Groups’ Brawl Heads to Congress

Posted October 16, 2009 at 6:36pm

A long-standing battle over payday lender regulations is moving to Capitol Hill, with the Consumers Rights League trying to use recently enacted lobbying reforms against the anti-predatory lender group Center for Responsible Lending.

The groups have been at odds at the state and national levels for the past two years, but the Consumers Rights League is mounting a new challenge using the lobbying guidelines enacted as part of the Honest Leadership and Open Government Act of 2007.

The league is arguing that the Center for Responsible Lending has numerous errors in its lobbying reports and tax filings, according to complaints it sent earlier this month to the Secretary of the Senate, the Clerk of the House and the Internal Revenue Service.

“[The Center for Responsible Lending] has systematically attempted to camouflage and hide its activities by improperly registering and filing for multiple legal entities on a consolidated basis in a manner that is not permitted by law or your official LDA Guidance document,— wrote Mike Flynn, president of the Consumers Rights League, in the lobbying complaint.

The Center for Responsible Lending adamantly defends its filings and says this is just the latest attempt by the Consumers Rights League to try to sully its reputation.

“CR League repeats previously discredited claims that the Center for Responsible Lending has not been a champion for consumers, but rather a front for donors,— spokeswoman Kathleen Day said in a statement. “In fact, the Center for Responsible Lending is well-known for its independent research and consumer protection work.—

The Center for Responsible Lending is an affiliate of the North Carolina-based Self-Help Credit Union. Started in 1980 by Martin Eakes, the credit union was formed to help women, rural residents and minorities get loans. In 2002, Self-Help Credit Union established the Center for Responsible Lending to expand its focus to implementing financial regulatory reform in areas such as payday lending.

The Consumers Rights League was formed at the end of 2007 with several Washington insiders on its board of directors, including Jason Roe and Michael McKay of the lobbying firm Federal Strategy Group and Terry Kibbe, a Republican fundraiser.

It’s unclear who the major donors are behind the Consumers Rights League. While Flynn says that the financial industry does contribute to the group, it is not the only sector it solicits funds from.

The organization has a “broad collection— of donors, according to Flynn, but he declined to give specific donor names.

Flynn previously was a lobbyist with Berman & Co. and worked for several years at the American Legislative Exchange Council.

The league has its roots in conservative politics, briefly renting office space from FreedomWorks in 2007 and 2008. The league now opts to have a “virtual office— to limit overhead, according to Flynn.

The Consumers Rights League does not have a federally registered lobbyist. But Roe and McKay have represented several financial-services-related clients, including First National Bank of Georgia and the Coalition Organized for the Future of Insurance Regulation.

Flynn said the reason the Consumers Rights League is going after the Center for Responsible Lending is because the center is a part of a credit union network, which is trying to limit the number of financial tools, and the amount of lobbying the organization is doing.

“We generally believe the consumer is in the best place to make decisions in their life,— Flynn said.

The complaint notes several inconsistencies in the Center for Responsible Lending’s lobbying reports, including combining the multiple iterations for the filer’s name; failure by the organization and its in-house lobbyists to file semiannual reports in a timely fashion; not terminating three former in-house lobbyists from the reports; and that its multiple outside lobbying firms, including Van Scoyoc Associates, Pennsylvania Avenue Group and International Government Relations, have listed several different iterations of the center’s name on lobbying reports.

The Center for Responsible Lending and its employees filed their 2008 LD-203 forms, which document political contributions, months after the reports were due. The center and two employees filed their 2009 midyear report after Roll Call notified it of the complaint. One employee filed it on his own initiative, according to Day, the group’s spokeswoman. Additionally, Day said the center has “added procedures to make sure we always file on time.—

The complaint also alleges that two large contributors — Paulson & Co. and the Sandler Family Foundation — should have been named on the lobbying reports if they are helping coordinate lobbying activity.

The Center for Responsible Lending says the contributions by Paulson & Co. did not go to lobbying efforts. The funds were earmarked for providing legal assistance to families facing foreclosure. The Sandler Family Foundation grant is for general operating support, according to Day.

The center also says its lobbying activity is appropriate and legal.

“CRL has also been transparent about its activities and its relationship to its affiliate organizations,— Day said in a statement. “There have been some late filings and some technical errors which we are correcting, but no information was withheld in the few instances when forms were not filed on time.—

Additionally, Day said the group tried to be more transparent by using both the Center for Responsible Lending and its parent organization, the Center for Community Self-Help, on its lobbying filings.

The Consumers Rights League also sent a complaint to the IRS, asking the agency to look into how the center calculated its lobbying expenditures and the amount it should be spending on lobbying. The complaint also questions the tax-exempt status of the Center for Responsible Lending, alleging that the large donors are enriching themselves by giving donations toward an organization that is lobbying for policies that would help their investments.

An IRS spokeswoman said federal law prohibits agency officials from discussing complaints. A Secretary of the Senate spokesman also declined to comment, saying that the office does not discuss complaints.

It’s unclear what process the Secretary of the Senate and the House Clerk use when dealing with lobbying complaints. The Honest Leadership and Open Government Act did not lay out a procedure for handling complaints.

Ethics lawyers say the offices aren’t enforcement agencies and don’t have the authority to require individuals or companies to make changes to their lobbying reports.

“If what they are going to do is start having a complaint process, then they need to make certain there’s an actual complaint process so they aren’t just making it up as they go along,— said Cleta Mitchell, an ethics lawyer at Foley & Lardner.

The tactic is hardly new, though. In 2006, Public Citizen filed a complaint against Archer Daniels Midland for not registering a lobbyist and the Renewable Fuels Association for underreporting its lobbying expenditures. Following a letter from the Secretary of the Senate’s office, ADM did register an in-house lobbyist. The RFA defended its reporting and did not amend any filings.