License Card Collection

[Adele Strecker]

Unlocka hangar bay of 290 essential upgrades with the Star Wars: Armada Upgrade Card Collection! This collection provides updated versions of all upgrades previously printed as mini cards in a new standard-sized format.

Admiral Chiraneau, Admiral Montferrat, Admiral Ozzel, Admiral Titus, Agent Kallus, Captain Brunson, Captain Needa, Commandant Aresko, Commander Beck, Commander Gherant, Commander Vanto, Commander Woldar, Darth Vader, Director Krennic, Director Isard, Emperor Palpatine, Iden Versio, Instructor Goran, Lira Wessex, Minister Tua, Reeva Demesne, Taskmaster Grint, The Grand Inquisitor, Wullf Yularen

@Drew_Schafer THANK YOU so much for that excellent video. I been trying for hours to figure this out! You would think Webflow would just let you unlink to a collection with a simple click of a button

One interesting lens for understanding how industries work is looking at their waste streams. Every industry will by nature have both a stock and a flow of byproducts from their core processes. This waste has to be dealt with (or it will, figuratively or literally, clog the pipes of the industry) and frequently has substantial residual value.

Most industries develop ecosystems in miniature to collect, sift through, recycle, and dispose of their waste. These are often cobbled together from lower-scale businesses than the industry themselves, involve a lot of dirty work, and are considered low status. Few people grow up wanting to specialize in e.g. sales of used manufacturing equipment.

One core waste stream of the finance industry is charged-off consumer debt. Debt collection is a fascinating (and frequently depressing) underbelly of finance. It shines a bit of light on credit card issuance itself, and richly earns the wading-through-a-river-of-effluvia metaphor.

Credit card issuers bucket users into various archetypes, personas, and predicted lifecycles, because behavior is extremely heterogeneous and this is important from both a marketing and risk management perspective. Most users of credit cards, probably including readers of this column, believe they are the typical user of credit cards; no bucket is typical. If I were to make some informed guesses, relative to the population-wide distribution, you, reader, use credit cards in preference to debit cards as a payment instrument, do not routinely revolve balances, and hold some combination of student loan, auto, and mortgage debt which dwarfs your credit card debt. And so it is critical to understand that most defaulting credit card debt is not held by people who act like you.

Default typically begins by missing (or underpaying) a scheduled payment. That in itself is a theoretical breach of contract but not very outside the ordinary for a card issuer; they will generally automatically assess a fee but take very little action. Most borrowers will recover before they are 30 days late, which is the point at which most issuers start to treat an account as being a credit risk rather than a minor operational issue.

After 30 days, issuers will typically work the account internally, using a combination of communication methods to nudge the user into payment, until one of a few things happens. The happiest is the customer gets current on their account. An outright refusal to pay is substantially less likely, and can result in an issuer moving up timelines. But the most common is that the borrower ghosts the issuer for a few months.

Consumer debt issuance is generally, by law, an exclusive privilege of regulated financial institutions. (The other big one is taking deposits.) Society wants many things from regulated financial institutions; one of those things is having accurate books, because stealth losses cause financial institutions to fail and frequently leave society holding the bag. As a result, the Federal Reserve has a Uniform Retail Credit Classification and Account Management Policy.

This tail wags the dog. Many decisions about account servicing, which a naive conception of debt might assume are between borrower and lender, are done with the goal of aligning servicing to accounting standards. In this way, the books impose their will on reality, and where the books and reality differ, reality frequently adjusts itself to accommodate the books. (As my buddy Kevin frequently muses, states are gonna see. Organizations which are tightly tied to the state, like regulated financial institutions, will develop a vocabulary and processes for seeing like the state sees, and that edifice tends to capture non-state methods of seeing that they run in parallel.)

Financial institutions achieve certainty and finality by packaging portfolios of bad debt together and selling them to non-financial institutions. This durably moves them off of the books and realizes a very, very small residual value.

