Meet the Cabal of Shady Characters CFPB Director Kraninger is About to Make Richer at Consumers’ Expense
WASHINGTON, D.C. – As the Trump/Kraninger-run Consumer Financial Protection Bureau prepares to open the public comment period on its reckless proposal to scrap a critical consumer protection against the payday loan debt trap, Allied Progress unveiled its first nominees for the Payday Lender Hall of Shame. The continuing series will introduce some of the worst actors in the financial system with histories of dishonest, exploitive or plain criminal behavior that for some reason the Trump administration would rather help than everyday consumers.
“It may not come as a shock to learn that many payday lender CEOs, who wake up every day thinking about how to exploit vulnerable communities and servicemembers for financial gain, have some pretty checkered pasts,”said Jeremy Funk, spokesman for Allied Progress. “Despite involvement in everything from a wrongful death lawsuit to a Ponzi scheme that defrauded victims out of millions of dollars, these are the kind of people the Trump administration say need less oversight, not more. If Trump gets his way, payday companies will carry on with business as usual taking advantage of people they know full well can’t pay back high-interest loans in time. That’s how they make most of their money. The end result of this proposed rule rewrite: millions more Americans drowning in long-term payday loan debt who would otherwise be protected by the ability-to-repay standard.”
Added Funk: “We already know why Trump is doing this. The $2.2 million the payday industry showered on his inauguration and political committees clearly bought a lot of good will. Now let’s meet the who’s who of predatory lending he’s doing it for.”
Without Further Ado, The First Nominees for the Payday Lender Hall Of Shame:
Rod Aycox, Select Management Resources CEO: Former Used Car Salesman Buying Influence From The Trump Administration
Title Lender Rod Aycox Once Settled A Wrongful Death Lawsuit After A Repo Man Hired By His Company Shot And Killed A Borrower While Trying To Seize His Car.
Rod Aycox Is The Founder And CEO Of Select Management Resources, Which Operates Hundreds Of Title Lending Stores Across The Country.
Rod Aycox Is The Founder And CEO Of Select Management Resources, Which “Owns About 660 Title Lending Stores In 21 States, Including North American Title Loans And LoanMax.”“In 2007, when the state legislature in Iowa was considering an interest rate cap on auto title loans, Rod Aycox paid a visit to the heartland. The founder and chief executive officer of Atlanta-based Select Management Resources owns about 660 title lending stores in 21 states, including North American Title Loans and LoanMax in South Dakota. He is one of the titans of an industry that brings in more than $4 billion annually in interest fees. Aycox, a former used car salesman and pawn shop owner, flew into the Quad City airport in his private jet and proceeded to defend the nature of his business, which critics label as predatory for targeting low-income customers with high-risk loans that carry interest rates as high as 400 percent.” [Stu Whitney, “Whitney: Payday lending’s money man [Column],” Argus Leader, 02/03/16]
Aycox, A Former Used Car Salesman, Once Settled A Wrongful Death Lawsuit After A Repo Man Hired By His Company Shot And Killed A Borrower While Trying To Seize His Car.
In 1997, Rod Aycox And His Company Settled A Wrongful Death Lawsuit After A Repo Man Hired By The Company Shot And Killed a Borrower While Trying To Seize His Vehicle. “The aggressive lobbying by its president, former used car salesman Roderick Aycox of Atlanta helped open the doors for countless other title loan operators across the country. […] In 1997, Aycox and his company were hit with a wrongful death lawsuit in Georgia after a repo man hired by the company shot and killed someone while trying to seize their vehicle. That case was settled under confidential terms, but court records in the suit provided a window into the privately held company.” [Adam C. Smith, “Price of fast car cash can put unwary on foot,” St. Petersburg Times, 01/24/99]
Rod Aycox Contributed Over $1.7 Million To Donald Trump—And His Company Has Already Benefitted From The Investment.
Rod Aycox Contributed Over $1.7 Million To Donald Trump’s Political Committees And Inauguration.
