Memo to Media: Congress Must Investigate Its Payday Problem
To: Interested Parties
From: Karl Frisch, Allied Progress
Re: Congress Must Investigate Its Payday Problem
Last week, the D.C. based government watchdog group Campaign for Accountability filed an ethics complaint with the Office of Congressional Ethics against eleven Members of Congress citing an Allied Progress report detailing how the Congressmen were showered with tens of thousands of dollars in campaign contributions from payday lenders within days of taking official actions to benefit the industry. The complaint noted:
Rep. Blaine Luetkemeyer
Rep. Luetkemeyer has led many of the congressional efforts to protect the payday lending industry. On July 18, 2012, he introduced H.R. 6139, a key piece of legislation in the payday lending industry’s arsenal that would have “negate[d] many actions that Congress, the OCC [Office of the Comptroller of the Currency), and other federal and state agencies and supervisors have taken to safeguard consumers from the risks” of products offered by, among others, the payday lending industry. One day earlier, the Community Financial Services Association of America (“CFSA”) – the payday lending industry’s special interest trade group – received a refund from Rep. Luetkemeyer of its $2,500 campaign contribution. Two months later, on September 17, 2012, Rep. Luetkemeyer received a $5,000 contribution from CFSA, exactly twice the amount of the returned contribution. He also received another $5,000 campaign contribution on September 6, 2012, from industry PAC Cash America International Inc. PAC.
On June 26, 2014, Rep. Luetkemeyer introduced H.R. 4986, the End Operation Choke Point Act of 2014, another key bill aimed at protecting the payday lending industry by ending Operation Choke Point. This came on the heels of a lawsuit CFSA filed against the FDIC over Operation Choke Point on June 5, 2014. On the very day the lawsuit was filed, QC Holdings, Inc. PAC made a $1,000 campaign contribution to Rep. Luetkemeyer. Four days later, CFSA’s PAC made a $5,000 donation to Rep. Luetkemeyer’s campaign, and two days thereafter a payday executive, William Webster from Advance America, contributed $2,500 to the congressman’s campaign committee.
Rep. Luetkemeyer also was instrumental in organizing sign-ons for an August 22, 2013 congressional letter to Attorney General Eric Holder and FDIC Chairman Martin J. Gruenberg, raising questions about the lawfulness of DOJ’s Operation Choke Point. DOJ has described Operation Choke Point as “a ‘vertical investigation model’ focusing on fraudulent merchants, third-party payment processors, and banks, and designed to ‘choke off’ the flow of money to the fraudulent merchants.” Its purpose was “to combat mass-market consumer fraud schemes in which financial institutions were either direct or indirect participants[.]” Id. Among other things, the congressional letter to which Rep. Luetkemeyer organized sign-ons accuses DOJ of “intimidating some community banks and third party payment processors” – a group that includes payday lenders – “with threats of heightened regulatory scrutiny unless they cease doing business with online lenders.” One month earlier, on July 9, 2013, Rep. Luetkemeyer had received a $5,000 campaign contribution from Cash America International Inc. PAC. Rep. Luetkemeyer also helped organize a letter he and other members sent to DOJ’s inspector general on October 16, 2014, requesting an investigation into Operation Choke Point. On August 7, 2014, he had received a $5,000 campaign contribution from Cash America International Inc. PAC, and on September 5, 2014, just weeks before the letter, he had received a $2,500 campaign contribution from ACE Cash Express Inc. PAC.
Rep. Kevin Yoder
Rep. Yoder also has been a major player in protecting the payday lending industry. He signed on to co-sponsor H.R. 1121 on March 16, 2011. In the preceding weeks he had received a total of $24,800 in campaign contributions from payday lending executives, PACs, and related individuals. These include $2,500 from QC Holdings, Inc. PAC on February 24, 2011; $1,000 from Cash America International Inc. PAC on March 4, 2011; $2,300 from James Darrin Andersen of QC Holdings and $2,500 from Jill Andersen of the same address as Mr. Andersen on March 28, 2011; $500 from Douglas E. Nickerson, also of QC Holdings, on March 28, 2011; two separate payments of $5,000 and $2,500 from QC Holdings, Inc. PAC on March 28, 2011; $500 from Darin Scott Smith of QC Holdings on March 29, 2011; $2,500 each from Don and Mary Lou Early of QC Holdings on March 30, 2011; $2,000 from Mary Ann Powell, also of QC Holdings, on March 30, 2011; $500 from R. Brian Elvin of QC Holdings on March 31, 2011; and $500 from Matthew J. Wiltanger, also of QC Holdings, on March 31, 2011.
