New DIFP Director Confirmed

A press release posted on the DIFP’s website announces that John M. Huff has been confirmed by the Missouri Senate to become the Director of the DIFP.

Mr. Huff earned his bachelor's in business administration at Southeast Missouri State University. In May 1987, he earned an MBA at St. Louis University, and he graduated from the Washington University School of Law with a juris doctorate in May 1990. For the past several years, Mr. Huff has worked at Swiss Re, a leading provider of reinsurance in the industry.

Greene Co. Bond Policy Reconsidered

The Springfield News-Leader reports that Greene County justice officials are considering repealing a four-year-old policy that has become known as book-and-release. The policy, enacted in 2005, allows some suspects to be booked and then released pending application of warrants. Critics of the program say that outstanding warrants have skyrocketed and criminals are released before the ink can dry on their arrest reports. Book-and-release has also been blamed for all but eliminating criminals' fear of jail time.

Under the new proposal, the jail would discontinue its book-and-release policy, and begin using a probable cause bond schedule. Under the schedule, suspects arrested for certain crimes are automatically eligible for a set bond amount, even though no charges are filed. If the prisoner chooses, he or she can contact family or a bondsman and post bail.

Discussing the proposal, Judge Dan Conklin said that bondsmen provide needed accountability -- ensuring the majority of their customers meet court dates and don't abscond --that outweighs other concerns. "The bond system is not perfect," he said. "It's not without its warts; there are opportunities for mischief. But they provide a service to the community at no cost for taxpayers."

The proposed changes will undergo further discussion.

More Guest Commentary: How to Improve the Bail Industry

The following is guest commentary submitted by Tim Bruce, a licensed General Agent from the Springfield area.

Reality Check

As I have been reading every ones comments and suggestions, it amazes me at just how many agents and General agents contradict themselves. The old (Pot calling the kettle black). From financing and no money down bonds to offering rebates, many of the ones complaining are some of the very ones doing just that.

We would all agree that something needs to be done if we are interested in the long term stability of our industry, but we cannot and will not truly stand together to effectively do something to help ourselves. The only Association I was once a member of was only in place for a few members to try and back door and sneak legislation through that would only benefit them and Insurance Companies. Had it not been for Angela Parks and a few others who were keeping track of what was going on, legislation could have passed and none of us would have known anything about it until it was too late.

To try and organize all the Agents statewide is a very commendable and hopeful thought. I assure you though that it will never happen. (Example> Each and every County and each and every Judge in this state does things differently and by their own rule) Procedures are done differently according to the interpretation of rules by each individual Judge, Prosecutor, Sheriff and even the Bail Bond Agents.

Several years ago, myself and many of the local agents in my area got together and jointly and adamantly decided to raise our minimum fees, addressed discounting and financing fees, and raised all failure to appear bonds to 20%. That very afternoon, two agents walked across the street to the jail and one wrote a bond by discount and the other by financing with low down and low weekly payments.

If you cannot even get the local agents in your prospective area to agree and cooperate, then how do you even remotetly think you can organize agents and companies statewide?
As much as I hate the Government even slightly getting involved in my business, unless the rules of policy and proceedure are point blank and enforced, you will never get the agents and companies to comply.

I remember what it was like being a brand new agent. I starved to death for the first 16 months. Now with many Counties implementing the catch and release policy and the mass R.O.R. policies by allot of Courts it is even hard for exsiting agents to make a living. To make matters even worse for those agents many Generals chose to impliment what I call the Ice theory flooding the state with multiple agents. This works out great for the General as he/she makes 50% of every agent. Unfortunately for the agent many Generals put multiple agents in the same area and not only does the agent have to compete with other companies, they also have to compete with thier own company. I do not believe in stacking agents. I would rather have an agent make a good living and write quality bonds, than to have high volume profits on questionable and high risk bonds. (make sense?)

In my opinion, If the General Agent puts an agent in situations where he/she is struggling to make a living. The responsibility of the agents business ethics, proceedures and questionalbe bond writing should fall on the General that allows it. If as a General, you cannot control the proceedures followed by your agent, you simply get ride of them. If you as a General allow the agent to premium write, finance, undercut and conduct themselves in the manner in which you allow. Then by all means, do not complain about the down fall of this industry and do not put all the blame on your agents. As a General, if you are into high volume bonds rather than quality. If you put pressure on your agents to write more bonds,then accept the concequenses that comes with the added stress to your agents.