“Title Loan Magnate” Rod Aycox And His Wife Collectively Contributed $1,000,000 To Donald Trump’s Inauguration.“Less than two months after President Donald Trump tapped his budget director to run the independent federal agency tasked with protecting U.S. consumers from harmful and predatory financial practices, the agency has moved to undo a rule intended to prevent payday lenders from preying on low-income Americans […] The industry’s shrewdest investment may have been the money it delivered to Trump after he won the 2016 election. While payday lenders weren’t lining up to support Trump during the presidential election, in January after Trump’s win, Advance America, the nation’s biggest payday lender, donated $250,000 to Trump’s inauguration. Title loan magnate Rod Aycox and his wife each donated $500,000 for the event.” [Josh Keefe and David Sirota, “Trump And Lawmakers Got Cash From Payday Lenders, Then Weakened Lending Rules”,International Business Times, 1/17/18]
- Roderick and Leslie Aycox of Select Management Resources contributed $1 million to Donald Trump’s 2017 Inauguration.[“Trump 2017 Inauguration Donors,” Center for Responsive Politics, accessed 01/16/18]
Rod Aycox And His Wife Contributed At Least $702,000 To Trump’s Presidential Committees.
- In 2016, Roderick Aycox, CEO of Select Management Resources, contributed at least $350,000 to Trump Victory Committee, a joint fundraising committee. [Search for Trump Victory, 2016, Federal Election Commission, accessed 11/13/17]
- In 2016, Leslie Vail Aycox contributed at least $350,000 to Trump Victory Committee, a joint fundraising committee. [Trump Victory Schedule A, Federal Election Commission, 10/28/18]
- In 2016, Roderick Aycox, CEO of Select Management Resources, contributed at least $2,700 to Donald J. Trump for President committee. [Search for Donald J. Trump for President, 2016, Federal Election Commission, accessed 11/13/17]
Select Management Resources Lobbied On A Joint Resolution To Block The CFPB’s Arbitration Rule.
In 2017, Select Management Resources Lobbied On H.J.Res.111/S.J.Res.47, A Joint Resolution To Block The CFPB’s Arbitration Rule. From October 1, 2017 to December 31, 2017, Select Management Resources spent $100,000 lobbying the Senate on “H.J.Res.111/S.J.Res.47, A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection relating to ‘Arbitration Agreements’; issues related to consumer credit.” [Crossroad Strategies, LLC LD-2 Disclosure Form, U.S. Senate Lobbying Disclosure Act Database, 01/21/18]
- The Joint Resolution Blocked The CFPB’s Rule Barring “Banks From Requiring Arbitration Clauses In Consumer Contracts.” “The House will vote next week on a resolution that would block the Consumer Financial Protection Bureau’s new rule that bars banks from requiring arbitration clauses in consumer contracts, House Majority Leader Kevin McCarthy (R-Calif.) said Thursday. The resolution, H.J. Res. 111, was introduced by Rep. Keith Rothfus (R-Pa.) with the backing from every Republican member of the House Financial Services Committee.” [Ryan Rainey, “House Tees Up Vote Next Week on Bid to Undo CFPB Arbitration Rule,”Morning Consult, 07/20/17]
The Joint Resolution Was Signed Into Law By President Donald Trump In November 2017.
On November 1, 2017, President Donald Trump Signed H.J. Res. 111 Into Law, “Invalidating The Consumer Financial Protection Bureau’s Arbitration Rule,” Which “Was Unpopular With Banks And Other Financial Institutions.” “President Trump has signed the congressional measure invalidating the Consumer Financial Protection Bureau’s arbitration rule, killing the regulation that was unpopular with banks and other financial institutions. The president signed H.J. Res. 111 in a closed meeting Wednesday afternoon, offering no public statement. The White House confirmed that the president signed the resolution in a statement to the White House press pool. The rule, which the CFPB issued in July, would have prohibited financial companies from requiring consumers to forfeit their right to sue the firms in class actions as part of their use agreements. Such ‘mandatory arbitration’ clauses – which can be found in agreements with credit card companies, payments processors and banks – steer legal disputes toward extrajudicial arbitration venues, which the CFPB argued unfairly favor the companies over the consumers.” [John Heltman, “Trump signs resolution killing CFPB arbitration rule,” American Banker, 11/01/17]
Ken Rees, Elevate CEO: Online Lender Evading State Regulation
Elevate CEO Ken Rees Called Payday Lending The “Roach Motel Of Financial Products,” But Opposes Increased Regulation Of The Industry—Probably Because His Company Charges Comparably High Interest Rates For Its “Installment Loans.”
Ken Rees Is The CEO of Elevate, An Online Lender That Spun Off From Think Finance.
