From [HuffPost] and [IBL] A little over a year ago, Sen. Mark Warner (D-Va.), a former venture capital executive representing Virginia, addressed a small audience of political insiders at the Brookings Institution, one of the most prestigious think tanks in the nation’s capital. Times were changing, Warner told the crowd, and the old guard from Washington and Wall Street wasn’t keeping up with the needs of the modern workforce. The gig economy, outsourcing and automation had created an era of unprecedented “income volatility” for Americans. New financial technology firms had “an opportunity to bridge part of that new social contract,” to “lean forward and meet workers where they’re working.”  The government needed to “encourage innovation.” Entrepreneurs had to be thinking about a “portable benefits system,” about emergency funding to help people meet unexpected expenses. It was time to get past the same old debates about government and regulation. This was about change. It was about progress. Warner had seen the future. 

A year later, that tomorrow has arrived. And the grand financial technology breakthrough, it turns out, is to help payday lenders sidestep basic consumer protection laws. 

Un-representing You. Coin Operated Black Ho-Reps., Greg Meeks (D-N.Y.) and Gwen Moore (D-Wis.) have received large financial contributions from payday loan companies who prey on broke Black people with usurious loans. Both are Black proxymoronic probots. According to Funktionary, a probot is a propagandizing programmed robot who disseminates lies, distortions and convenient mass truths composed by a superior overruling elite. [MORE]

High Anxiety is the Fuel that Motivates Blacks in Racist System. In late July, racist suspect Sen. Mark Warner (D-Va.), a former venture capital executive representing Virginia introduced the ingeniously titled “Protecting Consumers' Access to Credit Act of 2017.” The legislation would allow payday lenders to ignore state interest rate caps on consumer loans as long as they partnered with a national bank. In a rare bipartisan effort in July, he introduced it with three cosponsors: two Republicans and one Democrat. The bill would allow lenders to ignore state interest-rate caps by partnering with a national bank. Most states have interest rate caps of 36 percent, but 15 states have none at all, and the bill could mean that millions of Americans would face rates of 350 percent or more.

Although it has been generally overlooked amid the GOP’s stumbling attempt to repeal Obamacare and its aggressive plan to slash taxes for Wall Street, Warner’s little bill has a much better chance of making it into law than the Republican Party’s marquee efforts. The bill has the backing of Reps. Greg Meeks (D-N.Y.) and Gwen Moore (D-Wis.), two Black proxymoronic, Ho-Rep Democrats with a history of sympathy for the financial industry. Warner’s Senate version is co-sponsored by tea party darling Sen. Pat Toomey (R-Pa.) and Sen. Gary Peters (D-Mich.). 

In addition to traditional payday lenders, newer financial technology companies want to become bigger players in the high-interest loan business. Warner is an outspoken proponent of fintech, and should his bill become law, these companies will be able to partner with major banks, evade interest rate caps and profit off of low-income borrowers facing soaring interest rates. Companies such as LendingClub, Prosper and LendUp will be able to expand their high-interest lending operations.

Warner’s bill has drawn opposition from consumer groups including Americans for Financial Reform, the Center for Responsible Lending and the Consumer Federation of America, along with civil rights organizations including the NAACP and the Southern Poverty Law Center.

In September, 152 state and national organizations, including the Center for Responsible Lending, the National Consumer Law Center and the NAACP, wrote a letter to Congress urging members to vote against the Protecting Consumers' Access to Credit Act. “This bill could open the floodgates to a wide range of predatory actors to make loans at 300% annual interest or higher,” wrote the groups. “Fintech lenders also should not be allowed to make loans that exceed state interest rate caps… The bill wipes away the strongest available tool against predatory lending practices.”

Diane Standaert, director of state policy and executive vice president at the Center for Responsible Lending, told International Business Times, “What’s at stake is pretty simple: either allowing 300 percent interest loans or not. Siding with consumers or not. You have to look at the more than 150 groups opposing this versus who’s pushing the bill. There’s a clear the line in the sand about what’s at stake and who really benefits.”

