Broker Bonds Again
I am writing to respond to Transportation Intermediaries Association President Robert Voltmann’s remarks regarding the people involved with the campaign to defeat the proposed $100,000 brokers bond. The remarks were published in the article headlined “Provision in Senate’s Transportation Legislation Would Raise Broker Surety Bond to $100,000” (3-26, p. 29).
The article first quoted James Sanders, a consultant with Pacific Financial Association Inc., a company the article said “. . . provides bonds for about 25% of brokers in the United States.”
The article quoted Sanders calling the bond’s proposed increase to $100,000 from $10,000 “preposterous” and saying it was designed to put small brokers out of business by requiring them to obtain surety no bond company would give them because small brokers rarely have the necessary collateral.
The article then quoted Voltmann’s rejection of Sanders’ remarks: “These are specious arguments by fear mongers, and they’re being spread by the people who this legislation is designed to stop — the cheats, the churners and the thieves.” The article further quoted Voltmann saying the brokers the legislation may put out of business are the ones trying to cheat the system.
On the contrary, the 1,173 people who stand with the Association of Independent Property Brokers & Agents, the true voice of the small and midsized broker to Washington, are good, honest, hardworking people who are, in fact, afraid that TIA is about to put them out of business.
Voltmann is still claiming this is about fraud. TIA collects $660 a year from small brokers allegedly to defend and promote their interests.
But he and TIA know very well that a $100,000 bond would be a barrier to small business because Voltmann said so himself in this very publication back in 2004:
“Fraud exists in both the brokerage and the motor carrier industries, and increasing the bond will have no effect on fraudulent operators. Those advocating raising the bond assume that a company’s intent on fraudulent activity will nonetheless meet the legal requirement of getting a higher bond. A company starting a new brokerage every Monday, for example, is unlikely to get any bond, let alone one worth $500,000” (TTNews, 5-13-2004). [Editor’s Note: At that time, there was a suggestion that the bond be as high as $500,000.]
Jim Sanders is right on. The $100,000 bond would put up to 17,000 of the existing 20,000 brokers out of business. This is an anti-competitive measure designed to do just that for big brokers.
If it is passed, the remaining 3,000 big brokers will be able to offer lower freight rates to carriers and owner-operators. The big brokers will not address the fact that the bonding companies will require $100,000 cash collateral because of the tenfold increase in their risk exposure. They mislead people into thinking this is just about coming up with a $5,000 annual bond premium.
The measure has failed twice before as stand-alone legislation in both chambers. The fact is that supporters of the bigger bond had to sneak this language into the massive highway bill as a footnote to the Reid amendment in order to get it through the Senate.
Association of Independent Property Brokers and Agents