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Battlelines: The Politicians Who Are With the Payday Loan Industry

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As much as money can talk nowadays, politicians are ultimately the ones with the power to implement and change policy, and incentivising their decision-making with money is an integral part of America’s current political system. This practice of donating money to our elected representatives is known as “lobbying.”

One of the industries that is both a donor of campaign funds and majorly impacted by policy change is the payday loan industry.

Just as other industries have found or lobbied many politicians sympathetic to their needs, so too has the payday loan industry gathered its own militia of willing political soldiers in the Payday Loan War. (While not a member of the payday loan industry, loans.org’s application can match you to a payday loan lender if you’re looking for an instant loan)

Here is a list of politicians who received money from the payday loan industry in the 2013-2014 election cycle according to the Center for Responsive Politics:

Politician

Position

Payday Loan Industry Campaign Donation Amount

Jeb Hensarling (R-TX)

Representative in the US House of Representatives

$22,500

Kevin Yoder (R-KS)

Representative in the US House of Representatives

$17,700

Ann L Wagner (R-MO)

Representative in the US House of Representatives

$13,500

Shelley Moore Capito (R-WV)

Representative in the US House of Representatives

$12,500

Steve Stivers (R-OH)

Representative in the US House of Representatives

$12,500

Lynn Jenkins (R-KS)

Representative in the US House of Representatives

$11,600

Tim Scott (R-SC)

Senator

$11,000

Tom Cole (R-OK)

Representative in the US House of Representatives

$10,400

Patrick E Murphy (D-FL)

Representative in the US House of Representatives

$10,000

Patrick McHenry (R-NC)

Representative in the US House of Representatives

$7,500

Mick Mulvaney (R-SC)

Representative in the US House of Representatives

$7,500

Lamar Alexander (R-TN)

Senator

$5,200

Mike Crapo (R-ID)

Senator

$5,000

John Carney (D-DE)

Representative in the US House of Representatives

$5,000

Trey Gowdy (R-SC)

Representative in the US House of Representatives

$5,000

Kevin McCarthy (R-CA)

Representative in the US House of Representatives

$5,000

Marlin Stutzman (R-IN)

Representative in the US House of Representatives

$5,000

Peter Roskam (R-IL)

Representative in the US House of Representatives

$3,500

Pete Sessions (R-TX)

Representative in the US House of Representatives

$3,500

Mark Pryor (D-AR)

Senator

$3,000

Steve Fincher (R-TN)

Representative in the US House of Representatives

$3,000

Lindsey Graham (R-SC)

Senator

$3,000

Vicky Hartzler (R-MO)

Representative in the US House of Representatives

$2,600

Jack Kingston (R-GA)

Representative in the US House of Representatives

$2,600

Mitch McConnell (R-KY)

Senator

$2,500

Kay R Hagan (D-NC)

Senator

$2,500

Joe Donnelly (D-IN)

Senator

$2,500

Andy Barr (R-KY)

Representative in the US House of Representatives

$2,500

Eric Cantor (R-VA)

Representative in the US House of Representatives

$2,500

Jason Chaffetz(R-UT)

Representative in the US House of Representatives

$2,500

Tom Cotton (R-AR)

Representative in the US House of Representatives

$2,500

Scott Desjarlais (R-TN)

Representative in the US House of Representatives

$2,500

Michael G Fitzpatrick (R-PA)

Representative in the US House of Representatives

$2,500

Michael Grimm (R-NY)

Representative in the US House of Representatives

$2,500

Robert Hurt (R-VA)

Representative in the US House of Representatives

$2,500

Carolyn B Maloney (D-NY)

Representative in the US House of Representatives

$2,500

Jason Smith (R-MO)

Representative in the US House of Representatives

$2,500

Lee Terry (R-NE)

Representative in the US House of Representatives

$2,500

Adam Kinzinger (R-IL)

Representative in the US House of Representatives

$2,250

Dean Heller (R-NV)

Senator

$2,000

Robert B Aderholt (R-AL)

