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Sen Corker calls claims he rewarded Payday Lenders Cheap Shot
By Michael Collins Published: 03/12/2010
WASHINGTON - U.S. Sen. Bob Corker said Thursday it was a "cheap shot" to suggest he had sought to reward payday lending companies that have contributed thousands of dollars to his political campaigns by pushing to exempt them from new financial regulations.
The Chattanooga Republican has been under fire this week after media reports said he had pressed U.S. Sen. Chris Dodd, chairman of the Senate Banking Committee, to remove a provision from proposed legislation that would have allowed federal authorities to crack down on payday lenders.
"That was the most major cheap shot I have ever seen," Corker told reporters.
Corker had been one of the key senators in bipartisan negotiations that began last month to come up with a sweeping overhaul of banking regulations that could win the backing of Democrats and Republicans.
Though no consensus had been reached, lawmakers said they were close to a final package when Dodd announced Thursday that he intends to move ahead on his own and without Republican support.
Corker said he was disappointed Dodd decided to go it alone. Negotiators had reached agreement on most of the issues before them, Corker said, and Dodd's decision to file his own bill was like being "on the 5-yard line after a pretty grinding march down the field, and the lights go out.''
Corker stepped into the negotiations on a financial reform bill last month and became a key player after talks had broken down between Democrats and the committee's leading Republican, U.S. Sen. Richard Shelby of Alabama.
Congress and the White House have been working to overhaul the banking rules to avoid another financial crisis like the one that hit Wall Street in 2008.
Corker's involvement in the negotiations came under scrutiny after media reports said payday lenders would be exempt under a draft of the rules and suggested it was Corker who was responsible.
According to The New York Times, Corker pressed Dodd to scale back the power that a new consumer financial protection agency would have to write and enforce rules governing payday lenders, debt collectors and other financial companies that are not part of banks.
Dodd went along with Corker, the newspaper said, to reach a bipartisan consensus.
Under the proposal, the new consumer agency would write rules for non-bank financial companies like payday lenders but would be able to enforce those rules only against mortgage companies, the paper said. The new agency would not have the authority to enforce the rules against payday lenders unless it petitions a group of federal banking lenders.
Consumer groups have argued the new agency would be unable to stop abuses by payday loan companies if it has no power to enforce the new rules.
The Times story noted that the payday lending industry is influential in Tennessee and has been a significant contributor to Corker's campaigns.
Executives from one Tennessee-based firm, Jones Management Services LLC of Cleveland, and its companies have given at least $31,000 to Corker's campaigns since 2001, when he was running for mayor of Chattanooga, according to the Times.
A political action committee of the Community Financial Services Association, a payday lending industry group that is lobbying against the new financial regulations, also gave $1,000 to Corker last year.
Corker said the criticism leveled at him had been unfair because the proposal had been put forth by Dodd, and he simply altered it. Furthermore, Corker said, he had pushed to make sure that all financial institutions were covered under the new rules.
"Our scope on rule writing was from A to Z, all financial activities," he said, although he added that regulators of the financial industries, rather than the new consumer agency, should be the ones enforcing the new rules.
Corker predicted the bill Dodd will introduce Monday would include some of the provisions worked out during the bipartisan negotiations. But he said he doesn't know how payday lenders would be regulated under the proposal.
"The bill will be a better bill" because of the negotiations, Corker said. But, "It won't be, unfortunately, one that received bipartisan support."Michael Collins may be reached at 202-408-2711