Caught On Tape: Payday Lenders Openly Brag That Their Contributions Lead to Regulation Rollbacks
Payday Execs Pressure Supporters to Donate More to Trump Campaign to Ensure a Final CFPB Rule That Perpetuates the Payday Debt Trap
Washington D.C. — As reported by the Washington Post, a video obtained by consumer watchdog groups Allied Progress and Americans for Financial Reform shows payday industry executives bluntly discussing how campaign contributions to the Trump campaign has bought them access to his administration. In a recent webinar, predatory lenders reveal their plan for using campaign cash to lock in a final CFPB payday rule that enriches them at consumers’ expense.
If the CFPB run by Trump appointee Kathy Kraninger goes through with its plan to permanently scrap the ability-to-repay standard, the payday industry will reap over $7 billion every year in fees from the most vulnerable communities in the United States. According to DebtTrapTracker.com, the industry has already banked over $1.3 billion since CFPB Director Kathy Kraninger delayed this critical consumer protection against the payday debt trap from taking effect in August.
*See transcribed excerpts from the video below, including this admission from Mike Hodges, CEO of Advance Financial:
“If I can show the campaign that [my wife] Tina and I have brought in net new givers to the campaign, meaning whether it’s a hundred dollars, fifty dollars, twenty-five dollars, fifteen thousand dollars, or fifty thousand dollars. If they didn’t give last time, that is um, a boost to us as fundraisers. And, while, um, and that is important to the campaign. Which means it’s important to the president, which means it’s important if you ever had to call on anyone for anything in the administration. And that’s how those things work.”
Hodges also boasts about having reached out to RNC Chairwoman Ronna McDaniel to ask for help and that she in turn asked the White House to give Hodges “an audience.”
After the September 24th webinar, payday lending company Borrow Smart Compliance sent a follow-up email to supporters that cheered on those who committed to donating to Trump’s campaign, while admitting their entire business model depends on pushing consumers they know cannot pay back their high-interest loans in time into an endless debt cycle:
Finally, a very big THANK YOU to everyone who agreed to contribute to President Trump’s campaign yesterday. Your help will go a long way toward keeping any CFPB rule from being reversed.
“We have here a striking example of how money in American politics leads to the abuse of consumers in the financial services marketplace,” said Linda Jun, senior policy counsel at Americans for Financial Reform. “The payday lenders are not simply acknowledging that their money lets them rig the rules to the detriment of everyone else. They are bragging about it.”
Allied Progress has suggested for months that the rollback plan Trump appointee Kraninger has formulated is payback for the millions of dollars the industry has already showered on his campaign and personal businesses. And the payday industry clearly agrees. Industry executives have just said out loud what their endgame strategy is for a final CFPB payday rule that works in their favor: double down on pay to play.
“This presentation reflects the worst of Washington, DC – wealthy executives buying off politicians so they can keep their predatory business model intact,” said Derek Martin, Director of Allied Progress. “It’s not surprising payday lenders are exploiting President Trump’s fondness for quid pro quos, because it clearly works. The President and his team at the CFPB have no good reason to push millions more people towards 400% interest loans and the payday debt trap. They’re acting solely on the millions of bad reasons payday lenders keep contributing to his campaign, and the industry clearly feels emboldened by that. The President pledged to drain the swamp, instead it appears he’s catering to the alligators.”
Since Kraninger took the help of the CFPB, she has moved ahead with plans to roll back the core provision of a regulation on payday and car-title lending that the agency finalized in 2017. Kraninger proposed crippling this consumer protection in February, and CFPB is now in the process of completing its planned rollback. Kraninger has also failed to use her authority to end a court-imposed stay on a portion of the existing rule that protects consumer bank accounts from unlawful withdrawals. Under the Congressional Review Act, Congress has the option to veto Kraninger’s actions, once she completes the rollback.
WHAT YOU NEED TO KNOW:
Payday Lenders Believe They Can Increase Their Chances Of Repealing The Cordray-Era Payday Rule By Buying Access To President Trump – And They’re Conspiring To Do So.
In September 2019, Payday Lending Executives Told Industry Insiders They Should Donate To President Trump’s Reelection Campaign So A Payday Executive Could Maintain Access To The President.
The Payday Lending Industry Believes That Donald Trump Moved Things In Industry’s Favor, And That The President Is A “Backstop” For A Potential Congressional Review Act Resolution Against The Kraninger-Payday Rule.