Ken Rees Is The CEO Of Elevate.“Elevate is reinventing the non-prime lending industry by giving consumers access to responsible and transparent credit options.” [“About Us,” Elevate, accessed 02/11/19]
In 2014, Elevate Spun Off From Think Finance And Rees Became CEO Of The New Company. “Think Finance, a leading provider of analytics and technology that helps lenders meet the needs of underserved consumers, today announced a restructuring of its business, resulting in the spinoff of a new independent company called Elevate. […] Elevate will be led by Ken Rees, former CEO of Think Finance.” [“Think Finance Announces Business Restructuring and Spinoff of New Company, Elevate,”Business Wire, 05/01/14]
- Ken Rees Was CEO Of Think Finance Starting In 2004.“Think Finance was started in 2001 by Mike Stinson in Fort Worth, Texas. Ken Rees replaced Stinson as CEO in 2004.” [Allen Taylor, “What Led to the Think Finance Bankruptcy?,” Lending Times, 12/29/17]
Elevate Charges An Annual Interest Rate Of 324% On Its “Installment Loans.”
Elevate Offers RISE Installment Loans, Which Provide An Extended Repayment Period But Have An Annual Interest Rate Of 324%.“‘We licensed the soundtrack of Rocky because we’re trying to highlight the idea of a financial comeback for our customers,’ said Ken Rees, chief executive officer of Elevate, the Fort Worth-based company that launched RISE a year and a half ago. Now available in 15 states — including Missouri, California and Texas — RISE has issued almost half a billion dollars in loans to more than 168,000 customers. The company expects to expand its services to Kansas and Virginia later this year. Small-dollar installment loans such as RISE are growing in popularity — especially online, where companies such as Elevate are pioneering the use of big data and analytics to offer borrowers flexible payment schedules or lower rates for paying on time.” [Lindsay Wise, “Fort Worth firm leads new pack of online subprime lenders,” Fort Worth Star Telegram, 03/13/15]
- “Borrowers have longer to repay RISE installment loans, which typically range from $500 to $5,000. But they can still be very costly. A $1,000 RISE loan in Missouri, for example, could wind up costing more than $3,100 to repay in 24 biweekly installments of $132.56, according to a standard payment schedule posted on RISE’s website. That’s an annual interest rate of 324 percent. The interest rate for a typical payday loan is about 400 percent, according to the Consumer Financial Protection Bureau, a federal watchdog agency. Annual interest rates on credit cards run from about 12 percent to 30 percent. Consumer advocates warn that installment loans aren’t necessarily safer than payday loans. And they caution borrowing money online carries extra risks.” [Lindsay Wise, “Fort Worth firm leads new pack of online subprime lenders,” Fort Worth Star Telegram, 03/13/15]
Ken Rees Called Payday Loans The “Roach Motel Of Financial Products.”
Ken Rees Called Payday Loans “Almost The Roach Motel Of Financial Products” Because “You Check In And It’s Very Difficult To Check Back Out.”In an American Bankerpodcast, Ken Rees claimed, that payday loans were “almost the roach motel of financial products” because “you check in and it’s very difficult to check back out.” [“Podcast: This fintech is on a mission to eliminate payday lending,” American Banker, 03/15/18 (1:40)]
Ken Rees Opposes Affordability Limits For Borrowers And Caps On Payday Borrowing.
Ken Rees Opposes Limits On Loan Payments As A Percentage Of A Borrowers Income, Calling Them “Unrealistic” And Claimed Rate Caps Would Restrict Consumers’ Access To Credit.Ken Rees wrote in an op-ed, “Many of the current prescriptions for change merely constrict innovation and reduce access to credit. Affordability limits, for instance, while well-intentioned, are unrealistic based on most borrowers’ needs. If loan payments are capped at 5% of income (as a recent Pew study recommended), the average American would be limited to $60 in loan payments per biweekly pay period, (based on a $31,000 annual income, as noted in the Pew report). This would severely limit loan amounts and paradoxically cause lenders to extend the terms of the loans to absurd lengths. Arbitrary rate caps also only serve to eliminate access to credit. While prohibition has a certain moral appeal, the reality is that for the millions of Americans facing unexpected bills, the most expensive credit is no credit at all.” [Ken Rees, “The Common Ground on Short-Term Lending,” American Banker, 02/27/14]
Ken Rees And His Last Online Lending Company Were Sued By The Pennsylvania Attorney General For Attempting To Evade State Payday Loan Regulations.
