This is part two of a five part series.
When political candidates spend their time begging for cash from wealthy interests and legislating to prioritize private profits over the public good, regular people lose out. The corporations and superrich donors that dominate our elections have an outsized influence over who wins, what gets discussed in campaigns and what legislative ideas receive serious consideration.
The sweeping legislative package known as the For the People Act (H.R. 1) contains ethics, campaign finance and voting rights reforms that are essential to make our government work effectively and fairly.
To illustrate the need for reforms that reduce corporate influence and redistribute power to the people, Public Citizen compiled stories of five regular Americans whose lives have been impacted by corporate political power.
Corporate Power Spotlight: Payday Lending
“What seems initially like help turns out to be nothing but hurt.”
– Wayne Wright, 59, Jacksonville
Starting about a decade ago, Wayne Wright, 59, of Jacksonville, Fla., started using payday loans. He had already drained his savings and destroyed his credit score after being laid off from a computer programming job.
Wright was raising two teenagers on a single income and had switched careers, but there were times when money wasn’t lasting from one month to the next. “I had more month than I had money,” he said.
Wright, who was living in Nashville, Tenn. at the time, took out loans from storefront and internet lenders to make it from one month to the next, but quickly found himself stuck in a debt trap, repeatedly borrowing money to pay back the last loan, plus fees.
“What seems initially like help turns out to be nothing but hurt,” Wright said. “Unless something happens in your life to break that cycle, you’re stuck.”
These days, Wright works as a home health care nurse in Florida and is on far more solid ground financially. He was able to get out of the payday loan cycle after his sister loaned him $2,600 and let him pay back that money gradually.
“It took outside intervention to help me totally just get free from them and then I never got another,” Wright said.
Though he hasn’t taken out a payday loan since 2015, Wright said he’s still getting calls from online lenders aggressively pushing out loans with lines like “your first one can be free” and “you have a good record with us.”
Payday lenders, which often target low-income borrowers, are effectively banned in states that with firm caps on the interest rate that lenders can charge borrowers.
But this kind of lending remains legal in much of the country.
Wright believes there should be limits on the number of times borrowers can renew payday loans, which typically last two weeks.
Once that limit is reached, the loan can be converted into a loan that can be paid off in a fixed number of installments rather than renewed in perpetuity.
His advice to people who are considering taking out payday loans?
“Just don’t. Do whatever you got to do. Sell your couch instead. You can always buy another one.”
CORPORATE INFLUENCE AT WORK
Under Trump, high-rate payday lenders have been hard at work pushing to roll back safeguards for consumers, undoing regulations established during the Obama administration and curtailing investigations of the industry. The payday lending industry’s main trade group has held its annual conference– and a golf tournament – at the Trump National Doral Golf Club near Miami. The Consumer Financial Protection Bureau has proposed to eliminate safeguards for consumers seeking payday or auto title loans that require lenders to assess whether borrowers have the ability to repay their loans. The Washington Post reported that a payday industry lawyer seeking to get rid of regulations on the industry worked closely with an academic researcher to publish a study claiming that taking out repeated loans doesn’t harm borrowers. Though the CFPB spent more than five years of research and study on its payday-lending rules, the bureau has indicated that it may not fully defend the rule against a lawsuit from payday lenders and has done the industry’s bidding by formally proposing to roll back the Obama-era protections that would help people avoid getting caught in cycles of ever-increasing debt.
The payday loan industry has:
- Spent nearly $57 million on lobbying in Washington since 2008.
- Contributed nearly $11.8 million in campaign money to Congress over the past 30 years, with money coming from PACs and individuals tied to the industry.
- Contributed 64 percent to Congressional Republicans and 36 percent to Congressional Democrats.
SOURCE: Center for Responsive Politics.
Republicans and Democrats alike have been recipients of payday industry donations, and have both used their positions of power to benefit the industry. Former Rep. Kevin Yoder (R-Kan.) received nearly $324,000 from individuals and political action committees tied to the industry over his career. Sen. Richard Shelby (R-Ala.), the former chairman of the Senate Banking Committee, has received more than $218,000 in payday contributions. Former Rep. Jeb Hensarling (R-Texas), the former chairman of the House Financial Services Committee, received $202,000. Other notable recipients of payday contributions include Rep. Alcee Hastings (D-Fla.), Rep Steve Stivers (R-Ohio.) Former Rep. Mick Mulvaney, the current acting White House chief of staff and budget director who also served as acting director of the Consumer Financial Protection Bureau, received nearly $63,000 from payday lenders during his congressional races. As acting director of the CFPB, Mulvaney ended multiple investigations into high-cost lenders, including one involving World Acceptance Corp., a lender from which Mulvaney had received campaign donations.