A payday loan is a relatively small, extraordinary high-cost loan, typically due in two weeks and made with a borrower’s post-dated check or access to the borrower’s bank account as collateral. Payday loans are designed to trap borrowers in debt. Due to the short term, most borrowers cannot afford to both repay the loan and pay their other important expenses. If the loan cannot be paid back in full at the end of the term, it has to be renewed, extended, or another loan taken out to cover the first loan. Fees are charged for each transaction. Lenders ask that borrowers agree to pre-authorized electronic withdrawals from a bank account, then make withdrawals that do not cover the full payment or that cover interest while leaving principal untouched.If the lender deposits a repayment check and there are insufficient funds in the borrower’s account, the borrower is hit with even more fees for insufficient funds in their accounts. The bounced amount causes any other automatic debits or payments from the account to also fail and accrue more overdraft fees - wreaking havoc on a person's bank account - thereby leading them to borrow more or disaster. 

The Center for Responsible Lending found that almost half of payday loan borrowers will default on their loan within the first two years. Taking out payday loans increases the difficulty of paying the mortgage, rent, and utility bills. The possibility of increased economic difficulties leads to homelessness and delays in medical and dental care and the ability to purchase drugs. For military men, using payday loans lowers overall performance and shortens service periods. To limit the issuance of military payday loans, the 2007 Military Lending Act established an interest rate ceiling of 36% on military payday loans.

The annual percentage rates on payday loans are extremely high, typically around 400% to 1000%. The loans are available to people unable to obtain credit from traditional lending institutions. They are a last resort taken by persons under extreme financial pressure usually during an emergency of some kind. Sounds like usury right? Not so in a crimeogenic system of white supremacy. Payday loans are the creation of Neuropeans.

Payday lending is legal in 27 states, with 9 others allowing some form of short term storefront lending with restrictions. The remaining 14 and the District of Columbia forbid the practice. States which have prohibited payday lending have reported lower rates of bankruptcy, a smaller volume of complaints regarding collection tactics, and the development of new lending services from banks and credit unions. [MORE]

Interest rate caps are a powerful tool applying to essentially all credit, not just payday loans. But national banks have a great deal of flexibility with these standards thanks to a court decision from the 1970s. They have to comply with the interest rate caps only in their home state ― not those of the state where the person receiving a loan lives. So payday lenders and other predatory operations sometimes ask banks in loosely regulated states to issue loans on their behalf. The payday lender quickly buys the loan after it is issued by the bank, allowing the bank to earn a commission for its service as a regulatory frontman. In 2015, a federal court prohibited this end-run around state laws in a few states. Warner’s bill would essentially overturn the court decision and protect cross-state rent-a-bank schemes nationwide.)

 Federal regulation against payday loans is primarily due to several reasons: (a) significantly higher rates of bankruptcy amongst those who use loans (due to interest rates as high as 1000%); (b) unfair and illegal debt collection practices; and (c) loans with automatic rollovers which further increase debt owed to lenders. The Dodd–Frank Wall Street Reform and Consumer Protection Act gave the Consumer Financial Protection Bureau (CFPB) specific authority to regulate all payday lenders, regardless of size. Also, the Military Lending Act imposes a 36% rate cap on tax refund loans and certain payday and auto title loans made to active duty armed forces members and their covered dependents, and prohibits certain terms in such loans.

Payday lenders have made effective use of the sovereign status of Native American reservations, often forming partnerships with members of a tribe to offer loans over the internet which evade state law. However, the Federal Trade Commission has begun aggressively to monitor these lenders as well. While some tribal lenders are operated by Native Americans, there is also evidence many are simply a creation of so-called "rent-a-tribe" schemes, where a non-Native company sets up operations on tribal land. Sovereign immunity generally precludes tribally run businesses from state regulations. Some tribes have claimed immunity in state and federal courts on behalf of the payday lending entities that consumer groups accuse of charging usurious interest rates to mainly low-income borrowers. Tribally affiliated payday lenders, due to this claim of immunity, are able to operate Internet-based payday lending businesses in states where the interest rates charged by lenders exceed those permitted by the state or in states where payday lending is banned all together. This immunity is commonly referred to as the “sovereignty model.” [MORE]

As far as BW knows payday lenders also simply avoid state laws by utilizing "choice of law" clauses and court jurisdiction clauses in the consumer payday loan agreements, a binding contract signed by the consumer. Although, the clauses are usually un-bargained for by the consumer and are largely a legal fiction, they have been upheld by courts.  