Rep. Yoder assisted Rep. Luetkemeyer in organizing sign-ons for the August 22, 2013 letter to the attorney general and FDIC chair. He also signed on to co-sponsor H.R. 1566 on October 23, 2013. In the intervening time period, he received a total of $36,757 in campaign contributions from payday lending executives, PACs, and related individuals. These contributions include $500 from payday lending executive Matthew J. Wiltanger of QC Holdings on September 10, 2013; $500 each from payday lending executives Brian Elvin and Michael O. Walrod of QC Holdings on September 16, 2013; two payments of $2,400 and $2,600 each from payday lending executive Darrin Andersen of QC Holdings and Jill Andersen of the same address as Mr. Andersen on September 17, 2013; two payments of $2,400 and $2,600 from Don Early of QC Holdings on September 17, 2013; two payments of $2,400 and $2,600 from Mary Lou Early of QC Holdings on September 17, 2013; $250 from Douglas E. Nickerson of QC Holdings on September 17, 2013, and an in-kind contribution of $307 from Mr. Nickerson on September 16, 2013; $500 from D. Scott Smith of QC Holdings on September 17, 2013; $500 from Cathy Tharp of QC Holdings on September 17, 2013; $500 from Michael E. Waters of QC Holdings on September 17, 2013; $500 from Wayne
Wood of QC Holdings on September 17, 2013; $5,000 from Cash America International Inc. PAC on September 26, 2013; $2,600 each from Rod Aycox of Select Management Resources and his wife Leslie Aycox on September 30, 2013; and $2,500 from Kenneth E. Rees of Think Finance on September 30, 2013.
Rep. Yoder also signed on to co-sponsor H.R. 4986 on July 17, 2014. Weeks later he received a $5,000 campaign contribution from Cash America International Inc. PAC.
Rep. Steve Stivers
On September 13, 2012, Rep. Stivers signed on to co-sponsor H.R. 6139. Eleven days earlier, he had received a $5,000 contribution from Cash America International Inc. Four days after co-sponsoring the bill, Rep. Stivers received two separate $5,000 campaign contributions from Checksmart Financial LLC PAC and Community Financial Services Association of America PAC. Several weeks later, on October 10, 2012, he received a $2,500 campaign contribution from David A. Davis of Axcess Financial.
After the introduction of H.R. 4986, Rep. Stivers received a $2,500 campaign contribution from Cash America International PAC on June 17, 2014. Several weeks later, on July 10, 2014, Rep. Stivers agreed to co-sponsor the bill, and in the weeks that followed he accepted a $2,500 campaign contribution from American Financial Services Association PAC on August 1, 2014.
Rep. Stivers also signed on to the August 22, 2013 letter. In the weeks preceding this, he had received a number of campaign contributions including $2,500 from Checksmart Financial LLC PAC on June 10, 2013; $5,000 from Cash America International Inc. PAC on June 25, 2013; and $2,500 from payday lending executive Kevin Dahlstrom of Think Finance on June 30, 2013.
Similarly, just weeks before signing the October 16, 2014 letter to DOJ’s inspector general, Rep. Stivers had received a contribution of $1,000 from Axcess Financial Services Inc. PAC on September 30, 2014. Rep. Stivers also had previously received a $2,600 campaign contribution on September 22, 2014, from payday lending executive Rod A. Aycox of Loan Max Title Loan, and a $2,500 campaign contribution on September 25, 2014, from Cash America International Inc. PAC. On September 26, 2014, Ace Cash Express Inc. PAC contributed $1,000 to Rep. Stivers through this joint fundraising committee.
