Sunday, October 18, 2009

More on Lacy Clay and Payday Loans

As I previously stated, I have been digging in to Lacy Clay's financial contributors. After reporting his ties to the Rent to Own industry I continued my research and found that Lacy has been receiving a lot of money from the owners and officials of many in and out of state "payday loan" companies.

These contributions intrigued me since Lacy Clay is a co-sponsor of H.R. 1214, The Payday Loan Reform Act of 2009. This bill aims to "establish additional payday loan disclosure requirements and other protections for consumers, and for other purposes". You would think that these companies would do anything they could to keep restrictions from coming into place. That is, until I did more research.

If you go back several years, it appears that Illinois Rep Luis Gutierrez was working on severely crippling if not killing the payday loan industry. The belief was that this industry was/is operating on a predatory lending premise and creating a viscous cycle of lending allowing these companies to make exorbitant amounts of money by repeatedly extending the lending cycle beyond the original terms of the agreement while continuing to charge the already high fees and interest rates. Customers who could not pay the entire loan amount back with their next paycheck, usually within two weeks of the loan, are extended another two or more weeks at the same interest rates and sometimes additional fees.

It is easy to see why a Democrat like Rep Gutierrez would be working to severally limit and/or regulate this industry considering the demographic he serves. Well, then comes Lacy Clay who sends a letter to Rep Gutierrez requesting he withdraw a proposed amendment back in 2005.

Afterwards, Lacy began working with Gutierrez to create a new bill. This new bill is much weaker than the original with many loopholes. Gutierrez himself admits that this new bill is not as strong as desired but was made weaker due to the influence of the payday loan industry and their campaign donations.
Why would Lacy Clay, a man who has attempted to identify himself as a progressive intent on protecting the welfare of the people, block a 2005 amendment that would cripple this industry. Could it be because the Community Financial Services Association (CFSA), the group that represents payday loan companies, donated between $15,000 - $29,999 to the Congressional Black Caucus in 2004.

After further research, I found out that the Rent to Own community is part of the payday loan community. Hmmm, now things are starting to come together. Apparently several of the rent to own facilities have started offering payday loans. It has gotten to the point where one of the board of directors for the CFSA is a senior executive with Rent-a-Center. To get an idea of how into this industry the Rent to Own companies are, just do a google search of "Rent to Own" "Payday Loans". You will find several rent to own facilities throughout the US that offer these services.

So once again, we find that Lacy Clay is doing whatever he can to support himself and his friends and not the community. Hey, I am a free market guy and think that these businesses have a right to exist, but they should not do so at the expense of those that do not know better or truly cannot afford these loans. In Lacy's case, he is purposefully reducing the restrictions that others have created to protect those that donate thousands of dollars to his campaign coffers. Of course, this is Lacy Clay, should we expect much more from him?

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