NACM: Representing the Business Credit Community.(National Association of Credit Management)

Associations have been around almost since time began, with some of the first having existed in ancient Egypt and China. Trade groups in Imperial Rome maintained protective regulations; in Phoenicia, trading and political problems brought merchants together to form mutual-aid cooperative groups. At the beginning of the 16th century, medieval guilds were formed to represent traders. The guilds decided on and enforced strict rules governing production and sales with their power intertwined with municipal authority as guild rules were enforced.

In early America, hard financial times hit the country in the mid 1830s. The population was rapidly growing, and business was expanding. The sale of land on credit went virtually unchecked, and the banking system was not centralized. By the summer of 1837, bank after bank closed its doors, and thousands of businesses went into bankruptcy. Extending credit was risky; there was no organized way of exchanging information about whether a business was reputable and whether the seller would be repaid.

Most of you know the rest of the story: in 1896 in Toledo, Ohio, a group of credit executives, representing a hundred or so of their colleagues, organized themselves into a national association for credit managers--the National Association of Credit Men. Their exchange of credit information was at first conducted on a local and regional level. The association expanded into the National Association of Credit Management, which today, with its network of Affiliated Associations, represents 27,000 credit executives worldwide. While the role of NACM has expanded, many of the reasons it came about still exist today. NACM still exists to protect the rights of and represent business credit grantors on federal legislative issues. NACM is the only association that represents the business credit profession on federal legislative matters. NACM continues to fight for fair commercial bankruptcy reform legislation.

While President Clinton failed to act on the bankruptcy reform legislation passed by the Senate in early December, which killed the bill, NACM will work to ensure that the bill is reintroduced when the 107th Congress convenes. The language crafted by NACM for the treatment of small businesses in bankruptcy and for the treatment of preferences was included in the legislation and was widely accepted by both the House and the Senate. NACM worked side-by-side with other interested groups to negotiate reasonable language for the reclamation of goods. NACM is already working on building support to introduce the compromised version of the bankruptcy bill early in the 107th session.

NACM has taken the lead with the Federal Reserve Board, the oversight body of the Equal Credit Opportunity Act, to ensure that as changes to the Act are put forth, that commercial credit--both business and trade credit--are considered differently from consumer credit. NACM has worked hard to ensure that business credit grantors are not subject to the same stringent rules and record keeping duties as consumer credit grantors. In fact, NACM has asked the Board to write a definition of trade credit into the ECOA, to clarify the difference between consumer and trade credit. That move alone will clarify many of our questions.

NACM has asked the Board to extend ECOA exemptions to "tenancy states"--which matters to those of us seeking personal guarantees. I was honored to be part of the NACM-National delegation that went to the Federal Reserve Board, on behalf of commercial credit grantors, to explain that the right to require signatures of both spouses in both common law and tenancy states was not a credit discrimination issue, but rather an access to assets issue--if and when open, unsecured credit goes bad. If a personal guarantor guarantees credit with personal assets, a business creditor should have access to those assets when the debtor defaults and that creditor needs the signatures of both spouses without having had to follow other non-applicable regulations of the ECOA.

The World Wide Web has moved privacy issues to front and center on Capitol Hill; the web has made access to information on all levels, instantaneous. The Internet, with its explosive growth in e-retailing, is fueling the privacy issue. In the first quarter of 2000, online retail sales topped 5.2 billion dollars, and second quarter sales climbed to 5.5 billion dollars. E-commerce transactions are estimated to climb into the trillions of dollars in the next several years--a truly staggering number.