If you truly want to change this industry for the better and you truly want to have each and every agent and General Agent on the same page, then unfortunately you are going to have to have someone put in place rules and regulations that forces all to follow. Les Hogue seems to be an honorable man, and from speaking with him, it seems he truly wants to clean this industry up.

Why would it be such an impossible task to maybe sit down with Les Hogue, the Dept. of Insurance,and whomever the new director turns out to be and impliment policy and proceedures to enforce many of the laws already on the books to work towards cleaning this industry up? I am not an advocate putting anyone out of work or preventing anyone from going to work, but in order to change anything for the better it is the General Agents who have to get on board and clean up thier own house before they can tell anyone else how to conduct business. If everyone had to follow the same RULES then there would be no questions.

Mr. Cooper and Mr. Thomas and many others have very good points of interest but putting them all in a blog, or sitting around talking about it does absolutely nothing to change things. If you manage to get all the Generals to come together in some sort of Independant Association and actually agree on how to change things for the better, please call me, as I would be one of your biggest advocates and allie.

If I have a tire that keeps going flat and all I do is keep putting air in it. eventually it will blow out doing unknown damage. Our Industry is just that. Unil we actually fix it, eventually it will blow out and all of us will suffer.

Thanks for reading
Tim Bruce
General Agent.

Guest Letter: Opposition to Increasing the CD Assignment

Note: The following is a guest commentary submitted by Michael Thomas, a state certified trainer for initial education and CE. Thomas is also a general agent in Missouri.

First of all let me explain to those who are not familiar with the current system, what happens when a general agent puts up his or her $10,000.00 with the state. The general agent goes to the bank and buys a CD in his or her name in the amount of $10,000.00. The general then completes a General Bail Bond Agent Assignment form MO 375-0525. This form assigns the money in that CD to the State of Missouri. The bank then completes an Acknowledgement of Assignment form MO 375-0527. These forms are then sent to the State of Missouri and at that point the General agent can no longer touch the money until he has surrendered his license and his liabilities have cleared. This money can not be touched by the General Agent to pay day to day forfeitures. The DIFP is the only entity that can draw money from the CD, other than the interest it earns, as long as the Assignment is in effect.

Similarly, if a general agent were required to put up a $5,000.00 CD for each agent working under his or her authority there would be an Assignment executed for each of those agents. Again the general agent would not be able to touch that money until the Assignment is released by the state. So regardless of what your contract with the general says the money isn’t going to be released until the state allows it.

A common misconception is that this money is routinely used to pay forfeitures. That just isn’t the case. By the time this money is used by the state to pay forfeiture, the General Agent has been shut down for at least 30 days and may in fact be out of business. The courts and the DIFP expect the General Agent to pay forfeitures with other monies long before it gets to a point where the state has to take it from the CD.

Most people try to keep their money working for them by investing in stocks and bonds, CD’s, real estate, and various business ventures. CD’s have a very poor rate of return, presently 1 to 2 percent at best and is typically an investment that older individuals would use to safeguard retirement money that has already been made. Most of us in the business are younger and are not to the point in our investment portfolios where we want our money to be stagnate. If the amount of assignment is raised from $10,000.00 to $50,000.00 this money would essentially stop working for us. And since this money is used by the State as the final solution and generals can’t touch it in the event of a forfeiture, each general agent would still have to have a significant amount of cash on hand or readily accessible to pay the day to day forfeitures.

All of us are disgruntled by the influx of people into this industry and yes it is affecting our income. Not so much because of the numbers of new bondsmen but because of irresponsible bail writing. This business has always been able to separate the wheat from the chaff but it takes a little time for this to occur. Irresponsible bondsmen go broke pretty quickly and eliminate themselves. But nevertheless they adversely affect us while they are in business. If you look at the liability they incurred in the 18 to 24 months that it took to get themselves into trouble the amount is staggering. Sometimes this liability can be in the millions of dollars. Raising the Assignment from $10,000 to $50,000 would not stop these people from getting into the business and would not do anything to curtail irresponsible bond writing.

