FOR IMMEDIATE RELEASE
Dec. 15, 2017
CONTACT: Jim Baker, email@example.com
Report Details How Private Equity Supercharges Payday Lending
Washington — Private equity moguls have invested heavily in the payday and installment lending, putting additional resources, tangible and intangible, at the disposal of these often-predatory businesses, according to a new report by Americans for Financial Reform and the Private Equity Stakeholder Project.
“Private equity firms have brought financial firepower and often a new level of sophistication to the subprime lenders they acquired,” said Jim Baker, a senior fellow at Americans for Financial Reform. “They have enabled some payday and installment lenders to buy competitors, securitize the loans they make, and engage in aggressive lobbying strategies to further their reach.”
The report, available here, documents 23 payday and installment companies in which private equity firms have invested, sometimes to acquire ownership stakes, other times to fund actual lending. The group includes companies that offer loans at triple-digit interest rates, that have run afoul of the Consumer Financial Protection Bureau, and that have bought their way into the political process to weaken or defeat state consumer-protection rules.
The development puts private equity firms in the position to profit from efforts by payday lenders to roll back an important new rule by the Consumer Financial Protection Bureau that would require lenders to verify the ability of borrowers to repay a loan — a common-sense protection arrived at after years of study. A bipartisan group of lawmakers has announced an attempt to roll back the rule under the Congressional Review Act.
“Billionaire owners of private equity firms could be some of the main beneficiaries of efforts to roll back CFPB’s payday rule and otherwise weaken regulation of subprime lending,” Baker said. “In recent years, private equity-funded lenders have been the subject of several investigations by the agency and other regulators and have paid out tens of millions of dollars in settlements.”