But the lenders aren't going down without an extremely well funded fight.
So far, payday lenders have contributed at least $1.32 million to federal candidates this election cycle, according to the watchdog group Citizens for Responsibility and Ethics in Washington. That puts the lenders on track to break their own record for federal campaign contributions.
And the top three beneficiaries of this largesse? They're all Republican lawmakers in a position to make key decisions about consumer finance.
Representative Jeb Hensarling, vice chair of the House Financial Services Committee, has gotten $36,500 in payday-lender contributions to date, according to CREW. Senator Richard Shelby, ranking member of the Senate Banking, Housing, and Urban Affairs Committee, has received $32,000. And Rep. Spencer Bachus, who chairs the House Financial Services Committee, has taken in $29,000 so far.
The past few years have been good to payday lenders. Mass layoffs and flat wages have contributed to a climate where millions of Americans are struggling to make ends meet. As a result, more and more people have gone looking for stopgap loans, even though it often leads to a cycle of debt that ends in bankruptcy. As of 2010, payday lending in the U.S. was a $42 billion industry.
But there's been a pushback. The Consumer Financial Protection Bureau has pledged to crack down on abusive lending practices. Other regulators have joined in, like the Federal Trade Commission, which is growing less tolerant of payday loan operations that affiliate themselves with Native American tribes in order to sidestep U.S. law. And communities like Birmingham, Alabama are holding public meetings to explore alternatives to loan shops.Given the renewed, unfriendly focus on payday lenders in Washington, then, it makes sense that the industry would step up its campaign contribution efforts. After all, reaching out to politicians is a method that often seems to work, whether it's corporations looking for a lower tax rate or banking advocates hoping to water down financial regulatory legislation.