In Stealth Lobbying Move, Wall Street Coordinates With Check-Cashers, Payday Lenders To Gut CFPB

WASHINGTON -- Wall Street banks are deploying little-known lobbying organizations who represent companies like Pizza Hut and Radio Shack in a new push to hamstring the Consumer Financial Protection Bureau. It's a tactic that bankers used repeatedly during last year's legislative debate over financial reform-- by rolling out airlines and butchers to warn about regulation, megabanks could lobby against the overhaul without tainting the public relations effort with their own unpopular brands. But now, for the first time, banks are using obscure lobby groups in order to team up with payday lenders, check-cashing agencies and other financial firms that target the poor-- and presenting the blitz as the work of a broad, non-financial business coalition.

During a Tuesday conference call organized by the Chamber, coalitions ostensibly comprised of companies outside the financial sector argued that the nascent federal Consumer Financial Protection Bureau will hurt their bottom lines. But while those groups, the International Franchise Association and the Manufactured Housing Institute, include payday lenders, check-cashing agencies and mortgage lenders-- exactly the kinds of firms the CFPB is designed to regulate.

Financial services or consumer lending firms are also part of at least nine of the other ten organizations that signed off on a Tuesday letter to Congress decrying what they called the CFPB's combination of "extremely broad rulemaking authority with an unusual absence of meaningful checks on the exercise of that authority."

This is not the first time Wall Street has asked The Chamber to block bank regulations by rolling out companies with a better public image than bailed-out financiers. Last year, the Chamber helped organize the Coalition for Derivatives End-Users to help lobby against reforms to the financial products that helped bring down insurance giant AIG, and ran ads featuring local butchers warning about the supposed dangers of consumer financial protection.

During Tuesday's conference call, Jason Straczewski of the International Franchise Association and Thayer Long from the Manufactured Housing Institute argued that too much consumer protection would restrict critical access to credit during a recession.

Restricting access to predatory or deceptive credit offers, of course, is one principal goal of consumer-protection regulation. When asked by HuffPost whether the IFA represented any check-cashing agencies or payday lenders, Straczewski said he didn't know. But according to the group's website, the IFA represents dozens of franchises that provide financial services, including some of the services most often flagged as predatory by consumer advocates.

Banks typically avoid being associated with payday lenders and other financial firms that target the poor out of fears that such alliances will create a "reputation risk" for banks. But with Tuesday's Chamber effort, they are teaming up with many of those very firms.

Check-cashing agencies charge high fees to cash checks in the absence of a bank account, and two major such franchises belong to the IFA -- Mr. Payroll and United Check Cashing. The latter company also offers payday loans, as does another IFA member, CashAmerica.

The IFA also includes a host of tax-preparation services which are frequently cited by both consumer groups and federal regulators for issuing tax refund anticipation loans -- short-term, high-interest loans from which issuing companies take a slice of tax refunds. Liberty Tax Service, H&R Block, ATAX Tax Preparation Services, Eagle Tax Services Group, Ronni Deutsch Tax Center, Tax Centers of America and Smart Tax are all IFA members.

During Tuesday's call, the Manufactured Housing Institute created the impression that it works on behalf of mobile home producers, but in fact, the group represents just about any firm connected with the mobile home business, including mortgage companies and other lenders. Subsidiaries of Wells Fargo and U.S. Bank are both MHI members, along with American Land Lease, 21st Mortgage, Clayton Bank and Trust, CIS Financial Services, CU Factory Built Lending, Land/Home Financial Services and Origen Financial Services.

Banks send out high volumes of junk mail, and as a result, several banks and credit card firms are members of the Direct Marketing Association, one signatory to the Chamber letter. The Association of Settlement Companies, another signatory, is a lobby group for debt collectors. Yet another signatory, The Center for Association Leadership, is a lobby group for trade groups -- other lobbying organizations.

Comments

[robert petersen]

01:15 AM on 03/08/2011

we here in Montana just set a limit on check-cashing pay day lenders who are all screaming bloody murder. So far the only thing that has changed is that the poor are just a bit less poor although a bit annoyed because they may have to do without the TV while it's in the pawn shop now. Now if we could just figure out how to get more people to switch to Credit Unions instead of banksters.

[upthecrik]

03:05 AM on 03/09/2011

From another Montanan....amen brother, especially on the credit union bit. I've been posting that piece of advice everywhere I can. Pull your money from the banks! You have options!

[kokobell616]

06:51 AM on 03/03/2011

The corporate greed in this country knows no boundaries. For payday loans up to 500% if allowed for a whole year. They get away with this because its 'only intended to be a short term loan'. Predatory lending not at all. As they say 'Our customers have unique demands not currently met by traditional banking institutions'. I am unable to find out what the most cashed check is. They say payroll and Government checks. I wonder if they are another business model that feasts on the Governments entrails. Federal and State Governments might want to take a look at the expense of keeping these and other bottom feeders like them in business.

[chappelforpres]

01:03 AM on 03/03/2011

Wall Street is a growing pariah, whose influence must be curbed. The government's (and specifically the Obama Administration's) failure to publicly expose, condemn and lock horns with the banksters, speaks volumes about the levels of corruption throughout.

[Smackum Yackum]

01:12 PM on 03/02/2011

The lobbying connection is at best coincidental. If anything, the big Wall Street banks are "backing" these small lenders by essentially hiding behind them, as payday loans and check cashing bear a disproportionate brunt of focus from finance reform. As the media and the CFPB increasingly define "consumer protection" as cracking down on payday lenders and check cashers, attention and resources are diverted away from holding the too big to fail banks accountable.

[CheckMyARMonline]

07:08 PM on 03/01/2011

Completely typical for the mega-banks. They get slapped with the lightest of regulations, and now they want to gut the agency which will watch over them while protecting consumers for gross abuse. America and the US government are now completely owned by the mega banks, oil companies and the Koch brothers.

[mansterEZ]

05:39 PM on 03/01/2011

The money changers and fraudsters don't want the gravy train to ever end. What will Montel Williams do now? This payday loan thing is a really big scam.

[alafonse]

05:30 PM on 03/01/2011

Indeed, it seems like lies have become the new truth.
Where did ethics and morals go? I don't think I've seen them since they whizzed by me sometime back in the 1980's....

[BBROWN69]

04:42 PM on 03/01/2011

Just another example of the Money Grabbers trying to keep the Gravy Train on the tracks. This is one of the biggest rip-offs ever. It affects the people most who can least afford it.

[only livin boy in NY]

04:33 PM on 03/01/2011

shockin!!! how soon will O fold