Seems we’ve got yet another sell-out (literally) in the effort to rid the world of predatory lenders who swarm working-class and low-income neighborhoods. Earlier this year we learned that Magic Johnson is shilling for scammers who rip off low-income working people with tax-return anticipation loans. Now, Mike Illis reports for the WASHINGTON INDEPENDENT that the industry has bought out a key congressional Democrat.
Rep. Luis Gutierrez (D-Ill.), who heads the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, is pushing a loophole-riddled bill that would allow payday lenders to charge annual interest rates of nearly 400 percent — a proposal widely condemned by consumer advocates and some liberal Democrats, who want to put payday lenders out of business altogether.
Gutierrez has previously been a leader in the fight to ban these plainly predatory loans, on which interest and fees run as high as 1,000 percent. In 2006, he supported the Defense Department’s effort to rid itself of payday lenders that target military bases, preying upon underpaid servicemembers. Congress banned lenders from charging servicemembers any more than 36 percent—junk fees and random service charges included. In 2007, Gutierrez was lead sponsor of the Payday Loan Reform Act, which Illis says would have banned the loans altogether.
Then came the 2008 campaign, in which Illis reports that Gutierrez’s largest contributor was payday lender QC Holdings, which gave him $10,100. Another company gave him $4,600. Suddenly, the congressman thinks we’ve got to compromise with these predators.
“While they may not be JP Morgan Chase or Bank of America, they’re very powerful,” Gutierrez said. “Their influence should not be underestimated.”
Indeed.
—KAI WRIGHT