How the payday loan industry has laundered its policy by paying academics for what they write documents that supported its positions / Boing Boing



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When Elizabeth Warren inaugurated the Office of Consumer Financial Protection, one of her main goals was subprime / payday / predator lenders; and lender lobbyists embarked on a large-scale blitz, which eventually triumphed under Trump's CFPB president, Mick Mulvaney.

The non-profit organization Campaign for Accountability used applications for public registration, up to the Supreme Court of Georgia, to show how the industry was paying academics to produce papers secretly co-authored by lobbyists who supported the idea that the payday loan benefited the poor was poorly served by the traditional financial sector.

The documents reveal how Hilary Miller, a lawyer with close ties to payday lenders for more than a decade, had arranged a $ 30,000 grant to Kennesaw State Statistics and Data Specialist Professor Jennifer Lewis Priestley University – no research experience in the field of payday loans. – and then dictated which sources Priestly should cite, which words it was allowed (and forbidden) to use in its report.

Priestly eventually released a document that had been tirelessly promoted by the payday lending industry and its public relations staff, supporting the idea that payday loans were socially beneficial.

The documents reveal that Miller was so ingrained in the writing, editing and structure of the document that Priestly offered him credit as a coauthor, which Miller refused, preferring to work in the shadows.

The Priestly newspaper was part of a larger and extremely well-funded charm offensive launched by payday lenders, which is revealed in detail in applications for public records, including the recruitment of black clergy, Congressional lobbying and the modification of the location of his annual conference. the Trump National Doral Golf Club near Miami.

The strategy has paid off. When the CFBP abolished its Obama era rules limiting the industry's most predatory tactics, it said it had new data showing that the initial policy was not supported by the evidence. This is very important: as FCC President Ajit Pai discovers, the law governing administrative agencies requires them to provide evidence to support each rule that they enact or delete.

Payday lenders have provided an important service to Trump and his representatives, bringing a rare moment of administrative skill to their evil plans – rather than simply abolishing the rule of the Obama era and exposing it to the may have it reinstated by a court, they have in fact done the painstaking work of obtaining falsified but plausible research to support the change.

In soliciting Priestley for work, Miller stated in an e-mail that he wanted to produce two articles of "peer-reviewed academic quality". But from the start, e-mails suggest he was very involved, sending dozens of changes to Priestley and helping him develop the language of the report.

Miller, for example, in an email in March 2014, he asked Priestley not to use the term "debt cycle," a term used by consumer advocates to describe borrowers who repeatedly contracted new loans to cover the elders.

"In general, we do not accept the idea that a" debt cycle "even exists, and I would be grateful if you would remove all references to that term, unless you deny its existence," he said. Miller in an email.

Priestley did use this term in his report, but only to describe the point of view of opponents of payday lenders. It also included a footnote indicating that the term was applied selectively to short-term loans and not to other forms of debt, such as credit cards or mortgages. This is an argument often put forward by payday lenders.

Miller also offered Priestley tips to anticipate potential criticisms of the research. Opponents of payday lenders argue that loan defaults are hurting borrowers, Miller said in an email in February 2014. "At least one possible counterfactual is that payment defaults improve welfare, because the lending is not easy. the borrower keeps the loan principal and the collection efforts are largely ineffective, "says the email.

Miller also wrote to him: "As a reminder, we are not interested in predicting defects [on loans]or by default, "he said in a June 2014 e-mail." What we're trying to find out is whether defaulting has a positive impact on the consumer's well-being after the default. We do this because the CFPB has stated that defaults are harmful to consumers. "

How an insider in the payday loan industry has tipped university research in his favor [Renae Merle/Washington Post]

(Image: swanksalot, CC-BY-SA)

(via naked capitalism)

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Cory Doctorow

I write books. My latest are: A graphic novel by YA titled In Real Life (with Jen Wang); a documentary book on the arts and the Internet titled Information Does not Want to Be Free: Laws for the Internet Age (with introductions by Neil Gaiman and Amanda Palmer) and a science fiction novel YA entitled Homeland (continuation of Little Brother). I speak everywhere and I tweet and tumble too.

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