Since last year, payday lenders have been concerned about a new rule that was under consideration by the CFPB requiring lenders to assess whether a potential borrower can afford to pay back a loan within 30 days, thus avoiding “payday death traps,” among other measures. The rule, which would seriously disrupt the payday lending business model, was finalized in October but won’t go into effect until mid-2019. Warner and some cosponsors say they support this CFPB rule. In May, as the CFPB was considering these rules, House lawmakers inserted a provision in its Financial Choice Act — which repeals parts of Dodd-Frank — that would hobble the CFPB’s ability to enforce its rules on payday lenders. The bill passed the House but sits in the Senate Committee on Banking, Housing, and Urban Affairs, of  which Warner and cosponsor Pat Toomey (R-PA) are members.

Now, President Donald Trump is expected to appoint current Office of Management and Budget Director Mick Mulvaney as interim director of the CFPB, leaving the agency in the hands of someone who wants to do away with it.

Puppeticians for PreyDay Loan Industry

The payday lending industry donates to many House and Senate candidates each election cycle. From 2015 to 2016, companies, corporate political action committees and individuals in the industry gave over $2.8 million to campaigns and independent political groups, 82 percent of which went to Republicans. So far this year, the industry has reported nearly $840,000 in contributions, with over 90 percent going to Republicans.

But regarding sponsors of friendly legislation, the payday lenders do not discriminate by party — both Democrats and Republicans who sponsored the bill are some of the industry’s biggest recipients of campaign cash. In the 2014 election cycle, Warner’s most recent, the primary sponsor of S.1642 took in the fourth-largest total in campaign donations from the industry ($21,500), including a maximum donation of $5,000 from the political action committee of the Community Financial Services Association of America, a major trade group for payday lenders. Warner received other PAC contributions from lenders such as Cash America International and Checksmart Financial.

“Campaign contributions have never influenced Senator Warner’s decision-making on policy matters and never will,” said Warner’s spokesperson.

Warner’s estimated net worth of $238 million made him the wealthiest senator and the third-richest member of Congress in 2015, the most recent year for which the Center for Responsive Politics (CRP) has estimates. In the 2014 election cycle, Warner was the Senate’s top recipient of campaign donations from finance and credit companies.

Cosponsor Toomey, a former currency trader and former president of the “free-enterprise advocacy group” Club for Growth, received the second-highest amount from payday loan donors in the Senate in 2016, his most recent election ($32,900). Maximum donations of $5,000 came from Lendmark Financial Services, trade group National Installment Lenders Association and the Online Lenders Alliance, another industry association. In 2012, a non-election year for Toomey, he still took in the largest amount of payday lending cash in the Senate — $57,250 — including $10,000 from the Community Financial Services Association. This year, he’s gotten $1,000 from the industry. CRP estimated Toomey’s 2015 net worth at about $2.7 million.

In the 2016 election cycle, payday lenders donated $5,000 to the campaign of co-sponsor Sen. Gary Peters (D-MI), a former financial adviser and executive, although his next election is in 2020. CRP estimated Peters’ 2015 net worth at just over $4 million.

Sen. Steve Daines (R-MT) received $6,000 from the PAC of Cash America International in the 2014 election cycle and another $1,500 in the 2016 cycle, according to CRP. Daines was worth $14.4 millionas of 2015, according to CRP, making him the 17th-richest senator. In 2012, the senator worked at Rep. Greg Gianforte’s (R-MT) RightNow Technologies, and after Oracle bought the company, Daines made over $2 million by selling his stock options.

The payday lending industry donates to many House and Senate candidates each election cycle. From 2015 to 2016, companies, corporate political action committees and individuals in the industry gave over $2.8 million to campaigns and independent political groups, 82 percent of which went to Republicans. So far this year, the industry has reported nearly $840,000 in contributions, with over 90 percent going to Republicans.

