New: Members of Congress from both parties asked the Federal Reserve to bail out unregulated lenders. They all received contributions from the lenders' trade group.
https://huffpost.com/entry/wall-str...18fc5b61fe0f57bbc25?ncid=engmodushpmg00000004 via @HuffPostPol
“It’s bad on the substance to have the Federal Reserve be lending to subprime consumer and small business lenders. It doesn’t look good when the members asking for that kind of bailout for these companies are also funded by those predatory lenders," @steelewheelz
The Federal Reserve revived a financial crisis-era program designed to bail out consumer lenders that are not banks.
14 House Financial Services Committee members asked for it to be expanded to loans issued by "installment" and fintech lenders.
https://big.assets.huffingtonpost.com/athena/files/2
Some of those institutions are reputable but many others are "payday lenders by another name" -- slightly better than payday lenders, but not much.
After reaching out to all 14 House members, I got a call from a fintech lobbyist who'd been tipped off about my story. He said the "investment-grade" asset-backed securities they want bailed out by the Fed are not usurious...
... But curiously, the letter's authors jettisoned a proposal to restrict the Fed bailout to loans capped at 36% interest rates.
“The 36% rate cap should have been applied,” said a House aide.
Here's a rundown of how much the American Financial Services Association, which represents installment lenders -- aka payday lending lite -- gave to the members of Congress who authored the letter (just this cycle).
(the campaign contributions...)
Missouri Rep. Blaine Luetkemeyer, the top Republican on the subcommittee for consumer protection, is a big recipient of campaign cash from World Finance, one of the most notorious installment lenders. More on them here:
https://www.propublica.org/article/installment-loans-world-finance
Another concern is that private equity is increasingly involved in the installment lending industry, meaning Fed money could go to cash-rich PE portfolios.
That includes OneMain Financial, the biggest installment lender in the country, owned by Apollo Global Management.
The co-founder of Apollo Global, his wife and his employees are all big donors to Rep. Josh Gottheimer, the NJ Democrat who co-chairs the Problem Solvers Caucus.
Gottheimer was on the letter too of course.
@sludge's @donnydonny reported on Gottheimer and the Problem Solvers Caucus's ties to Rowan and Apollo first for @theprospect:
https://prospect.org/politics/centrist-democrat-backs-bailout-plan-pushed-by-private-equity/
The Times wrote about it on Wednesday:
https://www.nytimes.com/2020/05/05/business/private-equity-coronavirus-relief.html
“The Fed and the Small Business Administration should do everything they can to stop private equity from getting access to taxpayer funding, as private equity funds will use that funding to lay people off and buy themselves more private jets,” @matthewstoller.