Rep. Stephen Fincher
On July 19, 2012, Rep. Fincher signed on to co-sponsor H.R. 6139. Ten days earlier Rep. Fincher had received a total of $5,000 in campaign contributions from payday lending industry executives Dennis and Kimberly Gardner of the Equity Management Group. Five days after co-sponsoring the legislation Rep. Fincher received a campaign contribution of $2,500 from payday executive William Allan Jones of Jones Management.
The following year on May 7, 2013, Rep. Fincher signed on to co-sponsor H.R. 1566, a bill similar to H.R. 6139. On June 3, 2013, Rep. Fincher received a $1,000 campaign contribution from a payday lending industry PAC, American Financial Services Association PAC.
Rep. Fincher also signed on to the August 22, 2013 congressional letter to Attorney General Holder and FDIC Chairman Gruenberg. Previously, on July 9, 2013, Rep. Fincher had received a $5,000 campaign contribution from Cash America International Inc. PAC, a payday lending industry PAC.
Rep. Patrick McHenry
Rep. McHenry signed on to co-sponsor H.R. 1121 on March 16, 2011. In the preceding weeks, he had received $8,000 from payday lending industry PACs including $4,000 from QC Holdings, Inc. PAC on February 24, 2011; $1,000 from Cash America International Inc. PAC on February 25, 2011; $1,000 from Ace Cash Express Inc. PAC on March 1, 2011; and $2,000 from Checksmart Financial LLC PAC on March 14, 2011. Five days after co-sponsoring the bill, Rep. McHenry received a total of $17,900 in campaign contributions from payday lending executives, including C. Dan Adams of Integrity Funding, Douglas Clark from Axcess Financial, Ian and Jean MacKechnie of Amscot Financial, James T. Marchesi of Check City, Randall McCoy of Express Check Advance, and Anthony Scales of Express Financial Services. On March 30, he received two campaign contributions of $305 and $4,694 from Community Financial Services Association of America PAC, and the following day he received two separate $5,000 campaign contributions from Advance America Cash Advance Centers Inc. PAC. Then on April 20, 2011, Rep. McHenry received four separate campaign contributions from David Bassford of Money Tree, Inc. totaling $7,300; two separate contributions from Sara Bassford totaling $2,700; a $2,000 contribution from A. David Davis of Check-N-Go; $2,000 from Jared Davis of Axcess Financial; and $500 from Roger Dean also of Axcess Financial. Rep. McHenry’s support for H.R. 1121 earned him a total of $55,399 in campaign contributions.
Rep. McHenry also signed on to the August 22, 2013 letter to the attorney general and FDIC chair. In the preceding weeks he had received a total of $12,800 in campaign contributions from payday lending industry executives and PACs. These include $2,500 from QC Holdings, Inc. PAC on July 13, 2013; ; $2,600 from Advance America Cash Advance Centers Inc. PAC on July 18, 2013 ; $2,600 from Tracy Rawle of Softwise Corp. Software on July 29, 2013; $2,500 from William A. Jones III of Check Into Cash also on July 29, 2013; and $2,600 from C. Dan Adams of Integrity Funding on August 7, 2013. After the letter was sent Rep. McHenry received a $2,500 campaign contribution on September 11, 2013, from American Financial Services Association PAC.
Rep. Pete Sessions
Rep. Pete Sessions also signed on to co-sponsor H.R. 1121on March 16, 2011. The preceding month, on February 18, 2011, he had received two separate $5,000 campaign contributions from Cash America International Inc. PAC, and on March 1, 2011, he had received a $1,000 contribution from Mary Jackson of Cash America Inc.
Rep. Sessions also signed on to co-sponsor H.R. 4986 on July 15, 2014, a day after receiving a $5,000 campaign contribution from Cash America International Inc. PAC.
Similarly, after signing on to the August 22, 2013 letter to the attorney general and FDIC chair, Rep. Sessions received a $2,500 campaign contribution from American Financial Services Association PAC on September 27, 2013, and a $5,000 campaign contribution from Cash America International Inc. PAC on October 28, 2013.
