Americans for Financial Reform has a report coming out on lobbying bucks from the payday lending industry during the last election cycle. One of the biggest recipients? Sen. Tom Cotton. The Consumer Financial Protection Bureau is currently working to develop rules to protect consumers from predatory lenders. The industry is predictably fighting regulation tooth and nail.
Here’s the list of the top ten congressional recipients of campaign contributions from payday lenders and their trade associations:
• Rep. Jeb Hensarling (R-TX) / Jobs, Economy & Budget Fund – $210,500
• Rep. Patrick McHenry (R-NC) / More Conservatives PAC / McHenry Leadership Fund – $105,300
• Sen. (former Rep.) Bill Cassidy (R-LA) / Citizens for Conservative Leadership – $95,600
• Former Rep. Jack Kingston (R-GA) / Southern Conservatives Fund – $88,500
• Rep. Kevin Yoder (R-KS) / Yoder Victory Fund – $85,757
• Rep. Steve Stivers (R-OH) / Support to Ensure Victory Everywhere PAC / Stivers Victory Cmte – $80,700
• Rep. Pete Sessions (R-TX) / PETE PAC – $76,630
• Rep. Blaine Luetkemeyer (R-Mo) / Building Leadership and Inspiring New Enterprise – $75,350
• Sen. (former Rep.) Tom Cotton (R-AR) – $62,800
• Sen. Tim Scott (R-SC) – $57,870
Above, see John Oliver’s righteous takedown of these truly nasty predators.
From AFR’s press release:
These predatory lenders do not want to rethink their business model, and campaign contributions are one big way in which they hope to achieve their goals in Washington. But their goals go sharply against the weight of public opinion. Broadly speaking, two-thirds of voters – including majorities of Democrats, Independents and Republicans – believe there should be more, not less, government oversight of financial companies, while three-quarters of voters say they support a rule requiring payday lenders to verify a borrower’s ability to repay within the stated period of the loan.
Americans for Financial Reform, which put out this report, is a nonpartisan and nonprofit coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based, and civic and community groups. Our members have called on the CFPB to take strong action against what we consider to be the highly abusive practices of payday, auto title and installment lenders.
The business model of payday lending is to make bad loans. A bad loan is one that a borrower cannot pay off and still cover basic necessities like rent and food – unless they take out another loan, and then another. Each loan comes with a 400 percent interest rate in the form of a new fee and each fee creates a bigger hole in the borrower’s budget. This is what we call the debt trap, and it’s intentional.
Payday and other high-cost quick-fix lenders make little or no effort to determine whether a borrower can afford to repay a loan. Instead, they rely on direct access to someone’s bank account or car to ensure collection – even if it takes priority over rent, utilities and other necessities. The typical payday loan customer is indebted for more than 200 days a year, and many people end up paying far more in loan charges than they borrowed in the first place.
For all these reasons, we think the voters of Arkansas should know – and would want to know – that Sen. Tom Cotton received $62,800 from payday companies and/or trade associations in the last election cycle.