Payday Loan Industry Floods Congress with Funds

The payday loan industry isn't going away without a fight. A new report finds the industry has more than doubled its lobbying expenditures to fight off crackdowns by federal regulators and Congress. (Read more payday loan complaints).

“Once again, we see that money talks in Washington,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington (CREW).  “As usual, money paid to lobbyists was well spent, but working Americans were left out in the cold.”

CREW found spending surged as Congress stepped up financial regulatory reform efforts as it worked to pass Dodd-Frank last year.

In the new report, CREW reveals that the payday loan industry more than doubled its lobbying expenditures between the 110th and 111th Congresses.  This spending paid off as the industry was able to kill legislative proposals to cap payday loan interest rates and limit the number of times borrowers could take out such loans.

At the same time, industry campaign donations jumped 80% between the 2006 and 2010 midterm election cycles. In the 2010 cycle, former Rep. Kendrick Meek (D-FL) received the most contributions, taking in more than $50,000.

The one bright note,Sloan said, is thatthe newly created Consumer Financial Protection Bureau(CFPB)will have jurisdiction to regulate payday lenders.  As a result, an industry trade association, Financial Service Centers of America, announced it would move to Washington and make the new bureau “a primary area of focus.”

“This is just one sector, focused on a small sliver of our economy,” said Ms. Sloan, “but the payday loan industry isn’t alone in flooding our political system with cash, especially in the wake of the disastrous Citizens United decision.  Unfortunately, real reform of our system would require lawmakers to bite the hand that feeds them. I won’t hold my breath.”