Representative in the US House of Representatives

$2,000

Marsha Blackburn (R-TN)

Representative in the US House of Representatives

$2,000

Billy Long (R-MO)

Representative in the US House of Representatives

$2,000

Joseph Crowley (D-NY)

Representative in the US House of Representatives

$1,500

Mark Pocan (D-WI)

Representative in the US House of Representatives

$1,500

Ted Cruz (R-TX)

Senator

$1,000

William L Clay Jr (D-MO)

Representative in the US House of Representatives

$1,000

Jim Costa (D-CA)

Representative in the US House of Representatives

$1,000

Dennis Heck (D-WA)

Representative in the US House of Representatives

$1,000

Carolyn McCarthy (D-NY)

Representative in the US House of Representatives

$1,000

Edwin G Perlmutter (D-CO)

Representative in the US House of Representatives

$1,000

Mike Pompeo (R-KS)

Representative in the US House of Representatives

$1,000

Nick Rahall (D-WV)

Representative in the US House of Representatives

$1,000

Mark Sanford (R-SC)

Representative in the US House of Representatives

$1,000

Aaron Schock (R-IL)

Representative in the US House of Representatives

$1,000

David Scott (D-GA)

Representative in the US House of Representatives

$1,000

Albio Sires (D-NJ)

Representative in the US House of Representatives

$1,000

Adrian Smith (R-NE)

Representative in the US House of Representatives

$1,000

Mac Thornberry (R-TX)

Representative in the US House of Representatives

$1,000

Ed Whitfield (R-KY)

Representative in the US House of Representatives

$1,000

Roger Williams (R-TX)

Representative in the US House of Representatives

$1,000

Kay Granger (R-TX)

Representative in the US House of Representatives

$500

Tim Murphy (R-PA)

Representative in the US House of Representatives

$500

Scott Rigell (R-VA)

Representative in the US House of Representatives

$250

As the data shows, 54 Congressional Representatives in the House received the bulk of funds from the payday loan industry compared to just ten Senators. This spread is likely due to the fact that there are more Congressional Representatives than Senators since the attention both branches received is close to proportional.

In order to offer some numbers for clarity, 10 percent of the entire Senate (which has a total of 100 Senators) received campaign donations from the payday loan industry, while a close 12.4 percent of the House (which has a total of 435 Representatives) received funds from the industry.

Exactly 75 percent of the politicians are Republicans while the remaining 25 percent are Democrats. In total donation amounts per party, Democrats received $36,500 while Republicans received $209,600.

Pundits and commonplace viewpoints tend to cast Democrats as usually supporting welfare and social safety programs, and is often touted as the party in favor of the redistribution of wealth. Republicans tend to be cast as socially conservative, yet also in favor of creating a business-friendly economy.

While there is no doubt a large degree of disagreement over what each political party really wants, does, or stands for, it is very clear that the payday loan industry overwhelmingly gives campaign contributions to the Republican Party.

At a glance, the above chart may seem to show that a high fraction of total Senators and Congressional Representatives are “in the pockets” of the payday loan industry, but it is important to keep in mind that there are numerous other industries also donating to these same politicians. As these different industries vie for influencing candidates, so too does public opinion and other politicians in the two major political parties.

In total, the payday loan industry is hardly a behemoth throwing its weight around in the political arena. If it were such a mighty beast, then every state in the Union would be permitting payday loans within their respective borders, as opposed to the many states that currently ban or limit payday loans today. What the industry has paid for in these donations is not the right to dictate policy, as many would imagine, but rather the right to access politicians in positions of power.

Campaign Donations for Access

Dan Greenberg, President of the Advance Arkansas Institute and former member of the Arkansas House of Representatives, said that the reality of lobbying and special interest donations is that money is being exchanged for access, not policy making power.

“Those who receive donations only have a finite amount of time, and when time is scarce, I think whether donations have been made can be a factor in who legislators and other decision makers will meet with and listen to,” he said.

