Talent And Graves Are Aiding And Abetting A Company That Preys On Our Military Personnel

Senator Jim Talent and Rep. Sam Graves are misleading Missourians, and exploiting our service men and women for their own political benefit. They should stop.

Rep. Sam Graves has a history of taking on legislative projects that benefit a single political contributor. In fact, Rep. Graves was a central figure in the Weststar scandal a few years back.

And now, he and Senator Jim Talent are at it again.

In October 2004, despite the fact that none of them had been particularly active political givers in the past, several executives from Pioneer Financial Services/Whitbread Management gave Rep. Sam Graves maximum contributions.

On October 11, 2004 Jim Robertson, Vice President of Pioneer, gave $2,000 to Graves. Then on October 20, 2004, Thomas Holcom, President of Pioneer gave $2,000. On that same day, Joe Freeman, Director of Corporate Affairs for Pioneer gave $2,000. And for good measure, on the same day, Holcom's wife tossed in another $200.

Why the sudden interest in political giving? Because on October 8, 2004, Rep. Sam Graves had introduced a piece of legislation that specially benefitted Pioneer's military lending business. It claimed to "cap" interest rates, but left our military personnel unprotected from the true predatory practices of lenders like Pioneer.

The payday loan industry has been under severe pressure from the military for their predatory practices. The scam companies like Pioneer run is to state a reasonable sounding interest rate, and then tack on hidden fees and charges, plus some unnecessary insurance. By the time they are done, the interest itself is only a small portion of the overall cost of the transaction.

Here's an example:

HIGH FEES JACK UP LOAN‘S COSTS - PIONEER MILITARY LENDING
This loan agreement with Pioneer Military Lending adds $431.99 in fees to the finance charge, changing the listed 19.95% —agreed rate of interest“ to 31.99%. And the original loan includes $476.35 for insurance premiums, so the money actually pocketed by the borrower in exchange for this deal‘s 24 payments of $195 yields an interest rate of 49.4%.

In December 2004, the NY Times wrote a story and singled out Pioneer Financial Services for their unscrupulous practices.

On January 4, 2005, Rep. Sam Graves re-introduced his legislation that benefitted Pioneer. On Tuesday, March 29, 2005, Rep. Graves held a hearing in Kansas City, Mo to "examine" predatory lending practices used against military families.

The backgrounders and talking points used by Rep. Graves for that hearing were prepared by Scott Cahill, a lobbyist for Whitbread Management, which is an affiliate of Pioneer that shares offices, executives, and directors.

And Pioneer's lobbyists in DC were none other than the favorite law firm of the Blunt-Graves Machine, Lathrop & Gage.

Pioneer surely is getting what they paid for. The legislation carried by Talent and Graves does nothing to reduce the predatory practices by Pioneer.

From a recent WaPo story:

Congressional and industry sources familiar with the report
also say it may back proposals to cap the annual percentage
rates on loans to servicemen at 36 percent.

That would force the payday industry, whose short-term
loans can carry interest rates of more than 300 percent, out of
military lending. It would not, however, affect other military
lenders (like Pioneer) that offer loans with lower rates but whose practices
would be prohibited under legislation aimed at stamping out
predatory lending to troops.

"This approach does not address the problem, but rather it
appears to simply exempt certain lenders that lend solely to
the military," Sen. Tim Johnson, a South Dakota Democrat, said
in a July 13 letter, obtained by Reuters, to the U.S.
undersecretary of defense for personnel and readiness.

Congressional sources have noted that for example, Pioneer
Financial Services, a Missouri lender that employs some
practices that could be prohibited under a bill approved by the
House of Representatives, would be unaffected by a cap on
rates.(the Graves/Talent measure){emphasis added}

And lest you be confused by that last sentence, the House legislation they say would clamp down on Pioneer's practices is not the Graves/Talent legislation, but instead, HR458, a bill that ACTUALLY clamps down on predatory lending practices to servicemembers.

The Talent and Graves legislation has been roundly criticized as doing nothing to stop predatory lending practices, but instead giving a competitive advantage to one of the industries bad actors. In fact, one watchdog group accused Graves of "introducing a
bill, HR 97, to specifically eliminate the competition of a Missouri
company, Pioneer Financial Services, Inc., ( Pioneer ) which makes
controversial, high-cost loans to military personnel."

The text of Talent's Senate Amendment perfectly mirrors the language Pioneer provided to Rep. Graves. This bill is so egregious that the House has yet to take any action on Graves' bill, instead passing real reform in the form of HR458.

Once again, Senator Jim Talent has gotten caught doing the bidding of lobbyists, donors, special interests, and other assorted favor seekers. He is just too weak to stand up to those people to do his job, which is standing up for the interests of Missourians.

When Pioneer makes loans to our servicemembers they conceal the true costs. And now Senator Jim Talent, has used those servicmembers as a political pawn. He has claimed he was looking out for their interests, but just like Pioneer, he has concealed his true purpose--to take care of the very company that has preyed on the brave men and women who protect our nation.

Shame on him.