Wednesday, December 1 2021

Payday lenders are spending millions of dollars in Washington trying to stop the government from cracking down on the industry.

And it seems to be working.

Since the start of 2013, high-cost loan providers and those with industry ties have spent more than $ 13 million on lobbying and campaign donations to at least 50 lawmakers, according to a new report from the Americans for Financial Reform nonprofit.

The recipients include big names on both sides of the aisle, such as Speaker of the House John Boehner and Democrat Debbie Wasserman Schultz, although lesser-known lawmakers have received some of the most significant contributions.

A major lender, Cash America International (CSH), spent nearly $ 1.8 million on lobbying efforts and donations. Meanwhile, a leading business group, the Online Lenders Alliance, has spent an additional $ 1.8 million, which he told CNNMoney is part of his “federal outreach. [to] educate policy makers.

All this money has poured in as consumer groups and federal regulators have stepped up scrutiny of short-term, high-cost loans, like payday loans – which are infamous for the postage that translates into high-cost loans. triple-digit interest rate and consumer entrapment. in debt cycles.

Related: Payday Loan Borrowers Pay More Fee Than Original Loan

Last year, the Department of Justice launched “Operation Choke Point,” an initiative to crack down on banks that do business with fraudulent companies, including payday lenders who violate state or federal laws.

The payday lending industry argues that the crackdown is unfair and that even legal operators are being targeted as part of the initiative. The government “is intimidating banks into choking off legal businesses because they just don’t like the industry,” the Online Lenders Alliance said in a recent statement.

The Consumer Financial Protection Bureau has also started to take enforcement action against payday lenders. And next year, the consumer watchdog is expected to announce a variety of new rules for the industry.

To get rid of the government, these “quick consumer lenders” are trying to monetize the “$ 13 million rating” they’ve built up through lobbying and campaign contributions over the past two years, says Gynnie Robnett , campaign manager. to AFR and one of the authors of the report.

The Online Lenders Alliance, for example, has significantly stepped up its lobbying efforts. Between 2012 and 2013, its spending jumped more than 40%, according to lobbying records.

“They have no problem using the money they earn with cash-strapped, vulnerable consumers to gain DC favor,” Robnett said.

Related: Debt Collection Horror Stories

The report found at least 50 lawmakers, political parties and committees that received campaign contributions from groups and companies in the payday lending industry.

While any amount of lobbying or donations from a controversial industry can raise questions of influence, these politicians raise millions of dollars in every election from various sources, so payday lenders’ contributions only make up for it. a small fraction.

Republican Jeb Hensarling, representative for Texas and outspoken critic of the CFPB, has received $ 183,400 from the payday loan industry since early 2013 (directly and through his political action committee). That’s more than any other lawmaker, according to the report.

As chairman of the House Committee on Financial Services, Hensarling is responsible for congressional oversight of government agencies such as the Federal Reserve and the Federal Deposit Insurance Commission.

A spokesperson said Hensarling was unavailable for comment.

The Church of England's war on payday lenders

Meanwhile, dozens of other lawmakers also received money from the industry – up to $ 90,000 per head for the 2014 election.

Some have signed letters to the Justice Department questioning Operation Choke Point or sponsored bills that would end the initiative. Others pushed for laws that would allow payday lenders to circumvent state laws and introduced legislation that would weaken the CFPB.

Consumer groups and attorneys general across the country have criticized the efforts, saying current and new protections are needed to prevent the industry from preying on the country’s most vulnerable consumers.

“We hope that those in Congress who work most closely with the troubleshooting industry shouldn’t have to be reminded that they are working for all of us, not just those who have the money to influence elections,” said Robnett.

The AFR report analyzed lobbying and donations to political candidates, their political action committees and other political groups. This money came from payday lenders, installment and auto loan providers (all categorized as short-term, high-cost loan providers), as well as their industry groups and related businesses and employees.

For a list of major recipients and donors, see the full report here.

CNNMoney (New York) First published on December 18, 2014: 11:31 a.m.ET

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