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Payday lenders discussed raising money for Trump’s campaign to fend off regulation, audio reveals

To ensure Democrats don’t block weaker industry rules, payday lenders said they needed access to Trump.

A customer leaves a payday loan store in Maryland. The payday lending industry has been urging the Consumer Financial Protection Bureau to repeal existing rules regulating short-term loans. (Michael S. Williamson/The Washington Post)

Billing himself as one of President Trump’s top fundraisers, Michael Hodges told fellow payday lenders recently that industry contributions to the president’s reelection campaign could be leveraged to gain access to the Trump administration.

“Every dollar amount, no matter how small or large it is” is important, Hodges, founder of Advance Financial, one of the country’s largest payday lenders, said during a 48-minute webcast, obtained by The Washington Post.

“For example, I’ve gone to Ronna McDaniel and said, ‘Ronna, I need help on something,’ ” Hodges said, referring to the chair of the Republican National Committee. “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. … They need to be heard and you need to listen to them.’ So that’s why it’s important.”

The Sept. 24 webinar sponsored by Borrow Smart Compliance, an industry consultant, gives surprisingly frank insight into the payday lending industry’s strategy to push for weaker government regulations by forging a tight relationship with the Trump administration and the president’s campaign. The payday lending industry, made up of businesses that make short-term loans to consumers at high interest rates, is awaiting new rules that could weaken Obama administration requirements. Those rules include a requirement that the companies must ensure consumers can afford to repay the money they borrow.

Rep. Maxine Waters (D-Calif.), the chair of the Financial Services Committee, is an industry “hater,” and Sen. Elizabeth Warren (D-Mass.) would pose a big threat if elected president, Hodges and three other industry insiders said during the talk. They called Trump their “ultimate backstop” against attempts to defeat legislation the industry wants.

“When Trump was elected, the needle moved in our favor — finally,” Max Wood of Borrow Smart Compliance said during the webinar.

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“If you need something and we may need something … then it would be good to be able to pick up the phone and call someone that could get the president’s attention,” Wood said during the webinar. Contributing to Trump’s campaign will help keep the president in office, he said, and “it will give [Hodges] access in the event that we need to have access to the president.”

In an interview, Wood acknowledged posting the YouTube video but then referred questions about fundraising to others who took part. The video, which had about 40 views as of Friday afternoon, was removed shortly after The Post asked Wood about it.

The major focus of the call appeared to be fundraising, which the industry insiders said would be critical to maintaining access to the Trump administration. Hodges encouraged others to donate to Trump’s campaign and referred to his efforts to bolster his standing with the administration.

“If I can show the campaign that Tina and I have brought in net new givers to the campaign, meaning whether it’s $100, $50, $25, $15,000 or $50,000 if they didn’t give last time, that is a boost to us as fundraisers,” Hodges said, referring to his wife.

Hodges said on the webinar that he has made more than $1 million in campaign contributions to help Trump since 2016. In an interview, Hodges said he is an “enthusiastic” supporter of the president but had never used his status to ask the administration for help.

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“When I am talking about access, I am not talking about the administration. I haven’t lobbied the administration,” he said in an interview. He said his support of the president is not connected to pushing any specific industry agenda. “I have not gone over to the White House because of Ronna McDaniel. … That just has not happened.”

But during the webinar, Hodges said it would give him a “boost” if he could show that he had brought in donors who had never given before, even if their contributions were small.

“That is important to the campaign, which means it’s important to the president, which means it’s important if you ever had to call on anyone for anything in the administration,” he said during the call. “That’s how those things work.”

The White House declined to comment for this report. Trump’s reelection committee did not return a call for comment.

In a statement, Mike Reed, a spokesman for the Republican National Committee, said: “Part of the RNC’s job is sharing what we hear from supporters across the country with party leaders. We often will connect our supporters with other Republican officials when they have a message they would like to pass along. Democrat policies would destroy millions of jobs, and that is not something our supporters and our organization will ever be shy about communicating.”

Elisha Brown of Speedee Cash, a payday lender based in Florida, and Ed D’Alessio, executive director of the Financial Service Centers of America, who also participated in the webinar, did not return repeated calls and emails seeking comment.

It’s unclear how many other people participated in the webinar.

The YouTube video was discovered by two advocacy groups, Allied Progress and Americans for Financial Reform.

“We have here a striking example of how money in American politics leads to the abuse of consumers in the financial services marketplace,” said Linda Jun, senior policy counsel at Americans for Financial Reform.

Derek Martin, director of Allied Progress, said: “This presentation reflects the worst of Washington, D.C. — wealthy executives buying off politicians so they can keep their predatory business model intact.”

