When Sen. Kelly Loeffler (R-GA) added her name to a letter to financial regulators in May urging them not to make changes to consumer credit reporting requirements during the pandemic, it seemed like a good case of home-state politics for the first-year senator.
Democrats had been pushing to suspend negative credit score reporting in the wake of COVID-19’s economic impact. But that was strongly opposed by the so-called Big Three credit bureaus: Equifax, Experian, and TransUnion. And one of those three, Equifax, happens to be headquartered in Atlanta, Loeffler’s hometown.
But shortly after she signed the letter, its purpose became neatly aligned with her personal financial interests as well. In August, Intercontinental Exchange—the company run by Loeffler’s husband, Jeffrey Sprecher—announced a $10 billion acquisition of home loan data giant Ellie Mae, which had stood to be hurt by the proposal for a credit reporting moratorium.
Loeffler was a former executive at ICE and retains some $9 million worth of stock in it and in signing that letter she added yet another chapter to an already complicated web of financial interests and official policymaking actions that have marked her short time in office. Like some of those prior chapters, this one almost never became public.
When Loeffler signed on to the letter to Treasury Secretary Steven Mnuchin, the Consumer Financial Protection Bureau, and the Federal Housing Finance Authority, she did not publicize it. Nor did she send a press release on it or put up a tweet about it. It was obtained by The Daily Beast in December.
But Loeffler’s involvement in the credit reporting issue was notable not just because of the secrecy of it. Financial regulation is not in the senator’s portfolio. Among the 11 GOP senators who signed the May letter, she was one of two who did not sit on the Senate Banking Committee. Her fellow Georgia Republican, Sen. David Perdue, also signed the letter but does serve on the committee.
Loeffler’s campaign declined to comment on her reasons for joining the credit reporting push, or whether she knew about ICE’s acquisition of Ellie Mae before it was announced. But good government groups say the dots connect in a damaging direction.
“We don't know why she signed this letter,” said Jordan Libowitz of the nonpartisan ethics watchdog group CREW, “but we should not need to wonder whether it could have been an instance of her selling out the interests of constituents who were in economic distress in order to maintain the value of her stock portfolio.”
The efforts to stop a credit score reporting moratorium were successful, despite heavy pressure from Democrats to implement such a proposal.
The calls to protect consumers from COVID-related hits to their credit scores began almost as soon as the outbreak itself erupted in March. That month, 70 House Democrats urged the three credit bureaus to stop reporting missed payments on hospital bills, mortgage payments, and credit card payments, as the country went into quarantine and millions of people began to lose their jobs.
On March 18, Sens. Sherrod Brown (D-OH) and Brian Schatz (D-HI) introduced legislation to implement a four-month moratorium on negative credit reporting. Their bill failed to make it into March’s coronavirus relief legislation, the CARES Act. But that bill did include provisions aimed at giving some consumers recourse to protect their credit scores. In some situations, lenders were required by the law to report some accounts as current, but borrowers had to contact their creditor and get them to agree first.
Democrats wanted another bite at the apple, arguing that without a moratorium, millions of Americans would see their credit scores crater through no fault of their own because of financial hardships tied to the coronavirus crisis. And their efforts to push the fed to act were persistent enough to warrant pushback from Loeffler and 10 fellow GOP senators.
Their May letter to top financial regulators urged them to disavow those proposals, for fear that “Altering credit data will harm the most vulnerable consumers, making credit less available and more expensive for consumers affected by the pandemic.” There was also concern that the moratorium would make lenders overly cautious about extending credit to consumers and business owners across the board, owing to a lack of data. That, theoretically, would have dried up access to much-needed capital for people in a trying economic time.
In June, the Federal Housing Finance Agency, which oversees federal home lending policy, responded to Loeffler and her colleagues with a supportive message.
“The Federal Housing Finance Agency (FHFA) supports accurate credit reporting during the COVID-19 national emergency,” wrote Mark Calabria, the agency’s director, in a letter obtained by The Daily Beast. “It is vital that a consumer’s credit report accurately reflects their mortgage and trade history to properly assess a consumer’s ability and willingness to repay through the underwriting process.”
The absence of a full moratorium was beneficial to companies like Equifax, which would have been hurt by such a move. The company spent more than $1 million lobbying Congress in the first six months of 2020, according to federal filings, on issues such as the CARES Act and “consumer credit reporting.” Its PAC, however, donated $1,000 to Rep. Doug Collins (R-GA), Loeffler’s rival for a spot in the Senate runoff election.
At around the same time, Sprecher bought Ellie Mae with a vow to put that company’s data under ICE’s roof in order to make it, in his words, “the de facto source of information for the U.S. mortgage market.” A credit moratorium would have been damaging for ICE too, in that it would have made much of that data useless to possible clients until any such moratorium was lifted.
“If you know that the data that’s from March 2020 to March 2021 doesn’t have any negative reporting data in it, you just have to throw out the data,” said Adam Levitin, a professor at Georgetown University Law Center who specializes in financial regulation. That would not be useful for ICE, which hopes to be a “giant Hoover and suck up all the consumer data they can,” said Levitin.
It’s unclear exactly when Sprecher would have had his sights set on acquiring Ellie Mae, but his company had been making overtures to the broader credit data sector for years, and ICE had been doing business with the company when COVID struck. Sprecher later told Fortune that he and his business partners got on planes during the COVID-19 lockdowns to persuade Ellie Mae to sell.
Loeffler seemed to recognize that being perceived as against helping consumers with their credit scores during the pandemic carried some political costs. Not only did she keep her signature on the letter secret, she also introduced a bill in June that would have stopped credit reporting agencies from including medical debts on a person’s credit report, in the event of “unconscionably excessive” medical costs. But that proposal would have left it to the Department of Health and Human Services Secretary to define what that was, providing no specific guidance on the threshold.
The letter Loeffler signed was not the first time that her financial interest in ICE collided with her public duties. In October, she used a bill to remove Chinese companies from U.S. stock exchanges—which ICE runs—as a cudgel against Collins, as they fought each other to advance to the runoff. But she never actually voted for the bill or cosponsored it, and ICE publicly warned against the legislation, The Daily Beast reported.
Loeffler’s extensive financial dealings first came under scrutiny after The Daily Beast reported in March that she sold off millions of dollars worth of stock holdings after private briefings about the coronavirus. The senator has consistently stressed that she has been found of no wrongdoing by federal law enforcement authorities and fellow members of Congress. But those who advocate for good governance say the lengthy web of financial entanglements that she and her family have created a myriad of problems and potential conflicts of interest.
Avoiding significant conflicts of interest, said Meredith McGehee, executive director of the nonpartisan good government group Issue One, “mostly requires a public official to be concerned about both the reality and the appearance of conflicts.”
“It seems the conflicts never end,” said McGehee in an email. “Undoubtedly, many of these conflicts arise because of the vast wealth of Sen. Loeffler and her husband. But it is notable that other wealthy senators have navigated these issues with more care and finesse.”