Blog

BLOG

March 17, 2010

Lobbying by pay-day lenders is paying off

By CREW Staff

At least so far. Given the amount of time and money that pay-day lending firms have invested to lobby Congress, it isn't much of a surprise that the Senate's financial oversight bill has been watered down to minimize regulation of this industry.

According to TPMMuckraker:

The new consumer agency to be created by the bill will have the authority to enforce regulations for large pay-day lenders, according to a summary of the bill prepared by the Senate Banking committee.

... But what counts as large? There's the rub.

In order to define a pay-day lender as large, and therefore subject to enforcement, the new agency would have to conduct a rule-making process, according to consumer advocate Ed Mierzwinski of the U.S. Public Interest Research Group, who has examined (Sen. Chris) Dodd's proposal.

That's an arduous process that can take six months or more, and would require the agency to "jump through a number of hoops," Mierzwinski told TPMmuckraker. And even then, he said, the rule can be challenged.

Compare this to the bill that was approved by the House of Representatives late last year. The House bill gave the new financial-consumer agency complete authority to draft and enforce rules against all pay-day loan companies.

There's still time for a better bill to pass, but it's disappointing to see the direction the Senate bill has taken. Meanwhile, pay-day firms are still fighting any provision that would regulate any company in their industry -- large or small.

CREW has closely examined the tactics used by pay-day loan firms. Last April, we released the report Payday Lenders Pay Up, which studied the industry's all-out lobbying and PR campaign to shield it from public scrutiny or regulation.