Power

Wasserman Schultz Backs Down From Opposition to Predatory Payday Loan Protections

Wasserman Schultz co-sponsored legislation in the U.S. House of Representatives to roll back proposed Consumer Financial Protection Bureau protections against predatory lending practices. Such practices often prey on those in poverty with offers of high-interest, short-term loans most borrowers are unable to repay.

“After reviewing the proposed rule, it is clear to me that the CFPB strikes the right balance and I look forward to working with my constituents and consumer groups as the CFPB works towards a final rule,” Wasserman Schultz said about the proposed protections. Fox News / YouTube

Rep. Debbie Wasserman Schultz (D-FL) retreated from her opposition to the Obama administration’s payday loan protections Friday amid a tough primary battle and increasing criticism aimed at her leadership of the Democratic Party.

Wasserman Schultz co-sponsored legislation earlier this year in the U.S. House of Representatives to roll back proposed Consumer Financial Protection Bureau (CFPB) protections against predatory lending practices. Such practices often prey on those in poverty with offers of high-interest, short-term loans most borrowers are unable to repay.

The Democratic National Committee (DNC) chair’s support of the plan aligned her with Republicans who have relentlessly attacked the CFPB, the Huffington Post reported in March. Wasserman Schultz is hardly the first Democrat to back such legislation, but as the head of the DNC, “her support undercuts efforts by liberals in Congress to draw contrasts with Republicans on economic issues,” the report said.

The position cost Wasserman Schultz’s standing with some lawmakers in her own party at a time when she could least afford it. Wasserman Schultz has been at the center of a string of heated criticisms, including allegations that she initially limited the number of the Democratic Party’s primary debates, steadfastly refusing to add more until she came under pressure. Her Democratic primary challenger, Tim Canova, has capitalized on intra-party disapproval, presenting himself as a more progressive alternative to Wasserman Schultz.

Wasserman Schultz made no mention of outside influences in a statement reversing her stance on predatory lenders and supporting the federal protections. “After reviewing the proposed rule, it is clear to me that the CFPB strikes the right balance and I look forward to working with my constituents and consumer groups as the CFPB works towards a final rule,” she said.

Allied Progress, a nonprofit behind aggressive web and television ad campaigns to reverse Wasserman Schultz’s, hailed the news as a “wake-up call for progressives in Congress and every state legislature around the country.”

“Getting in bed with the payday lending industry isn’t only bad policy, it’s bad politics,” the group’s executive director, Karl Frisch, said in a statement.

“In any given year, 12 million Americans take out a payday loan, which often comes with a triple-digit annual interest rate,” Joe Valenti, director of consumer finance at the Center for American Progress, and Alice Vickers, the director of the Florida Alliance for Consumer Protection, explained in a post for Talk Poverty, as Rewire previously reported. “And, as four out of every five of these borrowers aren’t able to afford these usurious rates, millions end up saddled with unsustainable debt.”

The Tampa Bay Times this week reported that Rep. Patrick Murphy (D-FL), who is running for the U.S. Senate, also reneged his support for the House bill.

“Now that both Patrick Murphy and Debbie Wasserman Schultz have endorsed the CFPB’s proposed rule to rein in predatory payday lenders, we can say without hesitation that the push to spread the disastrous ‘Florida model’ of payday lending nationally is dead,” Frisch said. “Anyone who thinks this effort is still a viable alternative to the CFPB’s proposal without the continued support of its two most influential congressional backers is delusional.”