Ethics complaint against Rep. Kevin Yoder alleges pay-for-play with payday loan industry

Photo: Associated Press

By: Justin Wingerter, Topeka Capital-Journal, 10/9/15

WASHINGTON — An ethics complaint has been filed against U.S. Rep. Kevin Yoder, alleging the Republican received a litany of campaign donations from the payday loan industry in the weeks surrounding his support of legislation that removed regulations on payday lenders.

On March 16, 2011, Yoder co-sponsored H.R. 1121, legislation that would have replaced the director of the Consumer Financial Protection Bureau with a five-person commission. Critics of the bill, such as Georgetown law professor Adam Levitin, contended it would have rendered the bureau that oversees payday lenders “less effective and less accountable.”

In the weeks before and after co-sponsoring H.R. 1121, Yoder received $24,800 in campaign contributions from the payday lending industry, beginning with a $2,500 donation from Overland Park-based QC Holdings Inc. Political Action Committee on Feb. 23, 2011. QC Holdings Inc. PAC made two more donations, of $5,000 and $2,500, on March 28, according to Federal Election Commission filings.

The company’s employees and their family members also chipped in. On March 28, company president Darrin James Andersen donated $2,300 and Jill Andersen, who listed the same address on FEC forms, donated $2,500. Don and Mary Lou Early of QC Holdings donated $2,500 each on March 30, 2011, and employee Mary Ann Powell donated $2,000 that same day. Douglas Nickerson, Darin Scott Smith, R. Brian Elvin and Matthew Wiltanger, all employees of QC Holdings, donated $500 each.

“We think this pattern shows there may have been a quid pro quo,” said Anne Weismann, executive director of the Campaign for Accountability, a Washington-based nonprofit group that is asking the Office of Congressional Ethics to investigate Yoder and 10 other members of Congress.

On Aug. 22, 2013, Yoder joined several other members of Congress in signing a letter to Attorney General Eric Holder and Federal Deposit Insurance Commission Chairman Martin Gruenberg asking the Department of Justice and FDIC to end Operation Choke Point, an investigation into money laundering and fraud in the payday loan industry.

Two months later, on Oct. 23, 2013, Yoder became a co-sponsor of H.R. 1566. According to the bill’s summary, it would “promote much greater availability of … commercially viable credit for underserved customers.” But a Treasury Department official testified the legislation would negate actions Congress and federal officials had established for safeguarding consumers from payday lenders.

In the two-month span between Aug. 22 and Oct. 23, 2013, Yoder received $36,757 in campaign contributions from the payday lending industry, including $5,000 each from Darrin and Jill Andersen, $5,000 from Don Early, $5,000 from Mary Lou Early, $5,000 from Cash America International Inc. PAC and more than $4,000 in donations from other QC Holdings employees.

“He took three different actions, all of which were aimed at protecting the payday loan industry from greater oversight,” Weismann said.

Yoder’s office declined to comment on the allegations and his campaign spokesperson didn’t respond to a request for comment. The congressman canceled a previously scheduled interview with a Topeka Capital-Journal reporter Wednesday, citing a hectic schedule.

Phone and email requests for comment from QC Holdings weren’t answered Friday. When a reporter asked to speak with a company spokesman, a QC Holdings receptionist said, “We don’t have anyone like that.”

Clay Barker, executive director of the Kansas Republican Party, defended Yoder, saying the congressman “has the highest standards of integrity and professional conduct in representing all his constituents.”

“Campaign for Accountability is one of those dime-a-dozen political groups that exist to manufacture publicity by alleging the existence of nefarious conspiracies without offering any proof,” Barker said.

Nathaniel McLaughlin, a Democrat who announced last month he is running for Yoder’s 3rd District congressional seat, said he is focused on the Democratic primary, not attacking Yoder.

“Let’s allow the ethics committee to perform their duty,” McLaughlin said in an email. “I extend to any potential opponent the offer to keep personal commenting out of this campaign.”

Critics of payday loans claim they perpetuate a cycle of poverty, ensnaring low-income lenders in debt they struggle to ever emerge from. A 2012 Pew survey found 69 percent of people taking out a payday loan for the first time do so to pay for daily expenses, such as food and rent. The average borrower takes out eight loans annually, spending $520 on interest with an average loan size of $375.

A yearlong CFPB report released in 2014 found that 80 percent of payday loans are rolled over or renewed because they can’t be paid off and more than 60 percent of borrowers end up paying more in fees than the amount borrowed. Only 15 percent of borrowers repay all of their debts to payday lenders on time.

“I think it’s hard for any member of Congress to defend helping payday lenders,” Weismann said.

It isn’t yet clear whether the Office of Congressional Ethics will investigate Weismann’s allegations. The office said Friday that it doesn’t comment on complaints and Weismann said she expects it will take several months before she hears anything from ethics investigators. The Office of Congressional Ethics is a nonpartisan entity independent of Congress that investigates complaints against members of Congress and their staff.

“This complaint will go through the process and be tossed out for lacking any merit,” Barker predicted.

The Campaign for Accountability’s complaint stems from a report by the liberal nonprofit group Allied Progress, which found that Yoder has received more than $100,000 from the payday lending industry during his nearly five-year stint in Congress. FEC reports show QC Holdings’ political action committee has donated $10,000 to Yoder during each of his bids for Congress, in 2010, 2012, 2014 and 2016.

“The industry wields tremendous power not only over those it is able to ensnare with its risky financial products, but also over the levers of power in Washington,” Allied Progress wrote in its report.