By Lee Hedgepeth
Earlier this month, Gov. Robert Bentley announced he would be appointing State Rep. Mike Hill as head of Alabama’s Banking Department, the state agency charged with overseeing financial institutions such as banks, credit unions and private lenders.
Just weeks before that announcement, though, Hill probably didn’t have much of this on his mind. In fact, he probably didn’t have too much of anything on his mind. That’s because in early June, Hill and over a dozen of his Goat Hill colleagues were at a multimillion-dollar golf resort in North Carolina, being wined and dined on the dime of the Alabama Lenders’ Association, a special-interest lobbying group representing big lenders from across the state. Now, just over a month later, Hill is the top state official tasked with regulating them.
After the Carolina vacation had concluded and Hill was back in Alabama, it wasn’t long before Bentley made his decision public. Former Banking Superintendent John Harrison had retired after decades of service, and given Hill’s history with the industry, Bentley apparently couldn’t pass up the opportunity.
“For almost 30 years Mike has been instrumental in assisting with banking legislation while serving on several banking committees,” Bentley said in a news release following his appointment. “I am confident Mike will do a great job and I am honored to appoint him as the newest superintendent of the State Banking Department. Mike brings a wealth of knowledge that will continue to move the state forward in the area of consumer protection.”
Bentley’s right about the wealth of knowledge. It’s the consumer protection I’m worried about.
Indeed, Mike Hill has long been acquainted with the industry. Hill has served in the Alabama Legislature on committees tasked with regulating finance for three decades. Whether that’s the task he completed is another question entirely.
In 2002, Hill sponsored the legislation making payday lending legal in Alabama, with annual interest rates over 456 percent. Once that bill was passed, the State Banking Department tried to exert its authority and regulate the loans, capping their interest rates at a more consumer-friendly (and sane) 36 percent.
The lending companies fought back against the regulations and won with the help of Hill, who didn’t at that time seem to be concerned about “consumer protection.” In fact, according to a 2003 Associated Press report, “Consumer groups like AARP, Alabama Arise, and Alabama Watch [had] complained that they were never included in the talks” that led to Hill’s bill resurrecting the high-interest loans in the state with only a few minimal limitations.
Since those events in the early 2000s, Hill’s desire for “consumer protection” hasn’t seemed to grow, either. Hill and a handful of other legislators were singled out in a report by the Joint Center for Political and Economic Studies for their high number of campaign contributions by payday lenders, a vast minority of which are actually located in their respective districts. (Payday lenders, which now outnumber McDonald’s in Alabama by four to one, are typically located in low-income communities.)
“Five … representatives who report sizable contributions to their 2010 election campaign [including Hill] serve districts in which the number of licensed payday stores is fewer than 10,” the report concludes. That election cycle, Hill had received $6,400 from payday lenders. In the 2014 cycle, he received $14,250, more than almost every other legislator not in a leadership role.
The next year, in 2015’s regular session, a bill regulating the payday industry got further than it ever has: all the way through the Senate, through House committee and onto the House floor. Hill was there to stop it. The bill, which would’ve brought interest rates back down to 36 percent, was killed on the floor when Hill moved to carry it over indefinitely, a death blow to any legislation.
So it shouldn’t be surprising, then, after Hill’s appointment as the head of the state banking agency, one of the first to praise the change in leadership was — you guessed it — the Alabama Lenders’ Association.
“We are delighted with Gov. Bentley’s selection of Rep. Mike Hill to replace Mr. Harrison,” an announcement on the lending association’s website says. “Mr. Hill has been very active in the banking and finance world for many years. He has served in the Alabama Legislature for 30 years, where he chaired the Banking and Insurance Committee in years past, now known as Financial Services. He has been involved in most every significant legislative act important to the consumer finance industry and the consumers of Alabama for years. We do not think that the governor could have found a more appropriate replacement for Mr. Harrison.”
The lenders may think Hill’s the best pick for the job. I hope they don’t mind if I’m of a very different opinion.