took place and uses them to question our contemporary understanding of the law of sovereignty. The law of sovereignty, as with all of customary international law, is based on assumptions (often faulty – as Matthias shows in this case) about history. The article, “The Entanglement of Property and Sovereignty in International Law”, is short and eminently readable (here). Matthias, who many slipsters know because of his work on sovereign debt matters, has not only been writing on the topic of the genocide in South Western Africa but has also been involved in the court case (he filed an affidavit in the Herero and Nama lawsuit).

I hope that Judge Swain’s decision is not the end of the road for the claims of reparations by the Herero and Nama. Maybe they will have better fortune with a filing in a German court?

The Mad Mad World of "No Contest" Provisions in Wills

It has been almost twenty-five years since I got hooked on the puzzle of why boilerplate financial contracts, even among the most sophisticated parties, have inefficient terms. Steve Choi and I were taking Marcel Kahan’s Corporate Bond class and we couldn’t understand why the classical model with its highly informed repeat players (with everyone hiring expensive lawyers) wasn’t working to produce the optimal package of contract terms. Marcel presented a very coherent set of explanations for this phenomenon of contract stickiness having to do primarily with network and learning externalities.  And under that model, it was plausible to have equilibria where sophisticated commercial parties and their lawyers could know that they had suboptimal contract terms and yet be somehow unable to change them easily (thereby creating the phenomenon of “sticky” contracts).  Marcel though repeatedly emphasized to us that he had but scratched the surface of a topic worthy of much more investigation (for the classic Kahan & Klausner (1997) paper and its equally wonderful predecessor by Goetz & Scott (1985), see here and here).

Over the past two decades, since the publication of Kahan & Klausner’s sticky boilerplate paper, there have been a number of advances to our thinking about the phenomenon of sticky boilerplate. Most of them, however, have been focused on the worlds of mass market contracts of sophisticated finance or transactions where one of the sides to the transaction is a big repeat player (corporate bonds, sovereign bonds, M&A contracts, insurance). 

A wonderful new boilerplate paper though takes on an altogether unexpected area where I had always thought of the contract-type instruments as being highly tailored: that of Wills. The paper is “Boilerplate No Contest Clauses” posted about a month ago by David Horton (UC Davis) and Reid Weisbord (Rutgers). 

The paper identifies a persistent inefficiency in Wills – an area that I suspect most contract boilerplate scholars are utterly unaware to. That itself is interesting. But this paper goes beyond the traditional boilerplate contract scholarship which, as noted, identified the stickiness problem in mass market contracts.  Wills, as I understand the story that David and Reid tell, tend to always have both an element of tailoring for the individual client and an element of blind unthinking cutting and pasting from prior standard forms. What David and Reid show beautifully in their paper is that the boilerplate portion of the contract (and specifically, the “No Contest” provision) can often undermine the tailored portion that more specifically reflects the intent of the party making the Will.

For those not familiar with these clauses, the following is typical:

If any beneficiary under this Will in any manner, directly or indirectly, contests or attacks this Will or any of its provisions, any share of interest in my estate given to that contesting beneficiary under this Will is revoked . . . . “

Basically, this says: Don’t you dare challenge this Will. If you do, you might lose everything.

Problem is, as David and Reid explain, that there are situations where complications arise with the Will and someone has to go to court to get the complications resolved. That then presents the risk that some dastardly beneficiary will claim that the No Contest clause has been triggered vis-à-vis the innocent beneficiary who is just trying to solve a problem with the Will that the testator didn’t take into account. End result: The intentions of the testator are undermined. Even if the court ultimately tosses the challenges being made on the basis of the No Contest clause, time and money gets wasted.

Why does this clause persist?  The answer given by Reid and David is straightforward: These clauses are cut and paste from prior Wills without thought. They are part of the boilerplate that neither the lawyers nor their clients pay any attention to.  But why not?  The standard explanations from the boilerplate literature such as network/learning externalities, first mover disadvantages, negative signaling, status quo bias, inadequate litigation, etc., do not seem to apply particularly well.  Nor do explanations about big firms who are repeat players exploiting innocent customers who are one shot players.  So, given that the standard explanations do not work, why is the subset of the market for legal services not working?  Are the lawyers not being paid enough to read the boilerplate portions of the Wills and think through the contingencies?  (Best I can tell, the lawyers do actually understand the problem, since there has been lots of litigation over these types of clauses).

Lowdermilk on Family Farmers in Financial Trouble - new paper!

Jamey Mavis Lowdermilk has just posted an article of interest to Credit Slips readers -- lawyers, judges, journalists, policymakers, and more. The article uses a case study of a chapter 12 family farm bankruptcy in North Carolina to ask bigger questions about farming finances and how public policy on farming is set. Extending the early work of now-Representative Katie Porter, Lowdermilk brings her own perspective and expertise to this topic. Before law school, Lowdermilk obtained a masters degree in applied economics and statistics with a specific interest in agriculture as well as rural development, and held a variety of positions related to farms, forestry, and credit. During law school, she started this chapter 12 project in my advanced bankruptcy seminar. After law school, Lowdermilk continued to work on the project and revise the paper for publication as a law review article. Several wonderful bankruptcy judges graciously offered feedback as her first footnote documents. Please check it out!