Consumer advocates and the Obama administration have argued that new rules on the industry were necessary to end the “debt trap” in which, once taking out one payday loan, consumers are forced to take out another and another to keep up.

But payday lenders have said the rules were too complicated and would drive many of them out of business. The industry launched an aggressive counterattack, suing to block the rules, recruiting black pastors to speak out in their defense and commissioning academic research that bolstered their talking points. The Community Financial Services Association of America has held its annual meeting at the Trump National Doral Miami golf club for the past two years.

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The industry’s outlook began to change under the Trump administration. In late 2017, the president appointed Mick Mulvaney, now acting White House chief of staff, to temporarily run the Consumer Financial Protection Bureau. As a South Carolina congressman, Mulvaney had called the bureau a “joke” and co-sponsored legislation to close its doors. While CFPB’s acting director, Mulvaney took several steps that helped dial back pressure on payday lenders, including calling for a review of wide-ranging rules finalized by the previous administration and dropping several lawsuits against payday lenders.

Now the CFPB, run by Kathy Kraninger, is considering whether to rescind the Obama administration’s rule requiring that payday lenders verify consumers can afford their loans, a potential major victory for the industry. Kraninger previously worked for Mulvaney at the Office of Management and Budget.

But the industry has grown concerned that House Democrats, led by Waters, could block efforts to roll back those regulations using the Congressional Review Act, known as the CRA. That law allows legislators to block new regulations before they go into effect and was used repeatedly by Republicans in the past few years to roll back Obama-era rules.

“I think if we were to say that she’s a hater of the industry, that would be an understatement,” D’Alessio, of the Financial Service Centers of America, said of Waters during the webinar.

The industry would be unlikely to be able to stop efforts in the Democrat-controlled House to scuttle the weaker rules that payday lenders hope the CFPB will adopt, D’Alessio said during the webinar. Finding enough Republicans to block such an attempt in the Senate, where some lawmakers are facing tough reelection campaigns, could also be difficult, he said.

“That puts us in a position where the ultimate backstop is the White House. And there we will be relying upon President Trump,” D’Alessio said.

During the webinar and in an interview, Hodges pitched himself as a family business owner who could help spread the industry’s message. Tennessee-based Advance Financial started with just a few storefronts but now has more than 100 in the state.

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The company has grown significantly since Trump was elected, doubling its workforce to 1,300, increasing contributions to employees’ retirement accounts and distributing bonuses after the 2017 tax cut, Hodges said.

“Any chance I have to talk about the about the jobs he has helped me create, I” do, Hodges said in an interview. “There has been this economic resurgence.”

He has emerged as a top Trump fundraiser. During the 2016 election cycle, the company’s owners and employees spent $270,385 on campaigns, compared with $1,000 during the 2014 campaign cycle, according to Open Secrets. That jumped to $965,450 in 2018 and $672,956 so far for the 2020 cycle. Almost all of that money went to Republicans.

“It’s hard for me to say this number, because if you told me this five years ago, I would have thought you were crazy. But we’ve donated about $1.25 million to his campaign so far,” Hodges said.

“So Tina and I have become, I would say, one of the larger donors to the campaign over the last couple of years.”

So far this year, Hodges said, he has raised another $200,000. During the call, he encouraged other industry officials to contribute to or attend an Oct. 7 fundraiser featuring Vice President Pence in Tennessee. The tickets ranged from $1,000 to $100,000, according to a copy of the invitation obtained by the Nashville Post.

During the webinar, Hodges explained why such fundraisers were important. When money comes in that way “that raises the clout of that fundraiser so that when you go and speak to the administration through the campaign, they will listen.”

Hodges said in an interview that he is aiming to raise “as much money as possible” for Trump’s reelection campaign, potentially $1 million.

“The last administration and candidate [Hillary] Clinton … was working hard to end an industry that provides a lot of jobs for folks,” Hodges said in an interview. “Trump was running on pro-growth, pro-business [campaign]. … as an entrepreneur it was an easy choice.”

After the webinar, Michael Brown, a payday industry consultant, touted the group’s message on his website in a post that has since been removed. “If Warren wins you can bet on day 1 of her Presidency she will be focused on her baby, the CFPB. That is a doomsday scenario for the payday industry,” he said, echoing a talking point from the webinar. Warren conceived of the CFPB in the wake of the global financial crisis and has touted its success repeatedly during her presidential campaign.

“It is important for our industry to support the Trump Campaign financially and with votes.”

Toluse Olorunnipa and Magda Jean-Louis contributed to this report.