Consumer Fraud

Watchdog Calls for Investigation Of Congress Members Benefiting From Payday Lending Industry

Payday loan shop window by Gregory F. Maxwell Licensed under GFDL 1.2 via Commons 94x210 Watchdog Calls for Investigation Of Congress Members Benefiting From Payday Lending IndustryThe watchdog organization Campaign for Accountability (CfA) has asked the Office of Congressional Ethics to investigate 11 members of Congress who allegedly accepted financial contributions from the payday lending industry just before, and in some cases right after, taking official actions that benefit the industry but harm the consumer.

Payday lenders are notorious for predatory lending practices that take advantage of low-income individuals and families by charging extremely high interest rates on loans, then compounding the debt by rolling fees and higher interest for late payments into new loans, trapping millions of workers in a cycle of debt from which it is difficult, if not impossible, to break free.

Legislators named in the CfA’s Oct. 5 letter of complaint include: Rep. Stephen Fincher (R-TN), Rep. Scott Garrett (R-NJ), Rep. Alcee Hastings (D-FL), Rep. Jeb Hensarling (R-TX), Rep. Blaine Luetkemeyer (R-MO), Rep.Patrick McHenry (R-NC), Rep. Gregory Meeks (D-NY), Rep. Randy Neugebauer (R-TX), Rep. Pete Sessions (R-TX), Rep. Steve Stivers (R-OH), and Rep. Kevin Yoder (R-KS).

CfA Executive Director Anne Weismann stated, “It seems payday loans taken out by their constituents helped fund big paydays for members of Congress who used their positions to advocate on behalf of this unscrupulous industry.”

CfA’s request for an investigation was prompted by a report published by Allied Progress entitled “Cheaper by the Dozen: How Twelve Members of Congress Were Showered with Campaign Cash by Payday Lenders Just Before and Soon After Taking Official Actions To Benefit The Industry.”

The Sept. 30 report outlines how the vast majority of consumers who use payday lending services become trapped in a cycle of debt, which created $46 billion in profits annually on the backs of the poor. The report also outlines actions taken by the Congress members to aid payday lenders – including sponsoring legislation to limit oversight of the industry – either shortly before or after they received campaign and/or PAC contributions.

CfA alleges this conduct may violate criminal laws regarding bribery, illegal gratuities, and honest services fraud, as well as House rules prohibiting members from engaging in official action in return for campaign contributions.

“The Office of Congressional Ethics should immediately investigate whether these members of Congress were abusing the public trust by carrying the water of the payday lending industry in exchange for contributions,” Ms. Weismann said. “Once again, it appears that the public good has been sacrificed at the altar of high dollar donors. This is exactly the sort of pay-to-play scheme that leaves Americans so disheartened about the state of our government.”

Sources:

Campaign for Accountability
Allied Progress
Righting Injustice