An example I use in my classes to illustrate my point follows, If a small county has 5 bondsmen in the county and typically the court averages about 5 criminals with bonds of $20,000 each month, it follows that if all things are equal, each of those five bondsmen has a fair chance of procuring one of these bonds each month and making $2,000.00. Now, if one of these bondsmen advertises that he will write bonds for little or no money down and is very lax on cosigner qualification he will end up writing all five bonds each month and collecting only a small fraction of the fee. The other bondsmen who are doing things the way they should be done don’t make a dime. It doesn’t take long for the careless bondsman to get into trouble because his liability is going through the roof. But until that liability gets to the point that he can no longer pay the forfeitures, none of the other bondsmen in the county are making any money.

The answer to the problem lies in requiring a minimum percentage be charged on each bond and then prohibiting the extension of credit by a bondsman. Until January of 2005 a Judge in Livingston county required bondsmen to swear under oath that they were not extending credit and that they had received the full premium before the bond could be written. This begins to level the playing field because a bondsman who understands the risk involved in writing the bond no longer has to compete with one who doesn’t. And the criminal is no longer able to “shop” for the best price.

Several years ago, fed up with the number of forfeitures that I received in the mail each month, I began looking for a common thread that would help me better identify a bad bond before it was written. As I looked back over several years of records I realized that about 95% of my forfeitures were from clients to whom we had extended credit. I told my agents that we would no longer extend credit on bonds. Within six months my forfeitures had dropped by 95% and the income that my agents and I were making remained virtually unchanged. Sure we wrote fewer bonds but we got all of our money up front and didn’t have collection and bounty hunting fees chipping away at our income. When a person is charged with a crime, the cheapest thing on the menu is the bond fee. Attorney’s fees and court costs are usually about equal to the full amount of the bond. When a client can’t pay the full fee, you are likely to incur a forfeiture because if he can’t pay you, he can’t pay the lawyer or the fines either and sooner or later the Judge is going to give him the ultimatum that if he shows back up in court without an attorney or his fine money, he will be put in jail and an attorney appointed for him or his fines taken out in time served.

I have never been in favor of restricting people from getting into this business. If this proposed law were in effect 14 years ago, I could have never become a bondsman much less a general agent. I feel that I turned out OK and a lot of the people this bill would prohibit from becoming bondsmen will too. It is just an un-American ideology and in this troubled economy the wrong thing to do.

I am in full agreement with Mr. Cooper on the repeal of the Lee Clause. I make no apologies for this position as I feel that persons CONVICTED of felonies should not be allowed in the bail bond or surety recovery business no matter how long it has been. I do feel however, that if the court sees fit to issue an SIS, and the felony “goes away” after completion of a probationary period, then this should not be held against the prospective applicant.

More government regulation is NEVER the answer.

Respectfully Submitted
Michael R Thomas
Thomas Training Institute
www.thomastraininginstitute.com

Guest Commentary-Elevating Our Standards

Editor's Note: The following is guest commentary submitted by Randall Smith, a certified trainer for both CE and initial education. Smith is also a licensed bail bond agent.

I want to thank Agent Cooper for his commentary and editorial regarding HB 628. Opening discussion and dialogue on current issues within the industry should be on going. If we are going to elevate our standards of professionalism then we must open discussion for relevant positive change. Rest assured if we don’t someone else will. We MUST become proactive in our own industry.

Agent Cooper has made many valid comments and points regarding bail in Missouri. One of the most significant points he makes is the number and quality of agents in this industry. As a State Certified Trainer in Missouri I see people come to the 24 Hour Initial Basic Training with nearly delusional preconceptions about this industry. Mainly brought about by the media and reality TV shows.

Training in this state for the Professional Bail Agent is far less than adequate in preparing them for this complex industry. Currently we allow nearly everyone to attend a 24 hour course. Some can barely read and write, they attend, we then push them on through. They take a very easy 60 Question State Examination and receive their license. They are in NO WAY prepared for this industry.

We must elevate the standards and requirements for entering this profession by first making the training and testing requirements more standardized. We should demand a higher level of professional that enters into this business. Once licensed, the professional agent should then be required to have substantially higher CE requirements to maintain the licensure privilege. As an example, the State of New Mexico requires 120 Hours of basic training on a pass-fail basis. There are strict standards to even be accepted into their academies. Once they pass, the must sit for a 250 Question State Certifying Examination. They are issued a probationary license and must complete 100 hours of field training before they are issued a permanently renewable license with additional CE requirements. Agents in that state are highly regarded for the most part and have very similar training to law enforcement.

