Democratic Report Says Payday Lenders Contributing to GOP Politicians
The next time a Republican Congressman or Senator provides support to the payday loan industry, you may want to ask what their motivation is. One report suggests it may be a campaign contribution reason.
According to a new report from Allied Progress, a so-called government accountability organization run by Democratic strategist Carl Frisch, payday lenders are more likely to contribute to the coffers of Republican politicians. Study authors say that campaign contributions had coincided with votes by GOP officials in favor of the payday loan industry.
Essentially, the report asserts the notion that the Republican Party is heavily influenced by the bad credit loan niche. With that being said, the donations do not violate any campaign finance rules or laws.
“This industry wields tremendous power not only over those it is able to ensnare with its risky financial products, but also over the levers of power in Washington,” Frisch said in a statement. “These Members of Congress should do the right thing and donate this questionable campaign cash to a deserving charitable organization that helps hardworking Americans struggling with debt or credit issues.”
Some of the beneficiaries of campaign contributions donated by lenders that offer payday loans cited by the report include Texas Republican Congressman and House Financial Services Committee Chairman Jeb Hensarling; and Alabama Republican Congressman and former committee Chairman Spencer Bachus.
Other studies conducted in the past say this isn’t really a partisan issue.
Auburn University researchers purported this past summer that both Democrats and Republicans usually favor payday loan industry regulations, and there’s even data to suggest that Republicans in many states are more likely to rein in the bad credit loan industry.
“That probably was the only finding we comport with (the views) that some people might have thought that Democrats might be more restrictive,” said James Barth, a finance professor at Auburn University, in a statement. “When you jump throughout the entire country, you find no significant relationships between the stringency of payday lending (and political party affiliation in control of state government).”
This comes as the Consumer Financial Protection Bureau (CFPB) Director Richard Cordray delivered testimony at a House Financial Services Committee Hearing. During the near four-hour contentious hearing, Cordray participated in heated and sometimes hostile exchanges with Republican committee members.
The CFPB introduced a series of proposed regulations and reforms for the payday loan industry earlier this year. The consumer financial watchdog agency is attempting to work with Washington to get these measures put into law, though many states are apprehensive of federal intervention.
Over the past couple of years, payday loan stores and lenders have been under intense scrutiny from all fronts, including regulators, politicians, bureaucrats, religious institutions and non-profit organizations. They accuse these businesses of unscrupulously taking advantage of the impecunious by offering exorbitant high-interest loans for two weeks. Consumers are usually those who do not qualify for loans from banks. If they fail to pay back the principal amount then they will fall into endless cycles of debt, according to many critics of the business model.