On a sunny day in July 2010, a man with a big smile and a broad smile rolled into the lobby of a bank in downtown Washington, D.C. The banker had come to Washington to lobby Congress on an effort to create the Consumer Financial Protection Bureau.
The hard money lender had come from Texas.
The lobbyist was John C. Hester, the Republican chairman of the House Financial Services Committee.
The two had spent a month on the phone with the CFPB’s top official, and Hester had asked CFPBs staff to come down and meet with him in person.
Hesters office had a small conference room, and a half dozen staff members had already arrived, including a staffer from the Consumer Federation of America, an activist group that had been lobbying for the agency.
Hesse’s team had been dispatched to speak to the bureau’s staff.
The day before, the CFA had sent Hester a letter urging the CFO to get rid of the hard-money lending provision, which was in the CFSB’s consumer protection bill.
The group said that it wanted to “help restore the balance of power between consumers and banks.”
The CFA’s letter, sent just days before the CFIBA passed, had been signed by more than 50 groups, including the American Bankers Association, the National Association of Federal Credit Unions, the Consumer Bankers of America and the National Consumer Law Center.
The CFPBS had long fought to preserve the hard interest loophole.
In fact, during a Senate hearing last year, the bureau told the senators that “the law is intended to address only two types of loans: those that are made with money from an account and those that do not.”
The bank lobbyists wanted the CFEB to keep the provision in the law.
“I would hope that the administration would have a better sense of what they think about this,” said Representative Mark Meadows, a North Carolina Republican who chairs the House Ways and Means Committee.
“If they didn’t think that the provisions would be harmful to consumers, they wouldn’t have written them into the law.”
Meadows had been the first Republican to introduce a bill to repeal the provision.
It failed to gain enough support, and the CBA had little incentive to repeal it anyway.
So Hester and Hesse set out to convince Congress that the hard loan provisions were necessary.
The bill was sponsored by Meadows, Representative Ed Royce, a California Republican, and Rep. David McKinley, a Washington Republican.
It passed the House in April 2011, and it was signed by President Obama in June.
Hesson, who had previously worked for a small nonprofit called the National Education Association, was one of three lobbyists who represented Hesse at the time.
“They didn’t even have a budget for their lobbyists,” Meadows said.
“We spent about $30,000 in the first two weeks, and I was able to get $10,000 back in a week.”
The bill passed the Senate by a vote of 65 to 38, and by the time the House voted to override the veto in January 2012, it was clear that the law was not going to survive a filibuster.
Hield and Hesson had no money for a fight.
They had a few hundred thousand in donations to spend on the effort, but the CFFB had been operating at a loss since 2010, so Hesse and Hessel were spending the bulk of their time on their lobbying campaign.
They were still fighting for a little more money for the CFB, but Hesse had already secured a significant payday.
In late 2011, the agency had just under $2 billion in its budget.
A $1 billion increase in funding would have brought the CFC to more than $4 billion, and could have saved the agency millions of dollars in the coming years.
In May 2012, after Hesse won reelection, the lobbying blitz got under way again.
On May 14, the day after Hield won reelection in a landslide, the Congressional Black Caucus sent out a fundraising email touting the success of the bill.
“Hesse and CFPBC are proud to be able to work together to bring forward a $1.4 trillion funding package that will protect the hard working Americans of this country,” the fundraising email said.
The letter continued, “This is a win for all Americans.
And it’s also a win because it’s a win that protects the hard work and sacrifices of every American.
This legislation ensures that the working families of America have access to the best possible job opportunities.
We thank you, Chairman Hesse, for working so hard to pass this bill.”
Two days later, Hesse released a new fundraising email for the organization.
It read, in part: “Now it’s time to work harder to get a better deal for hard working families.”
The fundraising email was a major boost to Hesse.
He had just a few weeks left to fight the election, and he needed the money.
So he started sending out