By Marcus Stern
Roderick Aycox is not nearly as well known as some of the hedge fund managers and Wall Street financiers giving large checks to the super-PAC supporting Mitt Romney in his quest for the presidency. In fact, since such PACs are officially independent of their candidates, Romney might well know nothing about him.
Aycox's company, Select Management Resources, of Alpharetta, Georgia, is just one of the 120 entitles that by the end of January had written checks for $100,000 or more to the pro- Romney PAC Restore Our Future, according to Federal Election Commission records.
The company's anodyne name gives no hint that Select Management Resources is in the business of title-lending, a controversial practice in which a vehicle owner, usually in dire need of cash, turns over title to a vehicle in exchange for a loan at a high interest rate.
Twenty-nine states cap interest rates at about 36 percent, but in the other 21, according to the non-partisan Center for Responsible Lending, the average annual rate for such loans is about 300 percent.
Given interest rates of 300 percent or higher, it is no wonder that as Aycox's business expanded from state to state during the 1990s, it ran into political headwinds. Thus the need for support in local statehouses.
Romney is far from the only politician to receive support from Aycox.
Since he launched his business in the small town of Jonesboro, Georgia, 22 years ago, Aycox has become a national leader in title-lending. He and close associates have also given almost $1 million in campaign contributions to state lawmakers and more than half a million dollars to federal lawmakers and political groups, contributor databases show.
That is in addition to the more than $1 million he has spent in the last four years to lobby Congress on legislation directly affecting his business activities, according to federal lobbying records.
Much of Aycox's political giving has occurred when and where legislative battles were taking place over reining in the triple-digit interest rates many of his loan outlets charge.
Aycox and officials with Restore Our Future declined to be interviewed for this article, and the Romney campaign did not respond to inquiries.
In 1990, after struggling as a used-car salesman, Aycox scraped together enough money to rent a storefront and begin giving out loans that required nothing more than a clear title as collateral. He quickly expanded to hundreds of outlets in more than a dozen states. Today, he operates stores under a variety of names, including Atlanta Title Loans, in the Atlanta area. But the best known is LoanMax, whose website promises customers: "In 20 minutes or less drive away with your cash in hand!" ()
Title loans, sometimes referred to as title pawn, are kith and kin to the better known and more ubiquitous payday loan. Both involve high interest rates and balloon payments and are used mostly by people without other credit options.
Their defenders say they are often the only source of emergency cash available to low-income borrowers.
To get a title loan, a borrower authorizes the lender to repossess the vehicle and sell it at auction if the borrower misses a payment. He then hands over a spare set of keys and a copy of the vehicle title in return for cash.
Last year, the title loan industry gave out 1.4 million loans valued at an estimated $9.9 billion, generating $2.5 billion in interest fees, according to a yet-to-be released report by the Center for Responsible Lending, a non-profit group that advocates tighter controls over the payday and title-lending practices.
In October 1994, a tow truck driver shot and killed a borrower while repossessing a car for Aycox's firm. The incident resulted in a private financial settlement with the borrower's widow, according to court records.
To be sure, extreme adverse consequences like that are rare. But it is not uncommon for a struggling family to end up deeper in debt or losing its most important economic asset, said the Center's Uriah King.
"The fact that you're risking your car means that families will have to prioritize that payment over all others," said King, an expert on what some call the fringe finance industry.
"In the real world, particularly people on the edges, you strategically slow pay. You strategically pay some debts quicker than others. You strategically buy food before you pay the rent on time.
"Car title-lending takes that away," said King. "With car title loans, that payment becomes all important."
Todd Zywicki, a law professor at George Mason University, disagreed, saying the risks of title loans are well known to borrowers. He cites an industry-backed study that found more than 70 percent of people who take out title loans have more than one car.
Aycox has played a leading role in the industry's battle against efforts to cap interest rates on title loans. He, his business and his close relatives have given $995,291 in political contributions to state lawmakers since 2004, according to data compiled by the National Institute on Money in State Politics, a non-profit, non-partisan group that maintains a database on campaign contributions at the state level.
For instance, as Texas lawmakers last year debated legislation directly affecting Aycox's business activities in the state, he and his wife gave 23 contributions totaling $60,800 to Texas lawmakers, according to the database.
Aycox gave $25,000 to Joe Straus, speaker of the House, and he and his wife, Leslie, each gave $7,500 to Republican state Rep. Todd Hunter. Hunter chairs the committee that oversees the movement of legislation through the House.
In Texas, there are no limits on how much someone can contribute to the campaign of a state politician.
The Texas legislature eventually enacted legislation requiring tighter scrutiny of and transparency by title and payday lenders. But it set aside another bill that would have capped the triple-digit loan rates those lenders could charge.
A spokesman for Straus said the speaker "expects that anyone who donates to him does so because of his leadership and hard work."
Hunter, the committee chairman, told Reuters that the debate last year featured "a lot of lobbying on all sides of this issue. This was a pretty good tug of war." But he said the Aycox contributions did not influence him. "Absolutely not."
Aycox has been active on the federal level, too, in addition to his backing of Romney's current campaign.
On top of his $200,000 in contributions to Restore Our Future, he and his close relatives have given $402,100 to federal candidates and political parties dating back to 1996, according to data compiled by the non-partisan campaign finance research center Open Secrets.
Four years ago, Aycox spread his contributions among the 2008 presidential candidates, giving to Republicans John McCain and Romney as well as Democrats Hillary Clinton and Barack Obama. But those checks were limited to $2,300 by federal campaign laws.
On the state level, many of Aycox's individual contributions have been even smaller, often just a few hundred dollars.
But the 2010 Supreme Court case known as Citizens United allowed Aycox to super-size his federal campaign contributions as he pursues his struggle to avoid strict state and federal caps on title loan interest rates.
Aycox is not the only player among high-interest lenders to make substantial contributions in this campaign cycle.
A company called RTTA LLC wrote Restore Our Future a check for $75,000, according to Federal Election Commission records. That company is registered to a prominent payday lender named Jon Todd Rawle, who has payday lending outlets in many states.
Rawle did not respond to an inquiry, but he and Aycox share a common concern: Will the new federal Consumer Financial Protection Bureau clamp down on their activities?
A Bureau spokeswoman had no comment.
According to the federal lobbying disclosure database, Aycox's company has paid two Washington firms, SNR Denton and McGuireWoods Consulting, almost $1.3 million since 2008 to lobby on federal consumer credit matters, including the Dodd-Frank bill that created the consumer protection bureau.
Romney has criticized creation of the bureau and pledged to repeal the Dodd-Frank law, as have the other major Republican presidential candidates.
Copyright 2012 Thomson Reuters. Click for Restrictions.
SUBSCRIBE AND FOLLOW
Get top stories and blog posts emailed to me each day. Newsletters may offer personalized content or advertisements.Learn more