WASHINGTON — In mid-April, hundreds of members of the payday lending industry will head to Florida for their annual retreat featuring golf and networking at a plush resort just outside Miami. The resort just happens to be the Trump National Doral Golf Club.
It will cap a year in which the industry has gone from villain to victor, the result of a concentrated lobbying campaign that has culminated in the Trump administration’s loosening regulatory grip on payday lenders and a far friendlier approach by the industry’s nemesis, the Consumer Financial Protection Bureau.
Gone is Richard Cordray, the consumer bureau’s director and so-called bad cop, who levied fines and brought lawsuits to crack down on usurious business practices by an industry that offers short-term, high-interest loans that critics say trap vulnerable consumers in a feedback loop of debt. In his place is Mick Mulvaney, the White House budget director and a former South Carolina congressman, who was chosen by President Trump to assume temporary control of the bureau and has emerged as something of a white knight for the payday lending industry.
“I think now we’re in a period that is relatively passive,” said Dennis Shaul, the chief executive of the Community Financial Services Association of America, the primary lobbying group for payday lenders. “I think it is advisable for us to largely draw a curtain on the past and try to go forward.”
Two weeks ago, Mr. Mulvaney put the brakes on a contentious rule, ushered in by Mr. Cordray, that was set to impose tight restrictions on short-term payday loans. He ended a case that the bureau initiated last year against a group of payday lenders in Kansas accused of charging interest rates of nearly 1,000 percent. Last week, Mr. Mulvaney scrapped an investigation into the marketing and lending practices of World Acceptance Corporation, a lender based in South Carolina that donated $4,500 to Mr. Mulvaney’s previous congressional campaigns through its political action committee.
According to the Center for Responsive Politics, payday lenders have contributed more than $13 million to members of Congress since 2010, with the majority of that money going to Republicans who have made it a priority to roll back the financial regulations put in place by President Barack Obama after the financial crisis. That includes Mr. Mulvaney, who received nearly $63,000 for his campaigns from payday lending groups.
Mr. Mulvaney said that the donations were not an issue “because I am not in elected office anymore.”
The payday lending industry is cheering Mr. Mulvaney’s approach.
“He seems extremely reasonable,” said W. Allan Jones, a founder of one of the industry’s top lobbying groups who operates about 900 payday lending stores across the country. “He’s figured this thing out that they’ve overstepped their bounds.”
Mr. Jones, the chief executive of the Tennessee-based Check Into Cash chain of payday lenders, has been scaling back his payday loan empire in recent years. He laid off about 300 employees last year, bringing his work force to about 3,000. This year he plans to shutter 100 more stores, despite the changes happening at the consumer bureau, because it remains unclear how far the move to deregulate the industry will go and because state lending laws have become increasingly strict.
The Consumer Financial Protection Bureau, which was born out of the 2010 Dodd-Frank Act, immediately seized on the payday lending industry as one of its first targets, opening a complaint database, initiating investigations, filing lawsuits and formulating rules to prevent lenders from preying on consumers. According to the consumer agency, it has pursued more than 20 public enforcement actions against small-dollar lenders, many of which have resulted in large settlements.
The crackdown has had an effect. According to data from the Center for Financial Services Information, annual payday lending revenue dropped to $5.3 billion in 2017, from $9.2 billion in 2012. The number of payday loan stores dropped from a peak of 24,043 in 2007, to 16,480 in 2015, according to a recent report published by the consumer bureau.
The industry has long been a presence on Capitol Hill, but it spied an opening after Mr. Trump’s election and the Republican takeover of Congress. The industry pushed lawmakers to repeal the consumer bureau’s 2017 payday lending rule by using the Congressional Review Act to essentially kill it. A bipartisan group of lawmakers has sponsored such a resolution, though its viability remains uncertain. Since Mr. Trump’s election, the payday lending lobby has also made its voice heard at the consumer bureau, flooding the agency with comments expressing opposition to the payday rule.
