Updated October 9
The National Association of Attorneys General (NAAG) has come out against legislation that a provider of cash advances hired two law firms this summer to support.
The group on Friday sent to congressional leaders a letter that called on them to oppose the Consumer Credit Access, Innovation, and Modernization Act. The bill would establish a federal charter for "nonbanks" that serve individuals who have bank accounts but depend on alternative financial services, or who don't have bank accounts at all. Cash America International Inc. this summer added Andrews & Andrews and Jones, Walker, Waechter, Poitevent, Carrère & Denègre to its lobbying roster, giving itself six firms to push for the charter, according to congressional records. The Fort Worth, Texas-based company during the first half of 2012 spent $460,000 on federal lobbying that focused on the charter.
Nonbanks like Cash America often provide payday loans, which have come under fire in several states for what critics call predatory practices, such as loans with exorbitantly high interest rates.
The measure "would supplant state laws without sufficiently providing tangible benefits to the consumers of our respective states," NAAG said. "In our view, the bill would eliminate crucial consumer protections in many states and curtail our authority to enforce state laws governing the conduct of financial services companies operating within our borders."
Yolanda Walker, a Cash America spokeswoman, didn't have an immediate comment on the letter. But Peter Barden, a spokesman for the Online Lenders Alliance, which counts Cash America as a member and also supports the bill, dismissed the concerns of the attorneys general.
"The federal charter legislation maintains all federal consumer protections and preserves the role of state attorneys general," Barden said in a written statement. "In fact, the bill specifically gives attorneys general the power to investigate chartered entities."
In testimony prepared for a House Financial Services subcommittee hearing in July, Mary Jackson, Cash America's senior vice president for corporate affairs, said the current system of state regulations for nonbanks is "utterly ineffective," restricting her company.
"The patchwork of credit products currently available by state means we can't offer the same choices to consumers with identical financial needs because they are separated by nothing more than a state line," Jackson said. "Under the charter, American consumers living in different states would have access to the same products."
Founded in 1984, Cash America has more than 1,000 locations in the United States and Mexico, according to the company. Cash America also gives consumer loans through the Internet to individuals in Australia, Canada, the United Kingdom and almost three dozen U.S. states. The company operates under several names, including Cash America Pawn, Cash America Payday Advance, Cashland, Mr. Payroll, Pawn X-Change and SuperPawn.