By William Gavin
Members of Congress currently on the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Financial Services collectively received over $3.4 million from the payday lending industry during their time in Congress, according to OpenSecrets data. Of the 78 senators and representatives on the committees, just 11 received no contributions from payday lending members or affiliates.
Both committees are tasked with regulating the payday lending industry, and are considering legislation to do just that. The Veterans and Consumers Fair Credit Act, which would cap the interest rate on extensions of consumer credit at 36%, was introduced in the Senate Banking Committee by Sen. Jack Reed (D-RI) in July 2021, and reintroduced in the House Committee on Financial Services in November 2021 by Reps. Jesus Garcia (D-IL) and Glenn Grothman (R-WI).
As of Feb. 2021, 19 states and the District of Columbia have legislation capping interest rates at 36%. Watchdog organization Accountable.US said the legislation would help fight predatory lenders that “target communities of color” and benefit Black Americans, citing “nearly 190 consumer, civil rights, and other public interest groups.” Several members of the committee who have taken large amounts of money from the industry have opposed an interest rate cap, according to Accountable.US.
Several members of Congress have received hundreds of thousands of dollars from the payday lending industry including Sen. Richard Shelby (R-Al), Sen. Mike Crapo (R-ID) and Rep. Blaine Luetkemeyer (R-MI). Luetkeymeyer has, so far, received $39,000 from PACs and individuals affiliated with the payday lending industry during the 2022 election cycle -- more than any other sitting member of Congress. While many of the top recipients of contributions from the payday lending industry have each held office for over a decade, Sen. Kyrsten Sinema (D-AZ), who served in the House from 2013 until she was elected to the Senate in 2019 through a special election, has received approximately $150,000 from the payday lending industry since she took office.
In addition to pouring money into political contributions, the payday lending industry spent $4.2 million on lobbying in 2021, the highest it’s spent since 2017. In 2021, at least five companies and trade groups in the payday lending industry hired lobbyists for services that included lobbying on S.J. Resolution 15 — a bill to overturn a Trump-era rule that made it easier for non-bank lenders to issue loans through partnerships with national banks, according to Lobbying Disclosure Act filings.
In October 2020, the Office of the Comptroller of the Currency issued a “true lender” rule, which let non-bank lenders avoid state interest rate caps through partnerships with lenders. The Congressional Review Act was passed by the Senate in May 2021, and the House in June 2021, overturning the true lender rule.
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Several members of Congress who received large contributions from the payday lending industry, including Luetkemeyer and Shelby, voted against the resolution.
The Online Lenders Alliance hired the Emergent Strategies lobbying firm for $120,000 for work in 2021 on the resolution and the SAFE Banking Act. The resolution was the only issue listed in lobbying filings detailing theGROUP DC’s work for online credit company Elevate Credit from April to June 2021. Elevate Credit paid the lobbying firm $120,000 for work on the resolution that quarter and $360,000 total over the course of 2021.
Opportunity Financial LLC paid the Madison Group $120,000 in 2020 with $60,000 in quarters that included lobbying on the “Congressional Review Act resolution.” One of the firm’s lobbyists is Tiffany Harris, who worked in the office of Sen. Robert Melendez (D-N.J.) as a legislative correspondent. Menendez, who serves on the Senate Banking Committee, has seen a number of former employees leave his office and join lobbying firms.
JLL Partners hired Hogan Lovells law firm and paid $220,000 in 2021 for the services of Ivan Zapien, a partner in the firm and the former chief of staff to Menendez. Zapien only reported lobbying Congress on establishing federal rate caps in 2021.
Financial tech company Enova International Inc. paid former House Financial Services Committee Chief of Staff Larry Lavender’s Lavender Consultants $200,000 in 2021 with$150,000 during quarters that included lobbying on S.J. Res. 15 and 23 other issues. Lavender was also paid to lobby on the VCFCA.
INFiN, a financial services trade association, paid $180,000 to Crossroads Strategies LLC for lobbying on a variety of issues, including the VCFCA.
Originally posted on OpenSecrets on February 22, 2022.