Congress Fails to Repeal CFPB’s Crack Down on Predatory Payday Lenders – Next Up: Mulvaney

Payday Lenders Have Been Quietly Laying the Groundwork to Secure White House Intervention since President Trump Was Candidate Trump


WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau’s (CFPB) important rule protecting 12 million American consumers from the underhanded business practices of payday lenders, survived an attempted repeal in Congress when the U.S. Senate failed to pass a Congressional Review Act resolution (S.J. Res. 56) sponsored by Sen. Lindsay Graham (R-SC), who has received more than $35,000 from the industry. The deadline for repealing the rule using this obscure legislative procedure was today, although media reports in recent weeks indicated it was likely to survive such attempts due to a lack of support. For example, the measure had no Senate co-sponsors until yesterday when Sens. Ted Cruz (R-TX), Joni Ernst (R-IA), and Pat Toomey (R-PA) signed on — the trio has received at least $124,260 from payday lenders over the course of their careers.

The CFPB’s rule cracking down on predatory payday lenders may have survived a repeal effort in Congress but the industry has been quietly laying the groundwork to secure White House intervention since President Trump was candidate Trump. They spent more than $620,000 to help elect him and more than $1.2 million on his inauguration. Since then, they’ve lobbied the White House, hired his former campaign manager, held their annual conference at one of his luxury golf resorts, and begun actively investing in his reelection. They have every reason to think their investment will pay off despite today’s victory for consumers,” said Karl Frisch, executive director of Allied Progress.

He continued, “Payday lenders cheered when Mick Mulvaney, one of their strongest congressional allies, was named ‘acting director’ of the CFPB – a move that is already bearing fruit for these financial bottom feeders. In just six months, Mulvaney has dropped cases against payday lenders who charged consumers interest rates topping 900%, ended an investigation into a lender that contributed thousands to his campaigns, lied to Congress about his meetings with lenders, and indicated he may open the payday lending rule up to changes that benefit industry and throw consumers under the bus. Now is not the time for celebration – now is the time to double down and stand up to Trump, Mulvaney, and their predatory payday pals.

An Allied Progress ad campaign in four states urging members of Congress to oppose efforts to repeal the CFPB’s payday lending rule, ended yesterday. It followed an explosive report by the organization detailing how 16 members of the House and Senate took official actions to benefit the payday lenders within days of taking thousands in campaign cash from industry. 

Payday Lenders and Trump

  • Payday Lenders Spent More than $621,000 to Elect Trump in 2016: Despite repeatedly claiming that he was funding his own campaign because he couldn’t be bought by special interests like other politicians, candidate Donald Trump found a reliable source of campaign funds in payday lenders. During the 2016 election, the industry contributed at least $621,150 to Trump’s presidential campaign and related super PACs. [FEC Search for Trump Victory, 2016, accessed 04/12/18; [FEC Search for Donald J. Trump for President, 2016, accessed 04/12/18; FEC Search for Trump Make America Great Again Committee, 2016, accessed 04/12/18; FEC Search for Great America PAC, 2016, accessed 04/12/18]
  • Payday Lenders Spent More than $1.2 Million on Trump’s Inauguration: In the election of Donald Trump, payday lenders had reason to celebrate. After spending more than $620,000 to help get him elected, the industry opened its collective wallet once again. This time in honor of President-elect Trump at his inauguration which carried a celebratory price tag of at least $1,275,000. [Open Secrets Search for Trump Inauguration, Center for Responsive Politics, accessed 04/12/18]
  • Payday Lenders Spent at Least $375,000 Lobbying in 2017, Which Included Efforts to Influence the Trump Administration: After Trump was sworn into office, payday lenders worked overtime to influence their new friend. The industry spent at least $375,000 on lobbying efforts in 2017 alone, which included pushing the Executive Branch on such issues as Dodd-Frank reform, the CFPB’s payday lending rule, and ‘Operation Choke Point,” a Department of Justice effort opposed by payday lenders that targeted unscrupulous lending practices. [“LOBBYING REPORT,” United States Senate, 04/19/17; “LOBBYING REPORT,” United States Senate, 07/20/17; “LOBBYING REPORT,” United States Senate, 10/18/17; “LOBBYING REPORT,” United States Senate, 07/20/17; “LOBBYING REPORT,” United States Senate, 10/20/17; “LOBBYING REPORT,” United States Senate, 07/20/17; “LOBBYING REPORT,” United States Senate, 10/20/17; “LOBBYING REPORT,” United States Senate, 04/19/17; “LOBBYING REPORT,” United States Senate, 07/19/17; “LOBBYING REPORT,” United States Senate, 10/20/17]
  • Payday Lenders Have Already Started Investing in Trump’s Reelection, Giving More than $115,000 to His Campaign Committees and the Republican National Committee: The wallets of payday lenders have remained open too with more than $40,400 already being contributed to Trump’s reelection campaign committees and at least $75,000 finding its way to his Republican National Committee (RNC). [FEC Search for Trump Victory, 2017, accessed 04/12/18; FEC Search for Donald J. Trump for President, 2017-2018, accessed 04/12/18; FEC Search for Republican National Committee, 2017, accessed 04/12/18]
  • Payday Lenders Held Their Annual Conference at a Trump Luxury Golf Resort This Year: And, in what may be the most brazen attempt to influence the President, a shady trade group that “represents the payday loan industry,” is holding its annual convention at “Donald Trump’s 90-hole golf resort 12 miles west of downtown Miami.” All of that and we are only 16 months into his White House tenure. [Alex Daugherty, “Payday lenders, with major business before Trump, to hold conference at Trump Doral,Miami Herald, 11/08/17]
  • For CFPB “Acting Director,” Trump Selected Mick Mulvaney who 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 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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