And lenders have poured money into the coffers of influential Republican lawmakers. Lobbying donations peaked in 2012, when the bureau began to make payday lending a priority and have leveled off in the last year. Among the biggest recipients have been Representative Jeb Hensarling of Texas, the Republican chairman of the House Financial Services Committee, and Senator Mike Crapo of Idaho, the Republican chairman of the Senate Banking Committee.
In December, Mr. Hensarling, who has long accused the consumer bureau of overreach, said that “no unelected Washington bureaucrat” should be able to stop Americans from taking out the short-term loan that they wanted.
Payday lenders have also looked for inroads with the president. A lender based in Ohio, Community Choice Financial, was one of the first clients of Corey Lewandowski, Mr. Trump’s first campaign manager, who started a Washington consulting business last year. Over the summer, Mr. Lewandowski called on Mr. Trump in a television interview to fire Mr. Cordray.
In the spring, the industry will spend four days networking at the Trump National Doral Golf Club, which has event spaces like the Donald J. Trump Grand Ballroom and the Ivanka Trump Ballroom. Mr. Shaul said his group began looking at the Trump property as a potential site for its spring meeting well before the 2016 presidential election and ultimately chose it because it was cheaper than other East Coast resorts.
“We began an analysis well ahead of Trump’s election,” Mr. Shaul said, adding that the decision had not been entirely well received by members. “There’s quite a division of people who thought this is not a good thing to do and those who did.”
“We aren’t ashamed of it either,” he said of the decision. “We made it largely on economic terms.”
The payday industry is just one of many groups holding events at Trump properties in the wake of the election. The U.S. Chamber of Commerce is holding an event for “an elite group” of its members at the Trump National Doral in March, according to its website.
To consumer advocates, the defanging of the consumer bureau is the epitome of pay-to-play.
“They aggressively lobby against anything that goes against the debt trap nature of their business model,” said Diane Standaert, the director of state policy at the Center for Responsible Lending. “It’s been fierce.”
Consumer advocates and Democrats say they are worried that the industry’s lobbying will backfire by allowing less reputable payday lenders to prey on the most vulnerable Americans — the exact people Mr. Trump vowed to protect.
“Payday lenders are clearly watching this with bated breath,” said José Alcoff, manager of the Stop the Debt Trap campaign at Americans for Financial Reform. “I think this is clearly a case where the system is getting more and more rigged, where they have, as they say, the fox in charge of the henhouse.”
Watching the transition from afar has also not been easy for Mr. Cordray, who has taken to Twitter of late to express his outrage over the new direction of the bureau. Now a Democratic candidate for governor of Ohio, Mr. Cordray said he was stunned by how swiftly his successor tried to undo the bureau’s work. He warns that Mr. Mulvaney’s actions were misguided.
“I’m surprised to see any efforts aggressively to roll back efforts to rein in payday lending, because we had done extensive research on how these loans lead many people into debt traps that ruin their financial lives,” Mr. Cordray said.
Mr. Cordray remained hopeful that after reviewing the consumer complaint data, Mr. Mulvaney could come to see some of the value in rigorous oversight of payday lenders.
So far, that seems unlikely. In a memo last month to the bureau’s staff, Mr. Mulvaney made clear that he would be shifting the priorities of the agency to take into account the business impact of rules. He cited statistics that showed payday lending represents a sliver of total consumer complaints, signaling that the industry would not be a priority.
Payday lenders and their lobbyists say the industry supports regulation but said the previous approach was stifling lending to people who need help.
“This product is demand driven,” Mr. Shaul said. “It isn’t that people met in the middle of the night to say let’s put together a payday loan and see how it does.”
Mr. Shaul added that the payday lobby was not trying to buy off lawmakers or please the president.
“$65,000 over five or six years for Mulvaney?” he said. “That’s not a hell of a lot of influence on an annual basis.”
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