Rep. Alcee Hastings
On May 21, 2013, Rep. Hastings signed on to co-sponsor H.R. 1566. Less than two months earlier, on March 27, 2013, he had received a $2,500 campaign contribution from payday lending executive Ian MacKechnie of Amscot Financial, who also made another campaign contribution of $500 to Rep. Hastings on June 28, 2013, following Rep. Hasting’s support for H.R. 1566.
Rep. Hastings also signed on to co-sponsor H.R. 4986, a bill aimed at ending Operation Choke Point, on July 10, 2014. Cash America International Inc. PAC, a
payday lending industry PAC, made a $2,500 campaign contribution to Rep. Hastings on June 17, 2014.
Rep. Scott Garrett
Rep. Garrett signed on as a co-sponsor of H.R. 1121 on March 16, 2011. Two weeks later on March 31, 2011, he received a $1,000 campaign contribution from payday lending executive Ian MacKechnie of Amscot Financial, Inc. Rep. Garrett also signed the August 22, 2013 letter to Attorney General Holder and FDIC Chair Gruenberg. Weeks later on October 4, 2013, he received a $2,500 campaign contribution from QC Holdings Inc. PAC, a payday lending industry PAC.
Rep. Jeb Hensarling
Rep. Hensarling signed on to co-sponsor H.R. 1121 on March 16, 2011. Just a few weeks earlier, he had received $8,500 in campaign contributions from payday lending executives and industry PACs, including $2,500 from ACE Cash Express, Inc. PAC on February 15, 2011 ; $5,000 from Cash America International Inc. PAC on February 18, 2011 ; and $1,000 from Mary L. Jackson of Cash America International Inc. on February 22, 2011.
Rep. Randy Neugebauer
On March 16, 2011, Rep. Neugebauer signed on to co-sponsor H.R. 1121. The previous month, on February 9, 2011, he had received a $1,000 campaign contribution from payday executive W. Lee Moore of Check Cash, Inc. Following his co-sponsorship, Rep. Neugebauer received a $2,000 campaign contribution from W. Allan Jones of Check Into Cash, Inc. on March 23, 2011, and two separate $2,500 campaign contributions from C. Dan Adams of the Capital Corporation on March 30, 2011.
Rep. Gregory Meeks
Rep. Meeks signed on as a co-sponsor for H.R. 1566 on April 15, 2013. Just three days later, he received a $5,000 campaign contribution from Cash America International Inc. PAC.
With a business model that traps millions of hardworking Americans in seemingly endless cycles of debt each year, it is hardly surprising that polls show payday lenders are almost universally despised. Furthermore, you’d be hard-pressed to find Members of Congress that haven’t accepted campaign contributions from special interests. What is surprising – even bizarre – is seeing politicians these Congressmen tripping all over themselves to help such an unpopular industry within days of taking campaign contributions from that industry.
The stakes have never been greater. More than 12 million hardworking men and women fall victim to payday lenders each year, allowing the industry to bring in more than $46 billion annually. For most payday loan borrowers, this isn’t about a one-time loan to help cover an unforeseen financial emergency. Research from The PEW Charitable Trusts found most payday loans (nearly 70%) are used to cover recurring everyday expenses like a utility bill or food, while only 16% of loans are used to cover unexpected expenses.
That’s exactly what payday lenders are counting on – customers who are already having trouble meeting their day-to-day living expenses who then take out a payday loan only to find it nearly impossible to pay off on time without taking out a new payday loan, and thus kicking off or extending the cycle of debt.
Research from The PEW Charitable Trusts found Americans favor more regulation of the payday lending industry by a margin of 3-to-1. That, along with the impact these financial products have on borrowers, may explain why the Consumer Financial Protection Bureau (CFPB) will soon propose new rules to reign in payday lenders that will provide consumers with a baseline of nationwide protections.
That is the environment in which these Congressmen have raised thousands of dollars from payday lending industry executives and political action committees within days of doing their bidding in Congress. In a very real sense, the campaigns of these Congressmen have prospered on the back of hardworking Americans trapped in a cycle of debt caused by payday loans.
BOTTOM LINE: The actions of these Congressmen cast a shadow of serious impropriety over their tenure in the House of Representatives and must be investigated. They should avail themselves to both the media and the Office of Congressional Ethics to answer the serious questions raised by their actions on behalf of payday lenders.