The New York Times has a great scoop on the making of the Consumer Financial Protection Agency bill sausage. No surprise: It’s indigestion-inducing.
The paper reports that Senator Bob Corker, the Republican who’s proposing to neuter the agency by sticking it inside the Federal Reserve, is also doing a huge favor to his home-state cronies in the loan-shark… I mean, payday-loan industry. This follows good spadework by the Huffington Post last week that got near the issue.
The Times is good to emphasize in the lede that the payday lenders are big contributors to Corker, and to write this further down:
Asked whether the industry’s campaign contributions to him had shaped his thinking about the issue, he replied, “Categorically, absolutely not.”
Corker doth protest too much, methinks. What do the payday lenders get for all their support?
Under the proposal agreed to by Mr. Dodd and Mr. Corker, the new consumer agency could write rules for nonbank financial companies like payday lenders. It could enforce such rules against nonbank mortgage companies, mainly loan originators or servicers, but it would have to petition a body of regulators for authority over payday lenders and other nonbank financial companies.
Which defeats the whole purpose of having such a body. Is there a legitimate reason Corker could have for singling out payday lenders for favorable treatment? Here’s what he told the Times:
Mr. Corker also issued this statement: “Our goal in this legislation should be to level the playing field so that the same rules apply to all involved in lending.”
What does that even mean? The Times should have asked him to be more specific on why he would want to give favorable treatment to people who charge 400 percent interest—and reported how or whether he answered.
But that’s a quibble. This is good work. And make sure to check out the picture accompanying the story.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.