There is always criticism of the lobby system in Washington, where lawmakers are routinely courted by lobbyists (who represent big businesses and trade associations) to try and influence policy. Critics say this unfairly distorts the democratic system.
Reports coming out today indicate that big businesses aren’t the only groups trying to shape policy from behind the scenes.
The Consumer Finance Protection Bureau (CFPB) made headlines earlier this year with their campaign to shut down the payday loan industry. They proposed a new set of rules that would supposedly “overhaul” the payday lending system, but in actuality would ensure all independent lenders were put out of business.
But the CFPB was being influenced by outside sources, it would seem. A consumer advocacy group called the Center for Responsible Lending had considerable influence over the law changes – they met with Obama administration officials multiples times, as well as exchanging policy drafts and emails throughout the process.
Payday loans are short term, higher-interest loans catering to the working class citizens with poor credit who banks will not work with. Although they provide a valuable service to a segment of the populace who are underserved by the big banks, they have long been a target of consumer groups (who are oft times funded by the banks themselves)
The Center for Responsible Lending has long been overly critical of independent and payday lenders, and now it seems they were given a national stage to put their opinions into practice and potentially influence the finances of tens of millions of people.
To make things worse, at the same time they were pushing to shape national policy, the Center for Responsible Lending was also pushing its own agenda – it wanted the CFPB and the Obama administration to support its own small-loan business. It is called the Self Help Credit Union, and the CRL wants to promote its own business as it is concurrently putting all its potential competition out of business.
Criminal? Immoral? Illegal? That’s hard to say with the facts at hand.
But does it seem shady? You bet it does.
The problem most people have with lobbyists is that it appears that they curry favor and influence lawmaking by throwing their money around. Lobbyists are seen as representatives of Big Business and the 1% upper class, who have an unfair advantage over working class Americans, and use their position and power to extend that advantage as much as possible. Whether this right or wrong, it is the general perception.
So when the same tactics are used by a so-called “consumer advocacy group” it raises the same red flags as any other lobbyist trying to use the law to gain a competitive advantage for themselves.
The CFPB is still planning to move ahead with its overhaul of payday lending rules, but these reports have opened the eyes of some politicians. Lawmakers from Florida, among other states, are fighting the federal rule changes. Will these lobbyist revelations change the way the wind blows in Washington? We will find out soon enough.