I don’t usually write about the hypocrisy of politicians because, to one extent or another, they are all hypocrites at times. It comes with the territory.
Sometimes, however, a politician himself will invite scrutiny, either by direct invitation or, more often, indirectly through the unwarranted criticism of an opponent that calls that opponent's ethics into question. Then, hypocrisy is not only fair game, it becomes an arguably relevant factor in evaluating a candidate. Brian Moran is a serial offender in this regard – for example, vaguely criticizing, without any proof of wrongdoing whatsoever, that Terry McAuliffe’s fund raising was somehow tainted, thus begging for the same standard to be applied to his own fundraising. The results have not been pretty for Moran.
This past week, however, it is Terry McAuliffe who invited the scrutiny of his own donors.
The contretemps are over what began as a minor shoving match between Deeds and McAuliffe on payday lending, but which has now had a few punches thrown. In brief, McAuliffe asserted that he is the only candidate who wants to ban payday lending in the Commonwealth. This is demonstrably false – Deeds has the same position -- and the Deeds camp understandably took umbrage. McAuliffe has also criticized both Deeds and Moran for their votes authorizing payday lending in the Commonwealth, and subsequent ineffectual attempts to repeal or restrict it. That’s fair. Creigh and Moran are big boys, and they have records they have to defend.
Creigh put out a radio spot gently chiding McAuliffe on the issue, including asserting that, among other things, he was “attacking Mark Warner and Tim Kaine’s records” on the issue of payday lending. It is a fair argument – it is impossible to attack Deeds and Moran for their votes over the years on payday lending without also criticizing Warner and Kaine, who supported the very same policies.
McAuliffe’s campaign responded with the following statement (h/t Blue Virginia):
Statement from the McAuliffe Campaign on Creigh Deeds's Negative Attack Ad
In response to the release of Creigh Deeds's negative attack ad yesterday, McAuliffe campaign spokeswoman Elisabeth Smith released the following statement:
"It's strange that Creigh Deeds is attacking Terry on this issue. The fact is that as members of the General Assembly all three of Terry's opponents allowed predatory lending to explode in Virginia and took thousands of dollars in campaign contributions from the industry.
"It's an honest difference between the candidates. Terry wants to ban all predatory loans, and he's the only candidate who has pledged not to accept money from predatory lenders. He has also proposed a plan to replace predatory loans with a responsible alternative."
(The statement then included a “fact check” section not repeated here, but available at Blue Virginia.)
First, this is a complete overreaction to the gentle critique Deeds’ ad lays on McAuliffe. In any event, two statements drew my attention:
1. That Deeds “took thousands of dollars in campaign contributions from the industry.”
2. McAuliffe is “the only candidate who has pledged not to accept money from predatory lenders.”
Here is the problem with those statements: both are technically true, but both are gross distortions of the records of each candidate when it comes to donations from the consumer lending industry such that, taken together, they constitute, at best, a unfair misrepresentation of the true situation, and at worst, a lie.
Here is what VPAP shows:
Deeds received two contributions from a single payday lender – Check ‘n Go – totaling $2,000.
That is it since 2002, when payday lending was authorized in Virginia..
In his current Gubernatorial run, Creigh has not received one red cent from consumer lending companies of any stripe.
To put it in context, over that time frame the consumer lending industry has donated nearly $2 million to Virginia candidates, PACs, etc.
So, I guess you can truthfully say that Creigh has “taken thousands” from the industry, but to what purpose, other than to distort the truth of the matter.
Consider the placement of the sentence regarding the ominous “thousands” in donations [at $2,000, just barely] from the “industry” [a single company actually. Six years ago] immediately following an assertion that Deeds, among others legislators, allowed the industry to explode, inferring a connection between the two. This is absurd on its face with respect to Deeds, given the timing and the amounts involved.
Then the kicker: McAuliffe would never do such a thing. He’s the only candidate that pledged to accept no money from payday lenders.
If you’re going to play this game, if you’re going to disingenuously suggest sleazy activity by an opponent, and if you’re going to contrast yourself to this false allegation by self-righteously offering up yourself as the exemplar of ethical behavior, then you had better be, as the saying goes, as pure as the driven snow.
Unfortunately for McAuliffe, that is not the case. It is not even close.
McAuliffe’s most recent finance report lists a $25,000 donation from the “industry.” It is from Catherine Reynolds, CEO of EduCap. In fact, Ms. Reynolds husband donated $25,000 to McAuliffe, as well, although that donation is not counted as coming from the company. Still, that is a $50K donation from EduCap.
EduCap is not a payday lender, but a private, non-profit student loan company. So, again, we can see McAuliffe’s assertion is technically true. He has not accepted money from a payday lender.
Still, EduCap’s record as a lender is not a good one. Indeed, the company has been accused of some of the classic sleazy business practices that are the mainstay of the repulsive payday lending industry.
According to CBS reporter Sharyl Attkisson, “The problem [with EduCap’s business] is, according to investigators who have looked at this, too often high interest charged, onerous terms are put upon the kids who, through aggressive marketing tactics, have been convinced to get these loans when they might be able to get better terms through other courses. Aggressive collection tactics are used, according to some of the students, if they miss a single payment.”
In addition, CBS has reported, “Watchdog Stephen Burd … says EduCap charges up to 18 percent interest - triple the government rates and as much or more than for-profit companies. He's heard from dozens student borrowers who complain about costs and aggressive collection tactics, who advise to avoid this company because it is predatory lending.”
Lastly, according to the Washington Post, in 2006 “the United States Student Association, the country's largest student organization, complained to the Federal Trade Commission, urging the agency to ‘take action to stop false and deceptive advertising practices’ by EduCap.” The FTC did not act, claiming it lacked jurisdiction.
I would also note here that EduCap has been the subject of or tangentially related to several other controversies, including an IRS investigation into its tax-exempt status, but the idea here is not to tar Terry McAuliffe with all the possible bad acts of his contributors, which is why I stuck to EduCap’s record as a lender – the issue at hand.
Catherine Reynolds is known around D.C. for, among other things, her large charitable and political donations. Does she do it from a charitable heart, or does she expect something in return, or both? Well, here's a quote to help you decide whether you're comfortable with Ms. Reynolds putting fifty large into our Governor’s race:
“Well, and we also believe that the people that give the largest donations should sit in the front row.”
But the question really is, given the standard the McAuliffe campaign itself deems approrpiate, if $2,000 of donations to Creigh six years ago from a payday lender is worthy of note, what about $50,000 of donations six weeks ago from a consumer lender that has, at best, a spotty record?