TPM: High-Living Pay-Day Lender CEO Tied to Bid to Weaken Financial Reform

[flpoljunkie]

High-Living Pay-Day Lender CEO Tied To Bid To Weaken Financial Reform
Zachary Roth

March 10, 2010

In the wake of the biggest financial crisis since the Great Depression, a high-living, politically connected Tennessee businessman who made a fortune by lending money to the poor at sky-high interest rates has ties to a successful effort to water down financial regulatory reform.

Meet W. Allan Jones, who in 1993 founded Check Into Cash, a pay-day lending chain that says it now has 1,100 stores in 30 states. The company offers short-term loans designed to tide customers over until their next paycheck. But the interest rates can be as much as 400 percent on an annualized basis, meaning that they lead many borrowers to end up digging themselves deeper into debt.

Lately, Congress has been mulling how to structure a new Consumer Financial Protection Agency (CFPA), so as to avoid a repeat of the financial crisis. And reform advocates have argued that increased regulation of pay-day lenders is an essential piece of the puzzle. But after lobbying by an industry group that Jones helped establish, Sen. Bob Corker (R-TN) acted to thwart the new agency's ability to effectively monitor Jones's industry.

As Harper's noted in a story on the pay-day lender industry last year entitled "Usury Country," "a payday loan essentially becomes a lien against your life, entitling the creditor to a share of your future earnings indefinitely."

"It's the craziest business," Jones told a reporter in 2008. "Consumers love us, but consumer groups hate us."

more...

http://tpmmuckraker.talkingpointsmemo.com/2010/03/high-living_pay-day_lender_ceo_tied_bid_to_weaken.php?ref=fpa

[cutlassmama]

1. Of course. They make $$$ off poor people

[mod mom]

2. This calls for an investigation of Sen Corker:

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There, Corker reportedly has weakened the section of the major financial regulatory reform bill that deals with pay-day lenders. Thanks to Corker, who sits on the Senate Banking committee, the new CFPA will have to get permission from a body of regulators in order to enforce rules against payday lenders and other non-bank financial companies -- a step that consumer groups say will significantly hamstring the agency's ability to crack down on predatory lending practices.

Corker's intervention came after intense lobbying from the Community Financial Services Association (CFSA), a trade group of pay-day lenders created in 1999 by Jones and others in the industry. In the last three months of 2009, CFSA spent $500,000 lobbying Congress on the financial regulatory reform and other issues affecting regulation of the pay-day loan industry, according to disclosure records examined by TPMmuckraker. (One of the top Washington lobbyists hired by CFSA, Wright Andrews of Butera & Andrews, was also the prime lobbyist for the sub-prime mortgage industry earlier this decade.)

Jones is a longtime backer of Corker -- as well as of several other lawmakers, from both parties, on the Banking committee. Since 2001, Jones, his relatives, and his employees, have contributed $31,000 to the campaigns of Corker, a former Chattanooga mayor, according to the New York Times.

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http://tpmmuckraker.talkingpointsmemo.com/2010/03/high-living_pay-day_lender_ceo_tied_bid_to_weaken.php?ref=fpa