But regarding sponsors of friendly legislation, the payday lenders do not discriminate by party — both Democrats and Republicans who sponsored the bill are some of the industry’s biggest recipients of campaign cash. In the 2014 election cycle, Warner’s most recent, the primary sponsor of S.1642 took in the fourth-largest total in campaign donations from the industry ($21,500), including a maximum donation of $5,000 from the political action committee of the Community Financial Services Association of America, a major trade group for payday lenders. Warner received other PAC contributions from lenders such as Cash America International and Checksmart Financial.

“Campaign contributions have never influenced Senator Warner’s decision-making on policy matters and never will,” said Warner’s spokesperson.

Warner’s estimated net worth of $238 million made him the wealthiest senator and the third-richest member of Congress in 2015, the most recent year for which the Center for Responsive Politics (CRP) has estimates. In the 2014 election cycle, Warner was the Senate’s top recipient of campaign donations from finance and credit companies.

Cosponsor Toomey, a former currency trader and former president of the “free-enterprise advocacy group” Club for Growth, received the second-highest amount from payday loan donors in the Senate in 2016, his most recent election ($32,900). Maximum donations of $5,000 came from Lendmark Financial Services, trade group National Installment Lenders Association and the Online Lenders Alliance, another industry association. In 2012, a non-election year for Toomey, he still took in the largest amount of payday lending cash in the Senate — $57,250 — including $10,000 from the Community Financial Services Association. This year, he’s gotten $1,000 from the industry. CRP estimated Toomey’s 2015 net worth at about $2.7 million.

In the 2016 election cycle, payday lenders donated $5,000 to the campaign of co-sponsor Sen. Gary Peters (D-MI), a former financial adviser and executive, although his next election is in 2020. CRP estimated Peters’ 2015 net worth at just over $4 million.

Sen. Steve Daines (R-MT) received $6,000 from the PAC of Cash America International in the 2014 election cycle and another $1,500 in the 2016 cycle, according to CRP. Daines was worth $14.4 millionas of 2015, according to CRP, making him the 17th-richest senator. In 2012, the senator worked at Rep. Greg Gianforte’s (R-MT) RightNow Technologies, and after Oracle bought the company, Daines made over $2 million by selling his stock options.

A bipartisan trio of representatives introduced the companion bill in the House, and all have received campaign donations from the payday lending industry. So far during the current election cycle, primary sponsor Patrick McHenry (R-NC) hasn’t gotten any payday cash, but the campaigns of cosponsors Gwen Moore (D-WI) and Meeks of New York have taken in $5,000 and $4,000, respectively. From 2015 to 2016, Moore received over $16,000, Meeks got $13,000, and McHenry received $5,500 from payday lenders. In the 2014 election cycle, McHenry received over $43,000 from payday lenders in 2014, the fourth-highest total in the House during that session.

Executives and top-ranking employees of fintech firms have also donated to the bill’s House and Senate cosponsors. For example, Moore has received $7,500 in donations from individuals affiliated with fintech firm Elevate, which offers loans with interest rates of up to 365 percent. CEO Ken Reesdonated $3,000 to Moore from 2014 to 2016, and Kevin Dahlstrom also gave Moore’s campaign $1,000 in 2014, when he was chief marketing officer of Elevate. Also in 2014, Sharon Clarey, then senior VP of human resources at Elevate, gave $1,000. In 2015, then-chief risk officer and executive VP of corporate development Kathy Boden Holland donated $2,500 to Moore’s campaign.

On Sep. 30 of this year, Elevate CEO Rees donated $5,000 to McHenry’s campaign. One year earlier,Walt Ramsey, then chief risk officer at Elevate, had given McHenry $1,000 and Daines’ campaign $1,500.

McHenry’s office did not return IBT’s request for comment.

Moore’s chief of staff Sean Gard told IBT that “[Moore’s] thinking is what is best for her constituents. She has taken many votes contrary to what some of her donors have asked.”

Meeks told IBT, “No, campaign donations do not impact my legislative activity. In fact, in September, I voted in favor of an amendment to the appropriations bill to protect the CFPB’s small dollar lending rule which was promulgated to stamp out abusive lending practices among financial firms, including payday lenders.”

