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Following The Money From High-Interest Lenders To Lawmakers

MIchael Pope

Companies that offer high-interest loans are fighting back against efforts to reform their industry, and part of that effort involves writing checks to political campaigns.

Recent years have seen increased scrutiny of car-title lenders, internet lenders and companies that operate open-end lines of credit largely in the shadows. Now campaign finance disclosures show the industry of high-interest loans is spreading its influence across the political spectrum with about $800,000 in political contributions, mostly to Republicans.  

“There’s no question that people give money with purpose, with intent,” says Virginia Tech political analyst Bob Denton. “And not just because of feeling good or being nice, and whether that’s a small contribution or a large one there’s a correlation between motive and giving that money.”

Campaign finance documents show car-title lender LoanMax is giving the most money, about $350,000. Check Into Cash, which offers a particularly controversial kind of unregulated loan, is giving $125,000. And an internet lender known as Enova is giving $30,000.

Denton says the money buys influence. But there may be another reason these companies give. “There are two sides to the coin. One seems to appear that it is peddling influence. But the other side is simply, well, I’m going to support those who have strong feelings supporting my particular industry, business or position.”

LoanMax is giving $10,000 to Republican candidate for governor Ed Gillespie. But it’s also giving the same amount to Democrat Ralph Northam. Stephen Farnsworth at the University of Mary Washington says company officials are hedging their bets. “This is a way makes sure that whoever wins the election, they win the election. You’ve covered all the bets on the table here. So whether there’s a Democratic or Republican governor, you’ve still got a ready audience for your issue.”

Campaign finance reports show the industry is targeting members of a House subcommittee that routinely kill any effort to reform the industry, making contributions to Jackson Miller, Kathy Byron and Lee Ware. Top dollar amounts are going to the head of that committee, Delegate Tim Hugo. He’s receiving $15,000 from LoanMax and another $15,000 from Check into Cash, companies that have resisted efforts to create new consumer protections.  “You have an opportunity to propose a bill. You have an opportunity to have a moment or two to speak about it, and then it dies in a way that the people putting the money in the pockets of the politicians would like,” Farnsworth explains.

Most of the money goes to political action committees like the Commonwealth Victory Fund and Dominion Leadership Trust. Quentin Kidd at Christopher Newport University says these are often set up to spread money around to candidates that need it the most. “But there’s something more sinister involved here. It’s also a way to pass money through without it being directly tied to a particular industry or a particular corporation.”

That way the candidate’s financial disclosure forms don’t have money listed from LoanMax or Check Into Cash, even though that’s where the money came from. “If a corporation gives, say $5,000 to the Commonwealth Victory Fund, and the Commonwealth Victory Fund passes that $5,000 on to candidates who are running in tight races,” Kidd explains.

Candidates like Democrat Jennifer Foy, who’s running for an open seat in Northern Virginia. Or Democrat Hala Ayala, who’s running against incumbent Republican Rich Anderson. “Those candidates may very well know where that money came from, but it isn’t easy for you or I to draw the straight line from one person, a candidate, to a corporation,” says Kidd.

So far, the campaign contributions seem to be working. Any effort to create new consumer protections or limit the amount of interest these companies can charge dies before it gets out of subcommittee — a subcommittee where the Republican members have all received money from the industry they’re overseeing.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association

Michael Pope is an author and journalist who lives in Old Town Alexandria.