The Abusive Payday Loan Gang Loves Trump’s Consumer Protection Bureau Pick
Mick Mulvaney, Trump’s pick to temporarily lead the federal agency tasked with preventing banks and other financial institutions from shafting us, collected $55,000 in campaign contributions as a congressman from the payday-loan industry, notorious for its Tony Soprano-style triple-digit interest rates.
He’s now in a position to pay back the legal loan sharks.
The Consumer Financial Protection Bureau published regulations in October to prevent the worst of the excesses of the payday-loan industry. Those regulations are scheduled to take effect in mid-2019, which means Mulvaney could delay or water down the regulations much as Scott Pruitt has done with environmental safeguards.
“I share your understanding that small-dollar lending serves an important function for many borrowers, especially those who may not utilize traditional banking services, and hope the bureau will work to ensure the continued viability and availability of these products,” Mulvaney said in 2014 at a House hearing on payday lenders.
Our nation has more payday loan stores than McDonald’s restaurants—nearly 18,000. They make about $46 billion in loans each year and collect more than $7 billion in fees.
Most borrowers pay more in fees than they received in the original loan. Researchers estimate that about 12 million people, many who can’t get other credit, borrow from payday lenders each year.
The regulations could put many of those lenders out of business by requiring them to limit how much often-desperate customers can borrow and to evaluate whether customers could repay the loans instead of paying escalating interest and fees.
The average payday interest rate in Wisconsin is a Mafia-style 574%. In Michigan, the average legally extortionist rate is 369%. In Missouri, it’s 443%.
“The potential costs and damage to customers are significant, especially for borrowers of color, as research shows that payday lenders disproportionately target communities of color and trap consumers in unsustainable cycles of borrowing and reborrowing high-cost loans,” said Vanita Gupta, the president and CEO of The Leadership Conference on Civil and Human Rights.
Mulvaney’s former district in South Carolina is not far from the national headquarters in Spartanburg, S.C., of Advance America, the biggest chain of payday lenders.
A former attorney for a payday lender, Steven Engel, wrote the memo for Trump’s Justice Department to bolster its case that Mulvaney should be the acting director of the bureau instead of the deputy director appointed by the former director, Richard Cordray.
The deputy director, Leandra English, went to court to try to block Mulvaney from taking the job, but a Trump-appointed judge backed Mulvaney in the first round of what could be a drawn-out court battle.
Now Mulvaney, who once called the bureau a “sick, sad” joke, is charged with enforcing federal regulations to protect the most vulnerable among us.