The tendency in this industry, (in our state), is to seek out those who offer CE Credits by merely processing the paperwork. We as true professionals should be demanding better CE training. If we represent ourselves as professionals then we should be seeking real and valuable training relevant to our industry. We MUST invest in ourselves by seeking out this training and not take short cuts just to get a license renewed. This is NOT professional practice. We as professional trainers should not allow this practice in the first place.

Mr. Cooper points out the practice of the courts issuing 10%, Cash and OR bonds. All one has to do is look at the FTA cases in those counties practicing these policies and see the number of unresolved cases. In my opinion when courts order cash or 10% bonds, they have crossed the line and now are involved in private enterprise, which is a direct conflict of local government. There is a huge amount of research that proves the viability of the bail system in reducing those FTA numbers. This stands to reason since we have a lot to loose when an FTA occurs.

Until we increase the standards of qualification in this industry and provide real relevant training I see this industry staying the same. Certainly there are many other issues and much more legislation needed. However, without seriously reconsidering the industry qualifications and training policies I do not see any viable way to address these issues. We have to make the training tough and rigorous. Only then will we be able to see a change in the level of the professional agent. New candidates should have to PASS the rigorous training program and testing before they qualify for licensure.

Finally, if we as professionals continue to tolerate impropriety, and other misconduct within the industry, then this industry will always have a "black cloud" haning over us. Another area where we need to become proactive!

Thank you again Agent Cooper for your comments. I hope the rest of us in this industry jump on board and become pro-active.

Randall E Smith, L.B.A., C.P. I., State Certified Trainer
MARC Academy of Professional Bail Agents
Randall E. Smith
Check Us Out On the Web
http://www.midamericarecoveryco.com/

Guest Editorial on HB628

Editor's Note: The following is a guest editorial submitted by Bart Cooper of Bart Cooper Bail Bonds. The letter addresses the industry concerning HB628:

As many of you know, HB628 was recently introduced by Representative Brian Yates. This legislation attempts to address some of the issues now facing the bail industry in Missouri.

In recent years, our industry has undergone a transformation for the worse. Gone are the days of trust and cooperation among companies and agents, having been replaced with a new era of avarice and greed. While the future of bail in Missouri appears dim, I believe we can work together to strengthen and preserve our profession for years to come. Accordingly, I’m asking for your help in restoring professionalism and accountability in our profession. But first, let’s examine the history of bail in Missouri, and how we got where we are today.

How We Got Here

1. The Good Old Days
   A. Traditionally, bail companies charged a minimum premium of ten percent per bond.
   B. The minimum premium was deemed necessary to cover potential losses and expenses while leaving some profit for the agent and general agent.
   C. The system worked and remained relatively stable for decades.
2. What changed?
   A. More and more people entered the bail industry. The proliferation of agents surged with the publicity created by series such as “Dog”. With an investment of less than five hundred dollars for a two year license, people soon learned that bail offered a means to turn a quick profit. Often seen as an additional stream of income, general agents were quick to hire new agents.
   B. The proliferation of agents inevitably led to more general agents. Needing only ten thousand dollars and two years licensure as a bail agent, the number of companies exploded. The past three years alone has seen a more than thirty percent increase in general agents.
   C. Courts also began modifying their approach to bail. Faced with budgetary constraints, some courts began to look at alternative forms of release as a means of generating revenue and reducing costs (e.g. ten percent to the court, cash only and recognizance bonds).
   D. Beginning in 2005, some circuit courts eliminated local qualification requirements. If you were licensed by the state, you could execute bonds within the circuit without further qualification. Without the oversight of local circuit courts, companies were free to execute bonds regardless of whether they possessed the assets necessary to fully collateralize the bonds should they forfeit.
   E. This combination of factors created extreme pricing pressures. With more agents and companies competing for a decreasing number of clients, the notion of a minimum premium began disappearing. Desperate for cash to cover personal or business expenses, agents began discounting bonds and extending substantial amounts of credit. Underwriting standards started to take a back seat to cash flow. Some even turned to questionable or unethical practices in an attempt to achieve profit.
   F. The erosion of a decades-old pricing structure negatively impacted the industry. Reduced cooperation and respect among companies and agents became pervasive. No longer were we able to trust each other, regardless of the merit of ideas or sincerity of efforts. As the pricing structure continued to break down, undercapitalized generals became commonplace. Discounted premiums, inability to collect on promises to pay, and poor underwriting left many generals with more forfeitures than they could pay.
   G. Much like the homeowner who owes more on their home than it is worth, undercapitalized general agents were faced with a decision: work diligently (and possibly borrow money) to resolve the tens of thousands in forfeitures and save the ten thousand dollars assigned to the state, or walk away. Clearly, the system is now at a point where people choose to walk away from the ten thousand dollars rather than work to resolve much greater forfeiture losses.
   H. As more and more general agents walk away, courts are left with more judgments than the ten thousand dollar assignment can cover. Frustrated by the breakdown in the bail process, courts become increasingly dissatisfied with the professional bail industry. This dissatisfaction, coupled with the budgetary pressures noted above, lead courts to adopt alternative forms of release. With fewer bonds available, the competition increases and the cycle repeats itself.

