Predatory Payday Loan Industry Showers GOP Lawmakers With Cash as CFPB Ruling Looms
"If the Supreme Court doesn't do the industry's bidding by weakening the CFPB, predatory lenders are counting on their MAGA Majority friends to finish the job," said the watchdog group behind a new analysis.
The payday lending industry has donated tens of thousands of dollars to congressional Republicans who backed a lawsuit asking the U.S. Supreme Court to invalidate the Consumer Financial Protection Bureau's funding structure, a step that would give corporate-friendly GOP lawmakers an opening to gut the agency they've been targeting since its creation.
A new report by the watchdog group Accountable.US—shared exclusively with Common Dreams—shows that the predatory payday loan industry gave at least $82,500 to the campaigns of Republican lawmakers who signed an amicus brief supporting the challenge to the CFPB, whose funding comes from the Federal Reserve system rather than annual congressional appropriations.
At least five Republicans—including Sen. Tim Scott (R-S.C.), the top Republican on the Senate Banking Committee—received a total of $23,400 in campaign contributions from board members of the Community Financial Services Association of America (CFSA) after they signed onto the amicus brief.
The CFSA is an industry trade group that brought the suit against the CFPB, challenging an agency rule targeting the abusive practices of payday lenders. The case has been described as an existential threat to the consumer agency and a potential disaster for the U.S. economy.
A previous analysis by Accountable.US found that CFSA member companies "have histories of criminal behavior or involvement in corruption and ethics scandals, including racketeering convictions, Ponzi scheme payouts, and payments to disgraced politicians."
Rep. Bill Posey (R-Fla.) received $7,500 in campaign donations from the owners of the payday lending company Amscot Financial, a CFSA member, less than two weeks after he backed the amicus brief, which echoes the industry's widely disputed claim that the CFPB's funding structure is unconstitutional. Amscot was charged in the late 1990s with fraud and racketeering, and the company's CEO, Ian MacKechnie, is banned for life from selling insurance in Florida.
"Predatory lenders, including convicted criminals, are greasing the palms of Republicans in Congress who endorsed their legal scheme for gutting the nation's top consumer advocate," said Liz Zelnick, director of the Economic Security and Corporate Power Program at Accountable.US. "It's all part of the plan for payday lenders notorious for trapping families in debt with triple-digit interest rates."
Accountable.US identified 27 Republican supporters of the CFPB challenge who received donations from the payday lending industry following their support for the amicus brief. Eleven of the GOP lawmakers, including Reps. Blaine Luetkemeyer (Mo.) and Bill Huizenga (Mich.), are members of the House Financial Services Committee.
Sen. Roger Wicker (R-Miss.), one of six GOP senators named in the Accountable.US report, got $6,600 in donations from Michael Lynn Hodges, the chairman of Advance Financial, after backing the amicus brief.
In 2019, consumer watchdogs obtained audio of Hodges bragging about how campaign donations bought the payday lending industry access to the Trump White House.
"Since the CFPB's inception, the financial industry and their lackeys in Congress have tried to shut it down all because it's an agency that puts consumers before corporations."
The conservative-dominated U.S. Supreme Court heard oral arguments in CFPB v. CFSA last month, and the justices "appeared highly skeptical that Congress improperly funded the Consumer Financial Protection Bureau by tethering its budget to the Federal Reserve," the American Bankerreported at the time.
But the legal uncertainty generated by the case has benefited payday lenders, which profit by offering sky-high-interest loans to struggling Americans.
As The Washington Postreported late last month, payday lenders "have blocked at least five federal investigations into their business practices since the start of last year, part of a broad and aggressive campaign by payday lenders to neuter or eliminate their chief watchdog agency in Washington."
"Some companies have successfully cited the pending Supreme Court decision to slow ongoing CFPB investigations or fight off the agency's recent punishments," the Post found after reviewing court filings. "Top lending executives, meanwhile, have donated generously this year to Republican lawmakers and presidential candidates who previously signaled they could restrain, if not eliminate, the bureau."
Even if the Supreme Court rejects the CFSA's challenge and upholds the CFPB's funding structure—which insulates it from annual political fights over government spending—Republicans who have been hostile to the agency since its establishment in the wake of the 2008 financial crisis are unlikely to stop trying to gut its ability to pursue relief for consumers and impose penalties on lawbreaking corporations.
Rep. Andy Barr (R-Ky.)—who helped lead the anti-CFPB amicus brief—introduced legislation in March that would make the agency's funding subject to the yearly congressional appropriations process, setting the stage for budget cuts. The legislation is just one of the slew of bills Republicans have introduced in their campaign against the CFPB, which has delivered $19 billion in relief to consumers since its creation in 2011.
"If the Supreme Court doesn't do the industry's bidding by weakening the CFPB, predatory lenders are counting on their MAGA Majority friends to finish the job of rolling back consumer protections for millions of Americans," said Zelnick. "Since the CFPB's inception, the financial industry and their lackeys in Congress have tried to shut it down all because it's an agency that puts consumers before corporations."