Some campaign finance experts have found otherwise in recent years. While there are differing views on the influence of campaign donations, several studies have concluded that contributions do influence policy outcomes. A 2012 book by University of Rochester political science professor Lynda Powell found that at the state legislative level, while the effects vary, campaign donations do affect the bill-drafting process.

“I am not arguing that there is much quid-pro-quo influence,” said Powell. “But even the best intentioned legislator receiving money from an interest group is likely to at least listen to what donors have to say. And if you are hearing much more from people who donate money to you, it is hard not to be swayed by the greater body of argument and evidence from donors.” Powell’s study also found that “the access legislators give to lobbyists clearly is biased in favor of campaign donors.”

Another study from 2010 by Baylor political science professor Patrick Flavin found that states with stricter campaign finance laws spend more of their annual budget on public welfare. And the populace appears to have caught on: A 2014 poll found that most voters think members of Congress are more concerned with their donors than their constituents.

Payday Lenders Lobby Congress To Help Expand Their Operations

Research shows that a “particularly effective” strategy for helping shape public policy is a combination of campaign donations and lobbying — and payday lenders and their trade groups don’t just donate to candidates they hope will support legislation that boosts their interests. Three trade associations representing lenders have spent a combined $1.6 million on lobbying in 2017 to lobby Congress on specific legislation and issue areas, according to federal lobbying records reviewed by IBT.

The Community Financial Services Association of America spent over $700,000 on lobbying in the first three quarters of 2017, lobbying the U.S. House and Senate in 2017 on issues including consumer financial protection, short-term lending, payday advance loans, Operation Choke Point — an Obama-era Justice Department program to investigate banks’ business with fraud-prone industries such as payday lending, rules by the CFPB, and a House resolution against a CFPB rule barring financial firms from preventing their customers from joining class-action lawsuits.

The Online Lenders Alliance has spent $840,000 on lobbying so far this year, speaking with Congress and the Executive Office of the President about FinTech, Dodd-Frank and Operation Chokepoint, “CFPB regulations on short-term lending,” and bills from past sessions relating to lending regulation. The groups lobbying on Dodd-Frank implementation don’t specify the particular provision in question, but their lobbying likely has to do with the provision in the House’s Financial Choice Act hobbling the CFPB and other CFPB-related issues.

In 2017, the Online Lenders Alliance has spent over $112,000 lobbying Congress and the CFPB onDodd-Frank, small-dollar lending, and a previous consumer credit bill.

Individual companies that have donated to the sponsors of Warner’s Senate bill are also lobbying directly on the same issues. ACE Cash Express, which donated $2,500 to Toomey in the 2016 election cycle, reported spending $460,000 this year to lobby Congress on the House’s Financial Institution Customer Protection Act of 2017 as well a 2018 financial services appropriation bill and other matters.

Elevate has spent over $1.1 million to lobby Congress since late 2013 on credit issues. The company has lobbied on Dodd-Frank implementation, Operation Choke Point, 2014 legislation relating to online lending charters, and CFPB regulations on short-term lending.

Bill sponsors said that they always consult with lobbyists on both sides of an issue. “Our staff meets with a wide range of constituents, groups and advocates, including some who support this bill, and some who oppose it,” said a Warner spokesperson. Meeks said much the same thing to IBT. “As a Senior Member of the House Financial Services Committee, I naturally interact with every stakeholder that has an interest in the bills before the Committee including their opponents and proponents.”

“Yeah, I have met with a lobbyist from just about every financial services stakeholder,” said Gard, Moore’s chief of staff, who has worked in government affairs for the National Association of Bond Lawyers and was previously a broker for online investment firm TD Ameritrade. “I have an open door for anyone so there can never be a question about impropriety. The meetings did not affect the drafting of bill; the congresswoman was added to the bill after drafting.”

While the payday lending bill’s sponsors say they aren’t influenced by campaign donations or lobbying, the people affected by payday lending laws have been clear: voters in several states have approved measures that impose interest rate caps on short-terms loans. [MORE]