New report: Tillis, McHenry among top recipients of payday lending industry campaign cash

Payday loansPayday lenders (and other short-term lenders) along with their trade associations have spent more than $13 million on lobbying and campaign donations since 2013, according to a new report put out by the Americans for Financial Reform (AFR).

The report is particularly troubling because it comes at a time when the government is finally beginning to crack down on “quick-fix” lenders, who are known for trapping vulnerable cash-strapped borrowers in cycles of debt by charging obscenely high fees in exchange for an immediate payout. The Consumer Financial Protection Bureau is expected to announce a set of rules next year that could bring dramatic changes to the payday lending market. Additionally, the Department of Justice has been zeroing in on banks and payment processors that knowingly facilitate fraud. The only enforcement action brought by the Justice Department in this operation (known as “Operation Choke Point”) so far has been in North Carolina. The Four Oaks Bank & Trust of North Carolina in collaboration with a Texas-based payments company was found to have processed around $2.4 billion in illegal transactions including those benefiting payday lenders.

Lobbying and campaign contributions from short-term lenders and their associates has prompted some lawmakers to push for legislation that would weaken the Consumer Financial Protection Bureau’s efforts and convinced others to question the Department of Justice about the validity of Operation Choke Point.

The top fifty politicians to receive these campaign contributions are listed in the AFR report. Two North Carolina politicians rank in the top fifteen of this list—Patrick McHenry, a Republican Congressman from the 10th district, and none other than our newly elected U.S. Senator, Tom Tillis.

While it’s hard to understand why any of our politicians would want to support a system that traps low-income borrowers in a vicious cycle of debt, it’s not difficult to see why short-term lenders want to stay in business. Currently, there are more payday lenders than McDonald’s in the United States (according to a recent news article). Now, consider that each borrower that visits one of these short-term lenders is paying fees that are the equivalent of between a 300 and 500 percent interest rate. Given the amount of money these companies are making, it is no surprise that they are willing to spend $13 million, if not more, to curry favor with lawmakers in the hopes of continuing with business as usual for as long as possible.


  1. Alex

    December 19, 2014 at 1:10 pm

    I’m wondering where the folks with bad credit can go when they get in a cash crunch. Probably, many of them end up in pawn shops because banks and credit unions won’t even talk to them.

  2. LayintheSmakDown

    December 19, 2014 at 5:38 pm

    Unfortunately this is the main source for borrowed funds if you have little to no money, bad credit, or they do not expect to get their money back. While it may be predatory, they are taking a huge risk. It would be interesting to see what their loss rate is on these types of loans.

  3. david esmay

    December 19, 2014 at 8:20 pm

    How low do you have to stoop to run to the aid of predatory lenders who prey on the poor and military families?

  4. Alex

    December 21, 2014 at 8:42 am

    Easy to criticize David, but I see you offer no alternative !

  5. Deirdre

    December 21, 2014 at 12:17 pm

    This is a sad plight. Even sader knowing that our own government (or state) can stop the gouging. Honestly, I was under the impression this practice was stopped, but this was apparently on the “walk up to the window” type of business. People need to seek credit counseling before they lose the few precious possessions of a car, home, etc.

  6. Alan

    December 21, 2014 at 4:42 pm

    Well said David, the tag-team of Alex and LSD know no limits.

  7. Alex

    December 22, 2014 at 11:35 am

    As usual Alan offers no solutions !

  8. Alex

    December 22, 2014 at 11:35 am

    As usual Alan offers no solutions !

  9. ML

    December 22, 2014 at 9:57 pm

    Make it illegal for them to loan shark. That’s the solution.

  10. LayintheSmakDown

    December 24, 2014 at 5:43 pm

    Making it illegal to loan shark will only make the people go to even more shifty sources. I am not condoning the payday lenders, but people would have no sources for funds. Maybe your solution is to require banks to loan to sub-standard credit risks…..oh we see how well that worked out with the great Clinton recession of 2008.

  11. ML

    December 24, 2014 at 5:53 pm

    Civitas employee:

    First time I’ve heard Clinton recession, that’s cute. The solution is simple ban payday loans. What happens next can be fixed as well. Another way to help those less fortunate is to create a jobs and infrastructure plan to get people working similar to the new deal. It’s not like we do not have money in this country, it’s just in been accumulated in the hands of a few
    greedy people after 30 years of class warfare waged by the rich in the poor.

    Certainly there are more solutions than to say screw it bc you are to lazy to solve a problem.

  12. LayintheSmakDown

    December 25, 2014 at 9:27 am

    Maybe you need to get out more if you have never heard of in Alan/ML, there are a lot of things out there to see if you get out of Fitzy’s cubicle.

  13. LayintheSmakDown

    December 25, 2014 at 9:29 am

    And when you ban payday loans, car title loans or whatever…then the need still gets filled. Just look at how prohibition worked out in the early 20th century. The same thing would happen for this issue. Banning does not work because an economic need will still be there to meet.

  14. ML

    December 26, 2014 at 4:46 pm

    So let’s stop the war on drugs? Let’s stop banning anything that hurts people.

  15. LayintheSmakDown

    December 29, 2014 at 9:13 pm

    I could agree to a point with that proposal.

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