Massachusetts Democratic Senator Elizabeth Warren rose toprominence as an advocate for the creation oftheÂ Consumer Financial Protection Bureau. It was to bea government watchdog advocating on behalf of Americans and wassupposed to be free from outside influences that could corrupt itswork. That wall of separation appears to have broken down, as leastin one case.
Earlier this year, the CFPB released suggested regulations ofpayday lenders, long a target of Democrats who claim they takeadvantage ofÂ the poor with outrageously high interestrates. Proponents for payday lenders remind opponents that theyengage in voluntary transactions in neighborhoods were banks arefew and far between.
The CFPB, it has been discovered, was quite “cozy”with left-wing advocacy groups who seek to harm the payday lendingindustry in the crafting of those suggested regulations.
TheÂ Center for Responsible Lending, Politico reports, was one of the groupsintimately involved in the proposed rule making.
The group regularly sent over policy papers, traded emails andmet multiple times with top officials responsible for drafting therule.
At the same time, the groupâ€™s financialservices business, Self Help Credit Union, was pushing CFPB tosupport its own small-dollar loan product with a much lowerinterest rate as an alternative to payday loans.
Companies and trade associations regularly spend tens ofmillions of dollars to lobby Congress and the executive branch topush their agenda, but the Center for Responsible Lending effortsto overhaul payday lending rules is a revealing example of hownonprofits and consumer groups also work back channels inWashington to influence the outcome of laws and regulations.
The proposal is of particular significance because it isexpected to be a model for how the nascent consumer agency draftsrules. A â€œnotice of proposedrulemakingâ€ from CFPB is expected in the comingmonths.
At the same time the influencing of the CFPB is coming to lightfrom the non-profit/activist world, the corporate and lobbyingworlds have come calling as well.
The Hill reports, “At least 45 formerCFPB employees, ranging fromÂ investigators andenforcement attorneys to higher-ranking officials who ran theagency, have departed to work at law or consulting firms,corporations and nonprofits since the agency opened its doors in2011.”
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 onbehalf of those very giants.
The Hill found:
Titans such as JPMorgan Chase, U.S. Bank, WellsFargo, PricewaterhouseCoopers, PayPal, BlackRock and Bank ofAmerica 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, DLAPiper, Venable and WilmerHale.
Consulting firm Promontory Financial Group and theCenter for Responsible Lending, a nonprofit that pushes forstricter consumer protections, have several.
While none appear to be registered lobbyists, manystill work closely with the entities under CFPB supervision.