POLITICS
05/24/2017 05:46 am ET

Joe Lieberman Has a Predatory Loan Problem

“It’s pretty unlikely that Joe Lieberman as an FBI director would focus on reining in novel predation of poor people.”

When Joe Lieberman left the Senate in 2012, he pledged, “I’m not going to lobby. For sure.”

But it seems like every politician says that and then does it anyway, right? “Yeah, I know,” he added. “Watch me.”

If you kept watching for just a bit more than one year, you’d have seen Joe Lieberman become a lobbyist.

As is often the case, formally registering as a lobbyist is indicative of more generalized buck-raking. And now that President Donald Trump has said that Lieberman is his top pick to be the new FBI director, that lucrative private-sector work has become a liability.

Most obviously, there is Lieberman’s work as a lawyer at Kasowitz, Benson, Torres & Friedman, a big corporate law firm founded by Trump’s longtime lawyer Marc Kasowitz. Kasowitz is now expected to represent the president in the Russia investigation, The New York Times’ Maggie Haberman reports. Lieberman joined the firm in June 2013, a few months before he registered as a lobbyist, and remains there.

Axios’ Jonathan Swan reported last week that “that connection — which could make it look like Trump is trying to install an ally at the top of the bureau — has become a matter of concern within the White House.” If Kasowitz does represent the president personally, those concerns should multiply, and nominating Lieberman would seem to be a non-starter in the Senate. However, so far in this administration, underestimating the president’s desire to drive stakes into his critics’ hearts ― and Republican senators’ willingness to remain largely supine while he does ― has not made for good betting.

Of course, there’s the issue of Lieberman having worked as a top lawyer at a massive corporate law firm whose bread and butter is representing rich people and corporations. It’s an obvious conflict for a man who might lead the country’s main federal law enforcement agency. But the outrage there is that it’s unlikely it will matter much in the Senate, where corporate lawyering is simply seen as a totally acceptable thing to do after you retire from politics or, indeed, before you run for office.

But Lieberman’s conflict-of-interest problems don’t end there. Since 2014, he has been the chairman of Victory Park Capital, a Chicago-based private equity firm. Victory Park has pumped $4.6 billion in debt and equity investments into companies that lend money outside the normal banking system.

One of those companies was Think Finance, which used companies nominally owned by Native American tribes because their sovereign status let them avoid state laws against predatory lending. Technically, Think Finance was a service provider. In reality, company documents obtained by HuffPost in 2015 from one of those tribal companies, Plain Green, showed that Think Finance provided everything the tribe needed to start and run an online lending business: a database of customers, underwriting software, payment processing, marketing, an offshore loan buyer and legal representation. 

The loans were what the industry prefers to call “installment loans.” They are small loans with extremely high interest rates ― often into the triple digits ― that can trap borrowers in a morass of debt. Unlike payday loans, which traditionally are repaid in a single pay cycle, the payoff time is longer. Plain Green said in 2015 that its minimum repayment cycle is four months.

In 2014, the Pennsylvania attorney general sued Think Finance, claiming the company violated that state’s racketeering, consumer protection and lending laws. The case is pending. In April, the Pennsylvania attorney general asked that Victory Park Capital be added as a defendant and submitted sealed evidence in support of that request. A judge is considering the request.

“I think it’s pretty unlikely that Joe Lieberman as an FBI director would focus on reining in novel predation of poor people,” Jeff Hauser, the director of the Revolving Door Project at the Center for Economic Policy and Research, told HuffPost. Not that there has been any significant FBI focus on financial fraud in recent years, he noted. “Since 9/11, there has been a notable decline in the FBI’s focus on white-collar crime,” he said, and that trend would more than likely continue if Lieberman ran the bureau.

As the lawsuit drags along, the Think Finance executive team has moved on. The company spun out a new entity called Elevate in 2014 that no longer uses tribal entities as a conduit. In 2016, Victory Park loaned Elevate $450 million, and in April, Elevate went public on the New York Stock Exchange. 

While the legal troubles were left sitting with Think Finance, Elevate’s business model is still harmful to consumers. “From what we can tell, Elevate offers a high-cost predatory debt trap product,” the Center for Responsible Lending’s Diane Standaert told HuffPost. “These high-cost, unaffordable loans have devastating consequences for consumers,” putting them at higher risk of falling behind of their bills or having their bank accounts shuttered, she said.

Predatory loans will soon be regulated for the first time by federal rules. And that seems to put the issue right on Lieberman’s plate. When Lieberman joined Victory Park in 2014, the firm’s co-founder Brendan Carroll told The New York Times why the senator joined the firm. Victory Park, Carroll said, “could benefit from Mr. Lieberman’s extensive regulatory expertise.”

The White House and Victory Park Capital declined to comment for this story. Think Finance, Plain Green, Elevate, Kasowitz, Benson, and Lieberman’s office at the firm did not respond to requests for comment.

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