Blog — Senate
Charging obscene interest rates. Robo-signing important legal documents with only a stamp. Preying on America’s servicemen and women. America’s payday lenders are at it again, but someone in Washington is finally cracking down on these vulture capitalists.
On November 20, the Consumer Financial Protection Bureau (CFPB) announced its first enforcement action against a payday lender, a $19 million settlement with Cash America. The CFPB’s investigation revealed the company’s illegal practices included robo-signing important documents and overcharging more than 300 active-duty military members in violation of the Military Lending Act. After the investigation began with a routine examination in July 2012, Cash America, one of the country’s largest payday lenders, tried to obstruct the inquiry by deleting recorded phone calls with consumers, withholding an internal audit, and shredding documents even after the company was told to stop.
Of course, those weren’t the only ways Cash America and other payday lenders tried to elude the reach of federal investigators. As CREW chronicled in earlier reports, including Payday Lenders Pay More, released in 2011, the payday lending industry ramped up lobbying and campaign contributions over the past several election cycles while unsuccessfully attempting to ward off federal oversight and derail the Dodd-Frank Wall Street Reform and Consumer Protection Act. CREW’s latest analysis shows the industry is still spreading money around in hopes of limiting federal regulation of payday lending.
The employees and PACs of the same 11 payday lending companies and two industry trade associations included in CREW’s earlier reports contributed $1.74 million to federal candidates and political parties during the 2012 election cycle, 13 percent more than the same group of companies and trade associations contributed during the 2010 election cycle and a new high for the industry. Republicans, whose platform promised to repeal Dodd-Frank and end the CFPB, got 69 percent of the money.
Cash America contributed more to federal candidates during the 2012 election cycle than any other payday lending company. One big recipient: Rep. Joe Baca (D-CA), who sponsored legislation that would have exempted non-bank lenders from oversight by the CFPB. Rep. Baca lost his 2012 re-election bid, and, as CREW reported last month, is now heading a new lobbying group for payday lenders. In addition, so far this election cycle, Cash America has already given nearly $250,000 to federal candidates in preparation for the 2014 midterms — more than two and a half times the next biggest spender included in CREW’s analysis. In addition, over the past two years, Cash America has spent more than twice as much lobbying as any other company we looked at. Between the time the investigation began and the settlement in November 2013, the company spent $720,000 on federal lobbying. The industry as a whole spent just less than $5.27 million during the same period.
The top recipient of the payday lending industry’s largess in 2012 was Restore Our Future, a super PAC backing Republican presidential candidate Mitt Romney, which received $100,000. Rep. Jeb Hensarling (R-TX), the chairman of the House Committee on Financial Services and top recipient among congressional candidates, received $64,750. Sen. Richard Shelby (R-AL), the ranking member of the Senate Banking Committee, received $55,500. As CREW noted last year, both Rep. Hensarling and Sen. Shelby have pushed to weaken the CFPB. Senate candidate Josh Mandel (R-OH), who lost his bid, received $48,472. Mr. Mandel challenged Sen. Sherrod Brown (D-OH), an outspoken opponent of payday lending and chair of a subcommittee with jurisdiction over the industry. In addition, Mr. Mandel reportedly raised at least $67,000 at a fundraiser organized by payday lenders at the luxurious Atlantis resort in the Bahamas. Sen. Pat Toomey (R-PA), a member of the Senate Finance, Banking, and Budget committees, received $37,000. Rep. Spencer Bachus (R-AL), the then-chairman of the House Financial Services committee, received $34,000.
With a broad rulemaking process for payday lenders by the CFPB in the offing, it’s clear scrutiny of the industry will continue to be a bureau priority. It seems likely Washington will continue to be a priority for payday lenders, too.
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