Lobbying pays off big for payday lenders
WASHINGTON — In midApril, hundreds of members of the payday lending industry will head to Florida for their annual retreat featuring golf and networking at a plush resort just outside Miami. The resort just happens to be the Trump National Doral Golf Club.
It will cap a year in which the industry has gone from villain to victor, the result of a concentrated lobbying campaign that has culminated in the Trump administration’s loosening regulatory grip on payday lenders and a far friendlier approach by the industry’s nemesis, the Consumer Financial Protection Bureau.
Gone is Richard Cordray, the consumer bureau’s director and so-called bad cop, who levied fines and brought lawsuits to crack down on usurious business practices by an industry that offers short-term, high-interest loans that critics say trap vulnerable consumers in a loop of debt. In his place is Mick Mulvaney, the White House budget director and a former South Carolina congressman, who was chosen by President Donald Trump to assume temporary control of the bureau and has emerged as something of a white knight for the payday lending industry.
“I think now we’re in a period that is relatively passive,” said Dennis Shaul, the chief executive of the Community Financial Services Association of America, the primary lobbying group for payday lenders. “I think it is advisable for us to largely draw a curtain on the past and try to go forward.”
Two weeks ago, Mulvaney put the brakes on a contentious rule, ushered in by Cordray, that was set to impose tight restrictions on short-term payday loans.
Mulvaney ended a case that the bureau initiated last year against a group of payday lenders in Kansas accused of charging interest rates of nearly 1,000 percent. Last week, Mulvaney scrapped an investigation into the marketing and lending practices of World Acceptance Corp., a lender based in South Carolina that donated $4,500 to Mulvaney’s previous congressional campaigns through its political action committee.
According to the Center for Responsive Politics, payday lenders have contributed more than $13 million to members of Congress since 2010, with the majority of that money going to Republicans who have made it a priority to roll back the financial regulations put in place by President Barack Obama after the financial crisis. That includes Mulvaney, who received nearly $63,000 for his campaigns from payday lending groups.
Mulvaney said the donations were not an issue “because I am not in elected office anymore.”
The payday lending industry is cheering Mulvaney’s approach.
“He seems extremely reasonable,” said W. Allan Jones, a founder of one of the industry’s top lobbying groups who operates about 900 payday lending stores across the country. “He’s figured this thing out that they’ve overstepped their bounds.”
Jones, the chief executive of the Tennessee-based Check Into Cash chain of payday lenders, has been scaling back his payday loan empire in recent years. He laid off about 300 employees last year, bringing his workforce to about 3,000.
This year he plans to shutter 100 more stores, despite the changes happening at the consumer bureau, because it remains unclear how far the move to deregulate the industry will go and because state lending laws have become increasingly strict.