With the Consumer Financial Protection Bureau (CFPB) unveiling new proposed regulation on predatory short-term borrowing, so called “payday loans”, the Koch brothers’ network is predictably fighting back against consumers.
The CFPB’s proposed reforms would cap the highest interest rates between 28 percent and 36 percent–down from the astronomical 390% interest rates payday loans presently balloon to. Additionally, the new regulations would stop lenders from using auto titles as collateral. The CFPB’s guidelines preserve the availability of short-term loans while cracking down on the most abusive practices.
Despite ample evidence of the predatory nature of these institutions and the desperate need for reforms, the Koch network planted themselves firmly on the side of the payday lenders. When Google announced last month that they would stop running ads for payday lenders, Mercatus Center Visiting Scholar Thomas Miller And Assistant Director Of Outreach For Financial Policy Chad Reese fallaciously argued that the customers would be harmed by limiting access to these lenders. They go on to say that if there truly is a problem, the market will correct itself, which completely ignores the fact the customers using these services are often in desperate circumstances with few options and are often misled by the lenders.
This tone-deaf reaction to Google’s announcement from the Mercatus Center is unsurprising in light of an opinion piece penned by Mercatus Center Senior Research Fellow Veronique De Rugy at the end of last year. De Rugy argued that, when speaking about payday loans with incredible interest rates, “Some call this predatory, while others call it good economics.”
In a similar factually dubious emotional appeal, Charles Koch Foundation Senior Program Officer Adam Kissel tweeted that “poor people” would be hurt by making payday loans less available. Yet again, Mr. Kissel chose to ignore the reality that the market for short-term lending will remain, and that “poor people” are already being harmed by exorbitant interest rates.
Meanwhile, another group with potential Koch-ties is aiming higher, seeking to discredit CFPB director Richard Cordray. “Protect America’s Consumers” launched an ad campaign accusing Cordray of using the CFPB as a political vehicle; they accuse Cordray of writing regulations that would benefit potential donors in a gubernatorial run for Cordray. Protect America’s Consumer’s masks their donors behind a c(4) tax designation, but their Warrenton, Virginia, address is shared with a lawyer who has worked with numerous other organizations linked to the Kochs.
Make no mistake, the Koch network’s opposition to the CFPB’s proposals isn’t driven by any altruism for the consumers who’ve found themselves in a payday loans “debt spiral.” This is yet another instance of the Kochs rabidly pursuing their radical anti-government, anti-regulatory agenda.