Mulvaney Goes to Bat for Payday Lenders After They Showered Him with Tens of Thousands of Dollars in Campaign Cash
WASHINGTON, D.C. – Late today, Mick Mulvaney’s Consumer Financial Protection Bureau (CFPB) and the payday lending industry trade groups currently suing the bureau to stop its new rule protecting consumers from predatory short-term lending, filed a joint motion in U.S. District Court seeking to delay implementation of the rule for what could end up being years.
“For anyone who doubted Mick Mulvaney would do whatever it takes to repay the predatory payday lenders that showered him with tens of thousands of dollars in campaign cash – this is your silver bullet,” said Karl Frisch, executive director of Allied Progress, a consumer advocacy organization.
He continued, “The fix is in. Mulvaney’s CFPB has joined forces with a payday lending trade group that has actively deceived the bureau in an effort to keep its predatory racket humming along. They have essentially asked the court to delay the bureau’s new protections for payday loan customers indefinitely.”
The CFPB’s joint motion with the payday industry’s special interest trade groups (Community Financial Services Association of America (CFSA) and Consumer Service Alliance of Texas) would:
- Delay the CFPB payday lending rule’s August 2019 compliance deadline until 445 days after the trade group’s court case against the rule is decided.
- Delay the trade group’s court case against the rule until after Mulvaney’s CFPB has announced any proposed changes to the rule.
Collusion: Mulvaney and Payday Lenders
- CFPB “Acting Director” Mick Mulvaney Has Taken More Than $60,000 in Campaign Cash from Payday Lenders: Mulvaney received $62,950 in payday lending contributions during his congressional career. [Search for Payday Lenders, OpenSecrets.org, accessed 12/13/17.]
- Mulvaney’s CFPB Dropped an Investigation of an Online Loan Shark but Claimed Mulvaney Had Nothing to Do With the Decision – They Later Admitted He Did: Under Mulvaney’s leadership, the CFPB “dropped a lawsuit against an alleged online loan shark called Golden Valley Lending.” Mulvaney’s spokesperson claimed that the decision to drop the Golden Valley lawsuit was made by “professional career staff,” and not Mulvaney himself. They were later forced to admit Mulvaney was involved. However, several CFPB staffers, who spoke on condition of anonymity, said that “Mulvaney decided to drop the lawsuit even though the entire career enforcement staff wanted to press ahead with it.” Mulvaney’s spokesperson finally admitted “that Mulvaney was indeed involved in the decision to drop the lawsuit.” [Chris Arnold, “Trump Administration Plans To Defang Consumer Protection Watchdog,” NPR, 02/12/08]
- Mulvaney’s CFPB Closed an Investigation into World Acceptance Corporation, a Payday Lender that Gave Him Thousands in Campaign Cash. Under Mulvaney’s leadership, the CFPB completed an investigation into World Acceptance Corporation “without an enforcement action.” The CFPB had opened an investigation into World Acceptance Corporation under Richard Cordray’s leadership. “World Acceptance, one of the nation’s biggest payday lenders, is based in South Carolina and gave Mulvaney thousands of dollars in campaign contributions while he represented the state in Congress.” [“Former payday lender CEO now wants to run the CFPB,” Associated Press, 03/06/18]
- Mulvaney’s CFPB Also “Dropped [a] Matter” Against National Credit Adjusters Which Was Accused of Stealing Millions from Customers. Mulvaney was also “weighing whether to drop cases against three [other] payday lenders” according to “people with direct knowledge of the matter.” [Ken Sweet, “Payday lenders, watchdog agency exhibit cozier relationship,” Associated Press, 03/06/18; Patrick Rucker, “Exclusive: Trump official quietly drops payday loan case, mulls others – sources,” Reuters, 03/23/18]
- Mulvaney Put Part of the CFPB’s Payday Lending Rule on Hold in January of 2018: The rule “would restrict payday lenders and their high interest rate loans.” The CFPB put the rule on hold under Mulvaney’s leadership, saying the would “take steps to reconsider the measure.” [Chris Arnold, “Under Trump Appointee, Consumer Protection Agency Seen Helping Payday Lenders,” NPR, 01/24/18]
- Mulvaney Received an Email from a Payday Lender in Which the Lender Asked for Mulvaney’s Help in Becoming the CFPB’s Next Director. When the CFPB completed it’s investigation into payday lender World Acceptance Corporation, the former CEO emailed Mick Mulvaney saying that she “‘would love to apply for the position of director of the CFPB'” citing her experience with CFPB investigations as qualifying expertise. World Acceptance Corporation is “one of the nation’s biggest payday lenders” and is based in South Carolina. [Ken Sweet, “Payday lenders, watchdog agency exhibit cozier relationship,” Associated Press, 03/06/18]
- Mulvaney Met with a Payday Lender During a Golf Trump to the Bahamas Despite Telling Congress His Only Meetings with Industry Were “In the Ordinary Course of Business.” While testifying before Congress, Mick Mulvaney was asked if he had ever “rubbed elbows with payday C.E.O.s or their lobbyists and lawyers in exotic locations.” Mulvaney said that “‘the only contact” he had “was in the ordinary course of business,” a response that turned out to be untrue.'” In February, Gary Cohn had invited Mr. Mulvaney to a tournament at an exclusive club in the Bahamas. Eating lunch, they were approached by J. Paul Reddam, the founder of CashCall, who told Mr. Mulvaney he wanted to discuss the bureau’s case against the California-based lender over high-cost loans. [Glenn Thrush and Alan Rappeport, “‘Like a Mosquito in a Nudist Colony’: How Mick Mulvaney Found Plenty to Target at Consumer Bureau,” New York Times, 05/08/18]
Payday Lending Facts
Payday lenders trap 12 million Americans in difficult to escape cycles of debt each year with interest rates as high as 400 percent—all while raking in $46 billion annually. When Congress created the CFPB in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, it charged the bureau with overseeing the payday lending industry, among other responsibilities. The CFPB detailed the damage caused by payday lenders, finding:
- Only 15% of payday loan borrowers are able to repay their loans on time. The remaining 85% either default or take out a new loan to cover old loan(s).
- More than 80% of payday loan borrowers rolled over (renewed) their loans into another loan within two weeks.
- More than one-in-five new payday loans end up costing the borrower more in fees than the total amount actually borrowed.
- Half of all payday loans are borrowed as part of a sequence of at least ten loans in a row.
It is findings like these that propelled the CFPB to carefully consider over a number of years and eventually promulgate a tough new rule designed to protect consumers from payday lending industry-induced debt cycles. It’s no surprise that research from The Pew Charitable Trusts found Americans favor more regulation of the payday lending industry by a margin of 3-to-1. Yet, these important safeguards are now under attack by payday industry-backed politicians in Congress and CFPB “Acting Director” Mulvaney who took more than $60,000 in campaign cash from payday lenders before his legally dubious installation by President Trump in November.
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