Louisiana Voice

You’ve seen them mostly in the seedier parts of town, those quickie payday loan storefront operations that specialize in small, short-term, high-interest loans against a customer’s next paycheck. Their clientele consists mainly of the working poor who, for whatever reason, can’t quite make that last paycheck stretch to the next one.

Louisiana has 18.7 percent of its families living below the poverty line, third-highest in the country. The state also ranked third in the nation in the percentage of households earning less than $35,000 (33.3 percent).

Not surprisingly, Louisiana has the fifth-highest payday loan usage rate in the nation at 10 percent.

Louisiana allows lenders to charge annual rates of up to 567 percent for a two-week, $100 payday loan. Most borrowers do not understand the true cost of the loans and use them for recurring expenses rather than one-time uses.

Incredibly, of the nine states with the most payday lending in the U.S. Louisiana, with 2,059, had the highest number of payday lending storefronts.

Texas, ranked ninth in payday loan usage at 8 percent, has 1800 payday lending storefronts and Missouri has 1,275. The next highest number of payday loan outlets was 781 in Kentucky.

The rankings of the nine states with the highest percentage of payday storefront activity, in order, are Oklahoma, Missouri, Washington, Ohio, Louisiana, Indiana, Kansas, Kentucky and Texas.

About 120 million payday loans, with an average interest rate of 455 percent, are made in the U.S. to low-income customers each year. The Center for Responsible Lending found that 76 percent of the $3.5 billion payday loan volume comes from “churning,” which is repeat borrowing by customers who paid off their loans but because of high interest rates, are forced to borrow again before their next paycheck.

Many of the payday lenders, who are financed by the nation’s larger banking institutions, have upped the ante in lobbying and campaign donations in response to the creation of the Consumer Financial Protection Bureau (CFPB) which is attempting to pass more rigorous regulations the industry.

So it should come as no surprise that recipients of the biggest campaign donations from the payday loan industry are Reps. Jeb Hensarling (R-Texas), vice chair of the House Financial Services Committee and Spencer Bachus (R-Alabama), chairman of the House Financial Service Committee, and Sen. Richard Shelby (R-Alabama), ranking member of the Senate Banking Committee.

In April, all that lobbying and financial investment in the legislative process paid huge dividends when the House Financial Services Committee voted to gut the CFPB budget.

But those are not the only beneficiaries of the payday loan industry’s largesse.

Louisiana got in on the action in a big way.

Cash America of Fort Worth (with five convenient locations in Baton Rouge) contributed $38,500 to 17 legislators and former legislators, a mayor, the Louisiana Republican Party and Gov. Piyush Jindal. And that’s just in Louisiana. Nationwide, Cash America has spent $707,000 on political campaign contributions in the first seven months of this year alone.

The breakdown of Louisiana contributions by Cash America is as follows:

• Gov. Piyush Jindal: $7500;

• Senate President John Alario (R-Westwego): $1500;

• Sen. Conrad Appel (R-Metairie): $500;

• Rep. Jeff Arnold (D-New Orleans): $1000;

• Sen. Norbert Chabert (R-Houma): $500;

• Former Sen. Joel Chaisson (D-Destrehan), now St. Charles Parish District Attorney: $500;

• Sen. A.G. Crowe (R-Slidell): $1500;

• Former Sen. Ann Duplessis (D-New Orleans): $1500;

• Former Sen. Nick Gautreaux (D-Meaux): $1000;

• Sen. David Heitmeier (D-New Orleans): $500;

• House Speaker Chuck Kleckley (R-Lake Charles): $1000;

• Rep. Joseph Lopinto (R-Metairie): $500;

• Former Sen. Rob Marionneaux (D-Livonia): $500;

• Sen. Daniel Martiny (R-Metairie): $1500;

• Former Sen. Mike Michot (R-Lafayette): $3000;

• Sen. John Smith (R-Leesville): $500;

• Sen. Francis Thompson (D-Delhi): $500;

• Former House Speaker Jim Tucker (R-River Ridge): $500;

• Mayor Cedric Glover (D-Shreveport): $5000;

• The Louisiana Republican Party: $5,000;

Payday One of California also contributed an additional $5000 to Jindal and Paycheck Loans contributed $3000 to Rep. James Armes (D-Leesville).

A few members of the Louisiana congressional delegation also got a share of the booty:

• Republican Sen. David Vitter: two separate donations of $2000 each in 2010 and 2012;

• Former Republican Cong. Richard Baker who served as chairman of the House Financial Services Capital Markets Subcommittee: $4000 in 2006 and another $1000 in 2008;

• Former Democratic Cong. Charles Melancon: $500 in 2004;

• Former State Sen. Willie Mount (D-Lake Charles), who lost her bid for Congress: $500 in 2004;

• Democratic Sen. Mary Landrieu: $1000 in 2002.