When the Consumer Financial Protection Bureau put out its proposal to overhaul payday lending rules in March, the move was cheered by consumer advocates as a much-needed crackdown on an industry that preys on the poor, the Politico reported on Friday. The Center for Responsible Lending spent hours consulting with senior Obama administration officials, giving input on how to implement the rule that would restrict the vast majority of short-term loans with interest rates often higher than 400 percent. The group regularly sent over policy papers, traded emails and met multiple times with top officials responsible for drafting the rule. At the same time, the group’s financial services business, Self Help Credit Union, was pushing CFPB to support its own small-dollar loan product with a much lower interest rate as an alternative to payday loans. Companies and trade associations regularly spend tens of millions of dollars to lobby Congress and the executive branch to push their agenda, but the Center for Responsible Lending efforts to overhaul payday lending rules is a revealing example of how nonprofits and consumer groups also work back channels in Washington, D.C., to influence the outcome of laws and regulations. The proposal is of particular significance because it is expected to be a model for how the nascent consumer agency drafts rules. A “notice of proposed rulemaking” from CFPB is expected in the coming months.