Ken Rees’ Companies Think Cash And Think Finance Tried To Evade Payday Loan Regulations Through “Rent-A-Bank” And “Rent-A-Tribe” Schemes…
Rees Used The “Rent-A-Bank” Model To Get Around State Payday Loan Regulations With Think Cash. “With Think Cash, Rees had found a clever way around these regulations: The loans were passed through a nationally chartered bank, thereby exempting them from state banking laws. This “’rent-a-bank’ model had been popular among online payday lenders since at least the late 1990s. But by 2010, various federal regulators had all but shut down the arrangement. Rees needed a new way to keep his business alive.” [Ben Walsh, “Outlawed By The States, Payday Lenders Take Refuge On Reservations,” Huffington Post, 06/29/15]
- After Regulators Shut Down The “Rent-A-Bank” Model, Rees Worked With Native American Tribes To Get Around State Regulations—Referred To As The “Rent-A-Tribe” Model.“Rees needed a new way to keep his business alive. The solution he found was relatively straightforward: He’d work with Native American tribes, which are exempt from state regulations. Think Cash renamed itself Think Finance, and in early March 2011 sent a letter to the Chippewa Cree Tribe proposing that they create a joint lending venture. Such arrangements between online payday loan companies and Native American tribes have become increasingly popular. Indeed, as the rent-a-bank model has waned in the face of government regulations, the ‘rent-a-tribe’ model has taken off in recent years. Today, a quarter of the $4.1 billion the online payday loan industry takes in each year goes to 30 or so lenders based on reservations, according to Al Jazeera America.” [Ben Walsh, “Outlawed By The States, Payday Lenders Take Refuge On Reservations,” Huffington Post, 06/29/15]
…And Was Sued By The Pennsylvania Attorney General For Allegedly Violating State Racketeering, Consumer Protection, And Lending Laws.
Pennsylvania’s AG Filed A Lawsuit Against Think Finance And Ken Rees Alleging They Violated The State’s Racketeering, Consumer Protection, And Lending Laws.“In November, Pennsylvania’s attorney general filed a lawsuit against Think Finance and Ken Rees, alleging they violated the state’s racketeering, consumer protection and lending laws. And on May 13, two Vermont women sued Plain Green in federal court, alleging that the company is violating federal trade and consumer protection laws. ‘Plain Green and the Tribe intend to evaluate the complaint and determine the appropriate response,’ said Rosette, Plain Green’s CEO.” [Ben Walsh, “Outlawed By The States, Payday Lenders Take Refuge On Reservations,” Huffington Post, 06/29/15]
- In 2018, A Judge Ruled Against Think Finance’s Motion To Dismiss The Case And The Rent-A-Tribe Claims Will Move Forward To Be Litigated.In response to claims the court did not have jurisdiction, “’The purpose of the ‘rent-a-tribe’ scheme was to target customers in states, such as Pennsylvania, which otherwise would have prohibited the Defendants from offering the payday loans at issue,’ the judge’s ruling states. “Think Finance’s answers to [interrogatories] establish that the scheme issued about $133 million in loans to 97,000 Pennsylvania consumers, which resulted in an additional $127 million in interest and fees.’ […] The Attorney General’s lawsuit accused the lenders of violating the Pennsylvania Unfair Trade Practices and Consumer Protection Law and other state and federal laws against illegal lending practices. […] The lenders in the case at issue are not licensed under the CDCA, the judge ruled.” [“Attorney General Shapiro Announces a Win in Case against Investment Firm involving “Rent-a-Tribe” Payday Lending Scheme”, Office of Attorney General Josh Shapiro, 02/05/18]
Dennis Shaul, Community Financial Services Association Of America CEO: Raking In Cash While Leading The Payday Industry’s Charge Against Consumer Protections
Dennis Shaul, CEO Of The Community Financial Services Association Of America (CFSA), Leads The Payday Industry’s Expensive Efforts Against Consumer Protection Policies—And Rakes In Hundreds Of Thousands From The Industry Trade Group.
Dennis Shaul Is The CEO Of The Community Financial Services Association Of America (CFSA), The Payday Industry’s Trade Group That Works To Influence Federal And State Policy.
Dennis Shaul Is The Current CEO of CFSA.On CFSA’s website, Dennis Shaul is listed as an ex-officio member of CFSA’s board of directors and CEO. [“Board of Directors,” Community Financial Services Association of America, accessed 02/13/19]
- CFSA Is The Trade Group For The Payday Lending Industry, Which Influences Federal And State Policy By “Working With Policymakers, Regulators And Other Key Stakeholders On Matters Concerning Non-Bank Financial Services Providers.” “As the voice for the small-dollar, short-term lending industry, CFSA represents its members when working with policymakers, regulators and other key stakeholders on matters concerning non-bank financial services providers. The association’s Board of Directors draws on the experience and expertise of its members and the legislative reach of its federal and state government relations teams to support a strong and viable industry.” [“Membership,” Community Financial Services Association of America, accessed 02/13/19]
CFSA Spent $494,000 Lobbying The Federal Government In 2018.
