Reps Calling for Payday Lender Bailout Get 6x More Money From Payday Lenders
The representatives seek an exemption from loan regulations so that payday lenders can receive funding from the coronavirus relief package meant to bail out small businesses.
House representatives who have received substantial funding from the payday loan industry are calling on the Trump administration to loosen Small Business Administration regulations so that payday loan companies and other small nonbank lenders can receive bailout funds.
In a letter sent on Thursday to SBA Administrator Jovita Carranza and Treasury Secretary Steve Mnuchin, a bipartisan group of 28 representatives argued that the SBA “unduly narrowed” what industries would be eligible for forgivable loans under the CARES Act’s Paycheck Protection Program when it applied its pre-existing prohibition against making loans to payday lenders.
Payday lenders, which typically charge interest rates of 400% or more on an annualized basis, are among the industries that have been barred from receiving SBA loans since 1996, along with casinos, coin and stamp collectors, and multi-level marketing companies.
The letter does not explicitly mention payday lenders, but one of the representatives who led it confirmed to Politico that the request was meant to apply to them.
The letter signers come from across the House’s ideological spectrum, including members on the left of the Democratic caucus, like Rep. Alcee Hatsings (D-Fla.), to those on the far-right of the Republicans, like Rep. Alex Mooney (R-W.V.). What the signatories tend to have in common, however, is a history of financial support from the payday loan industry.
The representatives who signed the letter have received, on average, $42,366 in campaign contributions from the payday loan industry over the course of their congressional careers, according to a Sludge analysis of campaign contributions data from the Center for Responsive Politics. The representatives who did not sign the letter have received $6,578 from the industry, on average.
“If these members of Congress think payday lenders deserve a taxpayer bailout, perhaps they should go all the way and make sure the loan comes with a 400% interest rate too,” said Jeremy Funk, a spokesman for progressive watchdog group Allied Progress. “When the entire country is hurting, who gets helped first is a matter of priorities. Americans don’t need predatory lenders preying on them or their tax dollars during this crisis.”
For many of the letter signers, this is not their first time trying to help the payday loan industry. Reps. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cueller (D-Texas), Steve Stivers (R-Ohio), and Collin Peterson (D-Minn.), all signers, were the original cosponsors of a 2017 bill to repeal Obama-era rules requiring payday lenders to ensure that borrowers could prepay their loans and to limit how many times lenders could attempt to withdraw money from borrowers’ accounts.
The SBA loans are designed to be forgivable if all employees are kept on payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. While 70 percent of small businesses applied for PPP loans, in many large states only a small amount of them received assistance, with much of the initially allocated funding going to large publicly-traded companies.
The Community Financial Services Association of America, a trade group representing payday loan companies, reported spending $57,000 on lobbying the federal government in the first quarter of 2020, including on issues involving the CARES Act.
Below are the 28 representatives who signed the letter and the amount of money they have received from the payday loan industry over their careers.
Correction: This article misidentified the payday loan industry’s trade association. That error has been corrected.
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