Greenberg explained that donations tend to track incumbency more than just about any other factor. Candidates who aren’t likely to get a large number of industry donations are also unlikely to win. Also, if a candidate has won in the past, he or she is in the best position to receive donations.

In Greenberg’s view, lobbying is far from “legal corruption” under another name.

“I don’t think that candidates are bought by donations or lobbyists,” he said. “If they could be bought, you’d see a lot more donations. As a general matter, district composition, party alignment, and general philosophical disposition are much better predictors of votes than campaign donations.”

Greenberg’s analysis is accurate, at least as far as the going value of the dollar is concerned.

Combined, the Democrats and Republicans who received donations from the payday loan industry only received a warchest totaling $246,100. That’s not even a quarter of a million dollars in a time when a million dollars is not what it used to be.

Despite this relatively small amount of money (in terms of industry budgets), lobbying and donations are still very powerful in the world of politics.

The Power of Lobbying and Donations

Dave Wakeman, Principal for Wakeman Consulting Group, works with campaign finance almost daily and in different states across the country.

“I think that lobbying can be very effective,” he said. “In the case of payday lending, I believe that the finance industry can definitely stop the industry from being put out of business.”

Wakeman foresees the possibility of traditional banks and investment banks putting their financial strength behind lobbying in support of payday lending. This is because success against payday lenders could lend strength to consumer advocates who push for change against credit card issuers that charge in excess of 29 percent interest.

“If Democrats, the CFPB, and consumer advocates can successfully roll back the interest rates of payday lenders, that could give fuel to efforts to apply even stricter controls on credit cards, banking fees, and other areas of finance,” said Wakeman. “Finally, I believe most of the banks probably see any effort to restrict finance practices as a bad step and a slippery slope, so I am sure that they will want to help ensure that even this area of lending and finance remains as untouched as possible.”

In effect, by helping to defeat consumer advocates time and time again, banks sleep peacefully knowing that they cannot focus on the next inevitable target after payday loans: credit cards. Fortunately for banks, the payday loan industry, while much smaller than banks, is hardly a collection of cash-strapped businesses.

“The payday loan industry uses campaign finance not just to defeat legislation, but also to maintain the status quo,” said Wakeman. “In 2012, the payday lending industry set records for the amount of money they invested in candidates that would maintain the status quo or defeat efforts to change the status quo.”

Aside from the federal level, lenders have the ability to lobby legislatures at the state level and still get results. Many states and cities have used direct or roundabout ways to ban payday lenders and should expect an equal response from lenders who simply focus on winning in state Senates and Houses.

“We may see a big push by payday lenders to give more campaign dollars to state and local level candidates because of the divided government at the federal level is likely to continue after the 2014 elections,” said Wakeman.

Existing campaign finance laws allow industries to exercise influence on policy making. This is a prime reason why payday industry lending campaigns are focused on the House Financial Services Committee and ranking members of the Senate Banking Committee.

“By bundling donations to a particular politician, the groups can gain a favorable ear,” said Wakeman. “So I think the key in their lobbying efforts is to focus their lobbying in a few, high leverage spots, especially committee chairs and ranking members that can kill or make sure to fight to keep out language or rules that would be bad for the industry.”

Wakeman’s statement is spot on.

Jeb Hensarling, the winner of the trophy for most payday loan donations, also happens to be Chairman of the House Committee on Financial Services.

Mike Crapo, who received $5,000 in campaign donations from the payday loan industry, is the Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs.

While these two politicians are not entirely in control of financial policy decisions, they do sit on two very powerful political bodies that have the power to shape the fate of the payday loan industry and its consumers.

The data researched in this article is not intended to cast any one party in a negative light, or even any one politician in a negative light. Nor is it intended to show the supposed evils of the payday loan industry. Rather, it effectively shows that the payday loan industry is leaning towards giving donations to the Republican Party at a time when support for a Democratic Presidency is falling. Hopefully consumers can recognize the influence that campaign donations play in politics by reading the chart above and, in turn, better learn how and why the battlelines in the ongoing Payday Loan War are stocked with eager, and influential, politicians.