Current State of Bail

1. The Department of Insurance, Financial Institutions and Professional Registration (DIFP) now acknowledges that there are too many bail agents for the system to function properly.
2. DIFP also realizes that the current deposit requirement of ten thousand dollars is never sufficient to cover losses of generals who walk away from the business.
3. Courts are becoming increasingly dissatisfied with the commercial bail industry.

Why Act Now

1. The industry is nearing a point of catastrophic failure. Without action on our part, the DIFP and courts will be forced to act. Although we do not know exactly what these actions will entail, they could include raising the amount of assignment or altogether eliminating commercial bail.
2. We must begin working together to control our industry. In states where commercial bail is strong, licensing requirements are also strong. Strong licensing requirements foster strong bail associations, which in turn strengthen the commercial bail industry as a whole.
3. We are legislatively positioned to achieve results now. With support from both lawmakers and the DIFP, we are poised to reform our industry and restore professionalism and credibility.

Solutions

I have proposed legislation which I believe will begin to restore professionalism and accountability to the commercial bail industry in Missouri. The legislative changes are as follows:

1. Eliminate felons from the industry.
2. Increase the assignment for new general agents licensed after August 28, 2009 (when the legislation takes effect) to fifty thousand dollars.
3. Require every general agent to assign five thousand dollars to the State of Missouri any time they add an agent after August 28, 2009.
4. Allow the DIFP to raise the assignment requirement to fifty thousand dollars for any agent should they deem it necessary (for cause).
5. Raise the non-resident assignment to fifty thousand dollars.

I ask you to join me in promoting this legislation. While by no means a solution to all our problems, the proposed changes represent a start at attempting to address the issues before DIFP and the courts take matters into their own hands. Together we can begin restoring credibility, professionalism and cooperation in the Missouri commercial bail industry.

I look forward to discussing the proposed changes with you.

Sincerely,
Bart W. Cooper, General Agent

Bail Bond Bill Introduced

A new baill bond bill, HB628, was introduced by Rep. Brian Yates-(R) of Lee’s Summit. The bill seeks to raise the assigned CD for new general agents. Here is a brief summary.

If the bill passes, on August 28, 2009 the following changes would occur:

1. An agent must hold an agent’s license for 4 years, prior to being eligible to become a general agent.
2. If you are a licensed general agent before 8/28/2009, your CD requirement will remain unchanged.
3. All general agents licensed after 8/28/2009 will be required to assign a $50,000 CD to the state.
4. After 8/28/2009, the general agent must execute an additional $5,000 CD for each new agent who licenses under his/her authority.
5. The director may require additional assignments of assets. Department rule will dictate when the circumstances of the business of the general bail bond agent warrants additional funds; except that, such additional funds shall not exceed fifty thousand dollars.
6. Repeals the Lee Clause. (The provision allowing a 15 year look-back on the criminal record of any license holder.)

Poll Results

Missouri Bondsman sponsored a poll, asking website visitors to answer the following poll question:

Would you favor legislation to increase the assigned CD requirement to $25,000 for general agents plus $5,000 per bail bond agent?

The poll results are as follows:

101 website visitors registered a response.

26 (25%) answered: Yes, I am licensed by the DIFP, and I support an increase to $25,000, plus $5,000 per agent.
59 (58%) answered: No, I am licensed by the DIFP, and I do not support the CD increase to $25,000 and $5,000 per agent
7 (6%) responded: I am not licensed, but I would support this proposal.
9 (8%) responded: I am not licensed, but I would not support this proposal.

Overall, the visitor’s responded against the proposal at a rate of 2:1.

For feedback on the poll, visit my original post New Website Poll .

Have a new idea for a website poll, email me, or to comment on the poll results, click "comment here."