In 2018, CFSA Spent $494,000 In Lobby Expenditures. CFSA reported to the Senate Office of Public Records that it spent $494,000 on “Lobbying Expenditures” in 2018. [“Community Financial Services Association Client Profile,” Center For Responsive Politics, accessed 02/13/19]
Dennis Shaul Made Nearly $750,000 In 2017.
In 2017, Dennis Shaul Was Paid $749,113 As CEO Of The Community Financial Services Association Of America (CFSA). In Fiscal Year 2017, Dennis Shaul made $720,000 in compensation and $29,113 of estimated other compensation. [Community Financial Services Association, GuideStar, accessed 02/13/19]
Under Dennis Shaul’s Leadership, CFSA Sued The Consumer Financial Protection Bureau (CFPB), Claiming It Ignored Public Comments On The Payday Rule—After Plotting To Bombard The CFPB With Pro-Industry Comments.
Under Dennis Shaul’s Leadership, CFSA Sued The Consumer Financial Protection Bureau (CFPB), Claiming It Ignored Submitted Comments About The Payday Rule.
CFSA Claimed The CFPB “Ignored The Input Of Small-Dollar Loan Customers” And Incorrectly Categorized Comments Supporting Lenders.”Throughout the rulemaking process and during the rule’s public comment period, the Bureau ignored the input of small-dollar loan customers. Serious concerns arose during the comment period over the inaccurate categorization of comment letters, and the questionable and inconsistent process through which the Bureau posted comment letters for public viewing as it rushed to finalize the rule. Questions also arose about whether the CFPB was appropriately reviewing and considering all public comments as required by the APA.” [“CFSA Files Lawsuit Against Consumer Financial Protection Bureau Over Small-Dollar Loan Rule,” Community Financial Services Association of America, 04/09/18]
In Reality, 40% Of Comments That Opposed The Rule Were Not Sent By The Individuals Associated With The Comment.
A Survey Conducted By Mercury Analytics Found That 40% Of Opposing The CFPB Payday Lending Rule Weren’t Sent Or Authorized By The People Who Associated With Them.“A survey conducted by Mercury Analytics for the Journal last year [in 2017] found that 40% of the comments in a batch of 13,000 comments opposing the CFPB rule weren’t actually sent or authorized by the people who associated with them.” [James V. Grimaldi, “Lawmaker Seeks Probe into Fake Comments on Payday-Lending Rule,” The Wall Street Journal, 02/05/18]
The Community Financial Services Association Of America (CFSA) Plotted To Bombard The CFPB With Public Comments Before The Deadline On Its Payday Lending Rule.
The Community Financial Services Association Of America (CFSA) “Plotted To Bombard The Consumer Bureau With Comments And Studies” And “Stressed The Need To Deliver Hundreds Of Thousands Of Such Comments Before The Deadline On The Payday Rule.”“For starters, the industry plotted to bombard the Consumer Bureau with comments and studies suggesting regular people would be the real losers—even if their own oversized profits were obviously the focal point. […] Under the Small Business Regulatory Enforcement Fairness Act (SBREFA), the feds must talk to small businesses affected by their rules, in this case payday lenders, and respond to concerns. In addition, most proposed federal regulations allow the public to make comments. At the Atlantis, leaders stressed the need to deliver hundreds of thousands of such comments before the deadline on the payday rule, which is this October 7.” [David Dayen, “How Predatory Payday Lenders Plot To Fight Government Regulation,” Vice News, 08/18/16]
At An Industry Meeting In The Bahamas, Dennis Shaul Admitted The Payday Industry’s Goal Of Bogging Down The CFPB With Thousands Of Public Comments.
CFSA CEO Dennis Shaul Admitted That “Hundreds Of Thousands Of Comments” On The Payday Rule Would “Necessarily [Bog] Down” The CFPB. “The third and perhaps most critical goal is to delay the rule itself—that is, to keep the payday loan party going. If the agency has to wade through hundreds of thousands of comments—from homeowners to political officials and academics—to which they must respond, ‘then they are necessarily bogged down,’ as Dennis Shaul, CEO of the industry trade group, put in the Bahamas. Delay does not just force the feds to mull over the details, he added: ‘If the rule is delayed, operators are still continuing to be in existence and presumptively to make a profit.’” [David Dayen, “How Predatory Payday Lenders Plot To Fight Government Regulation,” Vice News, 08/18/16]
# # #