Predatory lenders heap campaign cash on Virginia lawmakers charged with regulating them
Inside Subprime: November 2, 2017
By Alex Huntsberger
As the Consumer Financial Protection Bureau (CFPB) issues sweeping new rules designed to help credit-poor borrowers and defang predatory borrowers, it’s important to note how predatory lending became so common. The fact is, the brunt of the blame for our present circumstances lies with the states.
Lending products like payday and title loans are regulated at the state-level. And while 18 states have strict laws prohibiting payday lending, the other 32 states don’t. Considering the danger posed by these predatory bad credit loans, why are they legal in over half the country?
Well, one possible answer is that it all comes down money. Not the money these companies are lending out, but rather the money that they are donating to local politicians.
(Money in politics? We know. We’re shocked too.)
New reporting from Virginia Public Radio traces cash from predatory lenders to the lawmakers charged with regulating them. WFTV Reporter Mike Pope dove into the shadowy world of campaign finance and found that predatory lenders donated heavily towards state-level races, with approximately $800,000 in total contributions.
In the state of Virginia, many of those donations are going to members of a House subcommittee tasked with regulating those very same lenders. According to campaign finance reports that Pope scrutinized, committee members Kathy Byron, Jackson Miller, and Lee Way all accepted contributions from predatory lenders.
He also found that the subcommittee chair, delegate Tim Hugo, received the largest amounts of campaign cash of any committee member, with $15,000 each from Loan Max and Check Into Cash.
From Pope’s report:
“Most of the money goes to political action committees like the Commonwealth Victory Fund and Dominion Leadership Trust. Quentin Kidd at Christopher Newport University says these are often set up to spread money around to candidates that need it the most. ‘But there’s something more sinister involved here. It’s also a way to pass money through without it being directly tied to a particular industry or a particular corporation.'”
And while the majority of these donations are going to Republican politicians – as they’re generally in favor of less regulation – there have also been substantial donations made towards Democratic politicians.
For example, Loan Max has donated $10,000 to both the Republican and the Democratic gubernatorial candidates in Virginia. And, at the national level, former DNC chair and congresswoman Debbie Wasserman Schultz has frequently been criticized for her financial ties to the payday lending industry. (You might also remember Wasserman Schultz from her starring role in “2016’s Most Aggravating Twitter Fights.”)
While there is some uncertainty surrounding the future of the CFPB’s payday lending rule – not to mention the future of the CFPB in general – one thing remains clear: So long as predatory lenders can influence politicians at the state level through campaign contributions, they will have a shot at survival.
For more information about how to protect yourself from predatory lending, check out these related pages and articles:
- Installment Loans: What’s Your Financial Reality?
- The Truth About Bad Credit Loans
- No Credit Check Loans: A Guide to Understanding Your Options
- Payday Loans: The Most Dangerous Debt Trap