Report Examines How Payday Industry Courted Trump from Candidate to President-Elect to President and How They Plan to Cash In
WASHINGTON, D.C. – Payday lenders are holding their glitzy annual trade association conference at a Trump property for the first time in many years this week. The gathering takes place as Mick Mulvaney, an administration official and key Trump enforcer with deep ties to payday lenders, continues to consider ways to weaken an important Consumer Financial Protection Bureau (CFPB) rule reining in the worst abuses of this predatory industry. That the conference is taking place at Trump National Doral golf resort in Florida is no accident. As a new report from consumer watchdog organization Allied Progress shows, the payday lending industry has courted Trump from candidate to President-elect to President.
“It doesn’t surprise us that the payday lending industry views President Trump as an ally – someone whose questionable values are simpatico with their own. It’s little wonder they’ve spent millions of dollars currying favor with him since his days as a candidate. Now that Trump has installed the payday industry’s biggest ally from his administration at the CFPB, these predators are looking to cash in,” said Karl Frisch, executive director of Allied Progress.
He continued, “We already knew there was no daylight between Trump and the payday lenders that helped elect him, but holding their annual conference at one of his luxury properties is just more evidence that Trump and the payday lending industry have the same goal: getting rich at the expense of anyone and everyone, no matter who loses. Make America Great Again, indeed.”
As the report demonstrates, the payday lending industry has made a serious investment in Trump, spending well more than half a million dollars to help get him elected, and then donating well over a million dollars to celebrate his victory at the inauguration. Since then, the industry has spent significantly on lobbying efforts to ensure their investments pay off, including hundreds of thousands to Corey Lewandowski, Trump’s former campaign manager and on-again, off-again advisor. They’ve already gotten a jump on 2020, pouring tens of thousands of dollars into Trump’s reelection – which is still more than three years away.
The payday lenders have already seen their investment pay dividends, with Trump installing Mulvaney—a key ally of the payday lending industry—as the head of the CFPB which oversees the industry. At the bureau, Mulvaney has dropped an investigation into a predatory lender that gave him thousands in campaign cash, pulled out of court cases seeking to hold lenders accountable, and perhaps most troubling, delayed implementation of the CFPB’s important payday lending rule – a move experts view as the first step toward gutting the rule’s consumer protections altogether.
More Background on Payday Lending
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.