Massachusetts Democratic Senator Elizabeth Warren rose to prominence as an advocate for the creation of the Consumer Financial Protection Bureau. It was to be a government watchdog advocating on behalf of Americans and was supposed to be free from outside influences that could corrupt its work. That wall of separation appears to have broken down, as least in one case.
Earlier this year, the CFPB released suggested regulations of payday lenders, long a target of Democrats who claim they take advantage of the poor with outrageously high interest rates. Proponents for payday lenders remind opponents that they engage in voluntary transactions in neighborhoods were banks are few and far between.
The CFPB, it has been discovered, was quite “cozy” with left-wing advocacy groups who seek to harm the payday lending industry in the crafting of those suggested regulations.
The Center for Responsible Lending, Politico reports, was one of the groups intimately involved in the proposed rule making.
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 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.
At the same time the influencing of the CFPB is coming to light from the non-profit/activist world, the corporate and lobbying worlds have come calling as well.
The Hill reports, “At least 45 former CFPB employees, ranging from investigators and enforcement attorneys to higher-ranking officials who ran the agency, have departed to work at law or consulting firms, corporations and nonprofits since the agency opened its doors in 2011.”
Senator Warren become a star on the political left due, in part, to her opposition to “big banks and Wall Street.” However, the agency she started now boasts many alums working on behalf of those very giants.
The Hill found:
Titans such as JPMorgan Chase, U.S. Bank, Wells Fargo, PricewaterhouseCoopers, PayPal, BlackRock and Bank of America all have former CFPB officials on their payrolls.
So do elite K Street firms such as Arnold & Porter, Hudson Cook, Covington & Burling, K&L Gates, DLA Piper, Venable and WilmerHale.
Consulting firm Promontory Financial Group and the Center for Responsible Lending, a nonprofit that pushes for stricter consumer protections, have several.
While none appear to be registered lobbyists, many still work closely with the entities under CFPB supervision.