There are essentially two halves of the debt collection industry. A portion of it works on an agency model: a lender can have e.g. a law firm or similar work a debt on its behalf during the several month period where the delinquent debt lingers on their books, in return for a performance fee (often 15-30% of face value) should the borrower make good on the debt.

Most defaults are small. This fact drives everything about debt collection; it has to be done scalably, by the cheapest labor available, with a minimum of customization or thoughtful weighing of competing interests. The average defaulted credit card debt is on the order of $2,000, the median is between $500 and $1,000. These are processed like McDonalds burgers, not like grant proposals.

Debts are sold as part of a portfolio, where (typically) thousands of relatively similarly situated debts in a cohort are sold as a packet. The value of portfolios is a huge discount to the face value of the debts; at the point where a lender has only worked it themselves and the debt is a few months delinquent, portfolios generally fetch about 5 cents on the dollar. That value will continue to decay over time. There is an entire ecosystem of brokers supporting contractual infrastructure to convey these debts to buyers and insulate the issuing financial institutions from the actions of the debt buyers.

Partly, that is due to regulatory risk. (Particularly in recent years, regulators have begun using prudential regulation of financial institutions to strongly suggest that financial institutions adopt their social goals. There is a tortured argument by which a debt collector being unsavory in the process of debt collection would damage the reputation of the bank, which could damage an item on its balance sheet, which could damage its financial stability, which fact a regulator actually has jurisdiction over, and therefore regulators can discourage debt sales.)

The debt collection industry is, and I say this as someone who is capitalist as the day is long and attempts to be non-political in public, among the most odious hives of scum and villainy as exists in the United States. The business is sordid and virtually immune to reform, despite decades of trying. The Fair Debt Collection Practices Act was passed in 1978! It is older than me! I learned to cite it in 2004 against the same abuses it was designed to prevent! The situation did not markedly improve in the last 20 years!

This is not because of a lack of virtue or a lack of laws; the structure of the industry colliding with the socioeconomic reality of defaulting debtors basically ensures that it will be a miserable place populated by miserable people who will project leveraged amounts of misery into the outside world in the hopes of collecting a tiny sliver of defaulted debts.

This effectively makes paying consumer debts basically optional in the United States, contingent on one being sufficiently organized and informed. That is likely a surprising result to many people. Is the financial industry unaware of this? Oh no. Issuing consumer debt is an enormously profitable business. The vast majority of consumers, including those with the socioeconomic wherewithal to walk away from their debts, feel themselves morally bound and pay as agreed.

Why are debt collectors so bad at debt collection? Partially it is because credit card issuers are large national institutions with large, automated processes sitting atop a legacy of corporate acquisitions, IT migrations, and similar that makes availability of non-critical information extremely fragmentary. They then want to dump that complexity through a very small pipe (CSV files) onto the debt collection industry.

That industry is largely not characterized by large, nationally scaled, hypercompetent operators who happen to have decades of institutional inertia. Instead, it is heavily fragmented into strata of mid-market and smallest-of-small-business firms, governed by a patchwork of regulations on the national, state, and local levels, and runs (in large part) on faxes and post-it notes.

Roughly three quarters of debt is bought by ten large firms and one quarter is bought by so-called mom-and-pops, but this is complicated by the resale of portfolios which were worked by the majors. Mom-and-pops then buy them at a deep discount with the goal of getting the residual value which the majors did not successfully capture.

Suppose a debt collection firm has bought a portfolio. They will first "scrub" it, which means using automated or semi-automated processes to enhance the fragmentary data they have and prioritize the portfolio for collection efforts.

For example, one stage of the scrub will be associating a credit profile with as many debts as possible. Credit scores are extremely good predictors of who pays their debts; that is what they are designed to measure. You will get sharply better results on a per-call basis calling people with a 750 FICO versus a 450 FICO, accordingly, you should call all the 750s first and more frequently.

A second scrub will typically remove dead debtors, because they infrequently answer their phones. (Debts are not inherited in the United States, a fact which the debt collection industry frequently demonstrates strategic ignorance of.)

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