(18:36) Max Wood, Borrow Smart Compliance: “All these speakers on this call, in fact, other people that are on this call, they worked awful, awful hard to get us to where we are today. And of course, when Trump was elected, the needle moved in our favor. Finally. And um, but, none of this has happened either at the national level or even on the local level. We all faced battles locally. And we don’t win unless we push back and work very very hard to keep these things from happening. And so right now the focus is certainly at the national level.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
(22:01) Mike Hodges: “And so, President Trump is really the backstop, uh, that we have, um, to stop the bill that would be helping us from being overturned and then reverting back to the bill of which none of us can live under.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
In September 2019, Mike Hodges – CEO of Payday Lender Advance Financial – Said Raising Money For The Trump Campaign Would Enable Him To “Call On Anyone For Anything In The Administration.”
(22:47) Mike Hodges, Advance Financial: “So Tina and I have become, I would say, one of the larger donors to the campaign over the last couple of years. And the campaign asked us to fundraise. And so we are hosting the Vice President on October the 7th in Nashville, Tennessee. And Max has the invite. But — and so, I’m at, personally, I’ve, you know, I’ve turned from a you know, a mom and pop business operator to calling every vendor that I have and every relationship that I have to say, ‘hey listen, you know, my business depends on Donald Trump being in office and your business makes a lot of business off of me,’ XYZ law firm, XYZ, you know, technology company, XYZ whoever I’ve got on the phone. And burning up the lines, becoming a fundraiser for Trump. And what I’m asking them to do is to donate to the campaign and to donate under me, personally: Mike Hodges. And the reason why I’m asking that is because the way this works is, um, that fundraising works, is you fundraise for the president. Tina and I are contributing the lion’s share, but every dollar, no matter how small the dollar is, right – if I can show the campaign that Tina and I have brought in net new givers to the campaign, meaning whether it’s a hundred dollars, fifty dollars, twenty-five dollars, fifteen thousand dollars, or fifty thousand dollars. If they didn’t give last time, that is um, a boost to us as fundraisers. And, while, um, and that is important to the campaign. Which means it’s important to the president, which means it’s important if you ever had to call on anyone for anything in the administration. And that’s how those things work. So, we’re having a fundraiser on October the seventh, I think Max can give out to the group the invite. The tickets are pricey – because it’s the vice president. But I’m asking anyone to donate to the president no matter what the size of it is. And especially if they’re in our industry, so that we can show, uh, the administration that this industry in fact supports and has supported his campaign. So that’s what I’m on the phone to ask for.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
(25:30) Max Wood: “Look, if you need something – and we may need something, based on what Ed has told us about the CRA – then it would good to be able to pick up the phone and call someone that could get the president’s attention about this legislation.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
(26:40) Max Wood: “The number of comments that the CFPB received when that rule first came out exceeded anything that had ever happened in the past. Well over a million comments. And that had a tremendous advantage for us. And Mike was very, very aggressive in doing that. I know the number of contacts that Mike was working on because he shared it with me as it was going along. So, that worked. And I’m here to tell you that I believe that what Mike has just proposed will also work. For two reasons. One, of course, hopefully it will keep Trump in office. But most importantly, it’ll give him access, in the event that we need, uh, to have access to the president.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
On The Same Call, Mike Hodges – CEO of Advance Financial – Said He’d Been To The White House And That They’ve Been “Helpful” On The Payday Lending Rule; Noting That The Administration Wants To Remove Both “The Rule” And “Even The Payments Piece.”
(33:03) Mike Hodges: “I have gone to the White House and have, the White House has, has been helpful on this particular rule that we’re working on right now. In fact, it’s, the White House’s financial policy stance to, to um, to remove the rule and even the payments piece. So they’ve been helpful. While they don’t control the CFPB, it is helpful to have the White House on your side in policy.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
Mike Hodges Also Said He’s Gone To RNC Chairwoman Ronna McDaniel To Ask For Help On Something And That She Has Then Called The White House And Said They Need To Give Hodges “An Audience” And Listen To Him.
(35:38) Mike Hodges: “[…] when you go and speak to the administration through the campaign, they will listen. For example, I’ve gone to Ronna McDaniel and said, ‘Ronna, I need help on something,’ she’s been able to call over to the White House and say, ‘Hey, we have one of our large givers. They need an audience. They want, they need to be heard. And you need to listen to them.’” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]
The Host Of The Webinar Also Referred To House Financial Services Committee Chairwoman Maxine Waters As “One More Crazy Lady.”
(46:38) Max Wood: “So the bottom line is this. If we don’t do this, then this is what we’re going to deal with. This is what Ed talked about. [Shows picture of House Financial Services Chairwoman Maxine Waters] This is one more crazy lady. And they are absolutely intent – and I say they – and that’s the financial services subcommittee, along with a host of thousands of the groups that are against us, that will activate to get this stopped. So this is our way of dealing with it and to prevent that from happening. So, just keep that in mind.” [Borrow Smart Compliance Webinar, “The Payday Rule Could Become Effective!” Borrow Smart Compliance, 09/24/19]