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The proposed consumer financial protection agency, currently being constructed in Congress, would leave some potentially unscrupulous predators off its radar screen if the current version of the package makes its way out of Washington. Payday lenders and pawnbrokers are at the top of the list of industries that would largely escape the scrutiny of the federal government.

Simultaneously, new data is out that shows payday lenders and pawnbrokers have significantly increased their lobbying budgets in Washington, leaving consumer reform advocates to wonder how much bite will be left in the reform law when it finally sees the light of day.

The Washington Post is reporting that financial companies that make loans, but do not have bank charters — and payday lenders and pawnbrokers fit into that category — wouldn’t be regulated by the proposed federal consumer protection bill. For now at least, government regulators will focus only on banks and mortgage lenders, and avert their eyes from what The Post refers to as the "most controversial lending industries."

Excluding payday lenders and pawn shops stems from a bipartisan agreement between Republican Sen. Bob Corker of Tennessee and Democratic Sen. Chris Dodd of Connecticut. Corker believes the government is overreaching by regulating financial lenders who had little or no impact on the economic collapse of 2007-2008. Dodd, the chairman of the Senate banking committee, will go along with Corker to gather the cross-party support he needs to get the consumer regulation bill through Congress.

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Right now, the U.S. Federal Trade Commission does have some jurisdiction over nonbank financial lenders, but it rarely holds such companies accountable. That wouldn’t change under the current version of the Senate bill, which focuses strictly on banks and mortgage lenders — industries that had (and have) a huge impact on the financial crisis.

But in avoiding the regulatory eye of Uncle Sam, did payday lenders and pawnbrokers pay for the privilege? According to the Federal Election Commission, payday lenders (pawn shops are among the leading providers of such loans) spent approximately $6.1 million lobbying Congress in 2009. That’s up from about $1.7 million in 2001. And the payday industry’s $1.3 million given in campaign contributions since the beginning of 2009 is more than the industry pumped out in contributions for the entire 2008 election cycle, the FEC reports. Overall, the U.S. government estimates payday lending has grown into a $42 billion industry, and is going gangbusters since the onset of the Great Recession in October 2007.

Pawnshops aren’t far behind. According to the National Pawnbrokers Association, loans are up by 20% to 25% since the recession started.

Obviously, the payday loan and pawnshop industries have a lot of cash riding on the outcome of new federal consumer protection laws. As of right now, it doesn’t seem like either industry has much to worry about.

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