ALL EYES ON OBAMA: Finance and Credit Companies Lobby Lawmakers As Congress Moves to Aggressively Regulate Them

from Capital Eye by Michael Beckel

Total to Current Members of Congress since 1989: $23.3 million (53 percent to Republicans)

Total Lobbying Expenditures since 1998: $264.2 million

The U.S. economy faltered after the subprime mortgage meltdown, but these investments weren't the only obligations that many consumers defaulted on. Credit card companies, private student loan providers and payday lenders -- all groups within the finance and credit industry -- saw customers become more and more squeezed for cash.

While many people have used the extra money from the Obama tax cuts and the stimulus bill to pay down personal debt, Democratic lawmakers say new regulation is also necessary to protect constituents from predatory behavior. Some, too, blame the credit rating agencies for their role in the meltdown and want to see new measures enacted to prevent inflated values from being attached to mortgages and other assets.

The various companies and trade groups within the finance and credit industry have contributed about $62.4 million to federal candidates, committees and leadership PACs since 1989, with 62 percent of that sum going to Republicans.

In the 2008 election cycle, however, the employees and political action committees of these organizations directed a majority of their money to Democrats for the first time since the 1990 election. During 2008, these groups contributed $8.7 million to federal candidates, committees and leadership PACs, with 54 percent going to Democrats.

Here are the top 15 finance and credit industry groups to give money to the leadership PACs and candidate committees of current lawmakers since 1989:

Donor	Total	% Dem	% GOP
SLM Corp	$2,883,045	52	48
Bank of America	$2,827,318	23	77
Capital One Financial	$1,832,528	50	50
American Express	$1,744,956	57	42
HSBC Holdings	$1,704,842	46	53
Household International	$966,161	48	53
American Financial Services Association	$826,490	35	65
NelNet Inc	$821,251	34	67
Cash America International	$629,229	44	57
Mastercard Inc	$565,931	53	46
General Electric	$522,707	63	37
Advanta Corp	$454,940	32	68
Washington Mutual	$336,350	59	41
Advance America Cash Advance Centers	$335,275	74	26
QC Holdings	$305,569	62	38

Private companies offering student loans fall within the finance and credit industry -- particularly Sallie Mae (a subsidiary of SLM Corp), which is perennially one of the biggest donors to federal candidates and committees within this industry. These companies oppose congressional efforts -- backed by President Barack Obama -- to reduce federal subsidies to these lenders and instead put those dollars toward direct federal loans to students.

The House passed a measure to do just this in September, but the Senate has yet to act on it.

Lawmakers are also targeting credit card companies' high interest rates, numerous fees and their sometimes-aggressive outreach to low-income consumers and people with poor credit scores. In August, Obama signed one bill into law that would grant the Federal Trade Commission new authority to seek civil penalties from companies that engage in "unfair and deceptive" practices.

Known as the Credit CARD Act, the bill, sponsored by Sen. Chris Dodd (D-Conn.), aims to give credit card customers more protections. It requires companies to give more advance notice before making significant changes to a contract and mail bills earlier. It further allows customers to reject changes to their contracts, including interest rate increase.

Under the measure, credit card companies will also be prohibited from offering college students free merchandise in exchange for opening a credit card account and from issuing cards to students who have not applied for one. College students, on the other hand, will be required to present proof of income and a financial history when applying for a credit card. They'll additionally have new, lower credit limits, tied to their annual income -- unless there is a co-signer on the account.

Also in this industry? Payday lenders, such QC Holdings, Cash America International, Advance America Cash Advance Centers and the Online Lenders Alliance.

Lawmakers are taking aim at these lenders, too, for alleged predatory practices. People with little money or poor credit scores often turn to these companies for cash. Yet the loans they receive may carry interest rates of up to 400 percent, creating a nearly impossible hole of debt for them to climb out from. Consumer advocates and some politicians say payday loan interest rates should be capped -- closer to the tune of 36 percent, a rate Congress mandated for payday loans to members of the military in 2006. Reformers are also pushing to limit finance charges by these groups.

The payday lending industry, meanwhile, argues such regulations and rate caps could put them out of business. They also suggest that their fees are cheaper than the alternative: overdraft fees from a bank.

"The focus on overdraft protection on the Hill has helped legislators to understand that payday lending can be looked at as a cheaper alternative to overdraft charges," said Steven Schlein, a spokesman the payday lending trade group, the Community Financial Services Association, as quoted by the Washington Independent.

Furthermore, the big credit rating agencies of Standard & Poor's, Moody's and Fitch Ratings, fall, in part, within the finance and credit industry. According to many market observers and economists, the inflated ratings of risky securities helped precipitate the economic meltdown in the United States. Official at the Securities and Exchange Commission (SEC) and many Democratic lawmakers, including Obama, are calling for new measures to prevent inflated credit scores and lessen conflicts of interest.

Some reformers are calling for an upheaval of the credit rating industry's common business practice of charging the entity seeking the credit rating (known as the "issuer") to pay for the rating -- a move the major industry players say is unnecessary. Others are calling for investors to become less dependent on credit ratings altogether. There are also calls for the rating practices of all agencies to become more transparent.

All told, current congressional lawmakers have collected $23.3 million from the industry since 1989, with 53 percent of that flowing to Republicans. With the Democrats now in control of the White House and Congress, finance and credit companies contributed $1.7 million to the leadership PACs and candidate committees of all current lawmakers during the first nine months of this year. Of that, 53 percent has gone to Democrats.

Here are the top 20 current lawmakers to bring in cash from finance and credit companies through their leadership PACs and candidate committees since 1989:

Member	Amount
Rep. John Boehner (R-Ohio)	$716,795
Rep. Michael N. Castle (R-Del)	$580,465
Sen. Richard C. Shelby (R-Ala)	$553,979
Rep. Howard P. (Buck) Mckeon (R-Calif)	$507,526
Rep. Spencer Bachus (R-Ala)	$485,508
Sen. Chris Dodd (D-Conn)	$442,080
Sen. Tom Carper (D-Del)	$409,982
Sen. Tim Johnson (D-SD)	$395,400
Rep. Pete Sessions (R-Texas)	$374,588
Rep. Paul Kanjorski (D-Pa)	$339,896
Sen. Olympia Snowe (R-Maine)	$332,700
Rep. Eric Cantor (R-Va)	$308,409
Sen. Charles Schumer (D-NY)	$302,734
Sen. Harry Reid (D-Nev)	$298,868
Sen. Arlen Specter (D-Pa)	$278,034
Rep. Jeb Hensarling (R-Texas)	$272,861
Sen. John McCain (R-Ariz)	$267,019
Rep. Roy Blunt (R-Mo)	$260,800
Sen. John Kerry (D-Mass)	$257,041
Rep. Dennis Moore (D-Kan)	$252,861

For a list of how much all current lawmakers have brought in from this industry, check out our finance policy tools.

Additionally, the companies and organizations within the finance and credit industry have spent $264 million on federal lobbying since 1998. During the first nine months of this year, finance and credit groups spent $25.5 million on federal lobbying and hired 397 lobbyists.

If the industry continues to spent at this pace, it will break the record $32.8 million it spent last year.