New Guide to Money Judgment Collection/Defense

I excitedly tore into a small box this morning containing the first printing of my new book, Eyes on the Prize: Procedures and Strategies for Collecting Money Judgments and Shielding Assets (Carolina Academic Press 2019). Since the advent of the Bankruptcy Code in 1979, the study of how one collects a money judgment (or arbitral award) in law schools has become as rare as an involuntary bankruptcy petition against an individual debtor. But my students (and local lawyers) clamored for treatment of the topic for years, so I decided to do what I could to revive the subject. I was surprised at the diversity of approaches I found among the states (whose enforcement law applies to federal judgments, too, as described in the book), but I think I fairly survey the key variants by concentrating on a detailed exposition of the laws in New York, California, and Illinois, with a smattering of other salient state laws thrown in here and there (Texas, Florida, Pennsylvania, Iowa, etc.). In the past, I've used my state's statutes and a series of hypothetical practice problems (both of which included in this book) for years in my Civil Procedure classes, and the students have voraciously devoured that material. More detailed comparative knowledge has also sharpened my appreciation for how the battle between judicial lienholders and secured creditors works. I tried to offer soup-to-nuts coverage here, from discovery to asset protection to bankruptcy, so I think a lot of readers will find something useful, especially new practitioners who likely learned none of this in law school. A bit more of a preview than appears in the "Look inside" link on CAP's website is available for free download on SSRN, as well. Check it out--and let me know what you think!

PROMESA heads to the U.S. Supreme Court?

In February 2019, the United States Court of Appeals for First Circuit held that the selection process of the Oversight Board in PROMESA, the rather bipartisan Puerto Rico debt restructuring law (and more), is unconstitutional. The reason: its members were not selected with advice and consent of the Senate, in violation of the Appointments Clause. In other words, it held that the Appointments Clause applies even when Congress created the positions through plenary power over territories, and that Oversight Board members constitute "Officers of the United States." The First Circuit also used the de facto officer doctrine to avoid a complete do-over; it did not dismiss the Title III petition of Puerto Rico (parallel to the filing of a bankruptcy petition), it did not invalidate the already-taken acts of the Board, and the Board could continue to act, at least until the court's stay runs out (originally 90 days, then extended to July 15). 

Given that last remedial twist, even the prevailing parties found reasons to dislike the First Circuit's ruling. Like the Jevic case, the PROMESA dispute invites unlikely bedfellows. Joining Aurelius Capital Management in challenging the First Circuit's ruling on the remedy is the labor union UTIER. They likely have little in common other than wanting a new Oversight Board, or, even better, no Oversight Board. A full bouquet of certiorari petitions followed, including one by the United States/Solicitor General predicting dire consequences if the Appointment Clause ruling stands. On June 20, 2019, the Supreme Court consolidated and granted certiorari on the various petitions. Argument is to take place in October.

Seventh Circuit Smackdown of City of Chicago

The Seventh Circuit Court of Appeals this week released its opinion in In re Fulton, the highly anticipated consolidated appeal of four Chapter 13 cases involving debtors whose cars had been impounded. The City of Chicago had refused to release them to the debtors (exercising the rights of trustee under section 1303) after the petition filings, as clearly required by section 542 and Seventh Circuit precedent, Thompson v. GMAC, 566 F3d 699 (7th Cir. 2009). The Court rejected the City's arguments in favor of repealing Thompson or recognizing a stay/turnover exception for the City to maintain its possessory lien on impounded cars by keeping, well, possession.

The Court reached the right result here, in my view, and two things really jumped out at me. First, the Court explains several times that the case should be governed by "the purpose of bankruptcy - 'to allow the debtor to regain his financial foothold and repay his creditors.'" The Court's emphasis on the debtor-salutary purpose of bankruptcy is refreshing, even in cases where the repaying-creditors purpose is likely to be largely defeated.

More striking were the first lines of the portion of the opinion recounting the facts of Fulton's case. She used the car "to commute to work, transport  her young daughter to day care, and care for her elderly parents on weekends." You can already anticipate where the Court is heading in the case, but then it gets better: "On December 24, 2017, three weeks after she purchased a 2015 Kia Soul, the City towed and impounded the vehicle for a prior citation of driving on a suspended license." Really??!! The City towed and impounded her new car on Christmas Eve!!?? It probably still had a temporary plate indicating it was new. And it got towed for what? A prior citation having nothing to do with the car at all. Note to self, City of Chicago: When the Court opens the fact section with a smackdown recounting @$$hole behavior like this, you can just skip to the end. You lose. Three cheers for the Seventh Circuit again!

The Meaning of "Abusive" in the UDAAP Triad

On June 25, the CFPB will be holding a symposium on the meaning of "abusive" in the Consumer Financial Protection Act.  "Abusive" is an expansion of the traditional FTC Act couplet of "unfair or deceptive" acts and practices (UDAP) to a triad of "unfair, deceptive, or abusive" acts and practices (UDAAP). Although the Bureau has operated for the past eight years without defining the term "abusive", it has indicated in its long-term rulemaking agenda that it intends to undertake a rulemaking to define "abusive"—presumably in response to US Chamber of Commerce complaints about legal uncertainty chilling business.

The symposium will have two panels, one of academics, one of practitioners.  Credit Slips will be well represented on the first panel by me and our former guest blogger, Patricia McCoy.  We'll be joined by Howard Beales of GW University's Business School, and the inimitable Todd Zywicki of Scalia Law School.    

My (lengthy) written submission (a/k/a everything you wanted to know about "abusive" but were afraid to ask) is here.  Bottom line, there's no reason for the Bureau to undertake a definitional rulemaking, its legal authority to do so is suspect, it cannot bind state AG's to any definition... but if it does do so, there's no scienter requirement, no cost-benefit analysis required, and "taking unreasonable advantage" sounds in unjust enrichment.