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Payday Lenders Gave Trump Millions. Then He Helped Them Cash in on the Working Poor.

4 155 77
26.10.2020

Mother Jones illustration; Bayne Stanley/ZUMA, Romeo Guzman/ZUMA

This story was reported in partnership with Type Investigations, with support from the Puffin Foundation.

Mike Hodges was still a small fry among payday lenders when Donald Trump visited Hodges’s hometown of Nashville, Tennessee, in 2018. Hodges and his wife Tina owned somewhere around 100 stores scattered across the state, giving out small-dollar loans for fees that work out to annual interest rates as high as 450 percent. Their firm, Advance Financial, was puny compared to the chains of 1,000 or more that rose from the industry’s pioneers in the 1990s. But the Hodges quickly distinguished themselves as major donors to Trump, shelling out more than a million dollars to his campaign and main super PAC. In January 2018, Hodges told a reporter for USA Today that he was among those granted a private audience with Trump when the president showed up in Nashville to give a speech at the Gaylord Opryland. The following October, the couple co-sponsored a Nashville appearance by Vice President Mike Pence, where ticket prices ranged between $1,000 and $100,000.

By then, Mike Hodges had emerged as the industry’s point person with the Trump White House — access he openly boasted about purchasing.

“Every dollar amount, no matter how small or large it is” is important, Hodges explained two weeks ahead of the Pence fundraiser, according to an audio recording from an industry webinar obtained by the Washington Post. Hodges mentioned the chairwoman of the Republican National Committee: “For example, I’ve gone to Ronna McDaniel and said, ‘Ronna, I need help on something.’ She’s been able to call over to the White House and say, ‘Hey, we have one of our large givers. They need an audience.’”

America’s payday lenders and others selling exploitative financial products to the working poor have enjoyed a string of victories since Trump took over as president. Enforcement actions against the industry by the Consumer Financial Protection Bureau have fallen dramatically, and the country’s top banking regulators appear to be readying a loophole that would let payday lenders operate even in jurisdictions where local governments have banned their product. A whistleblower inside the CFPB charged in August 2019 that his bosses had ordered staff economists to rig a study so that it downplayed harm to consumers who repeatedly take out payday loans.

The biggest losers in this arrangement have been America’s working poor — above all, Blacks and Latinos, who are trapped disproportionately by payday lenders’ exorbitant fees (typically $15 per $100 for a loan due back usually in two weeks). The industry foremost sees green, and also operates in white low- and moderate-income communities. But a 2017 study by the Center for Responsible Lending showed that predominantly minority communities in Colorado were seven times more likely to have a payday lending store than predominantly white communities. A 2012 study by Pew Charitable Trusts found that Blacks were three times as likely as whites to have taken out a payday loan.

Hodges and his industry colleagues have gone all-in on a president who claims to “love the Hispanics,” be the greatest for Black Americans since Abraham Lincoln, and who has paid essentially no federal income tax for years by manipulating bank loans and the tax system, quite possibly fraudulently. Even after the coronavirus pandemic hit, the payday moguls could count on Trump. Initially, these storefront lenders were barred from participating in the Paycheck Protection Program designed to bail out small businesses. Yet after an intense lobbying campaign, the administration apparently shifted course: Records of PPP recipients released in July revealed that dozens of payday lenders and similar businesses received at least $9 billion from the program. (Hodges’ company, with more than 500 employees, the threshold for PPP, was not eligible for the program.) Presumably, none of these companies will pay triple-digit interest rates on any money they might have to payback under the PPP rules.

The industry’s biggest win came in July, when the Consumer Financial Protection Bureau announced that payday........

© Mother Jones


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