Debbie Wasserman Schultz plays both sides of payday lending

Last week, Florida congresswoman and DNC chair Debbie Wasserman Schultz announced that she was signing on as an original cosponsor of the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, which would prohibit payday lenders from having access to borrowers’ bank accounts, close loopholes in the payday lending system and “ban lead generators and anonymous payday lending.” A partner bill has also been introduced in the Senate, featuring progressive co-sponsors Tammy Baldwin, Bernie Sanders and Elizabeth Warren, among others.

The bill is, by all accounts, a solid piece of legislation. Payday lending has recently found its way into the crosshairs of the Consumer Financial Protection Bureau, among other consumer protection organizations, as being an industry that takes advantage of borrowers by trapping them in a cycle of debt, turning initial loans of a few hundred dollars into four or five-figure debts. The SAFE Lending Act would curtail some of the industry’s worst abuses.

However, Wasserman Schultz’s co-sponsorship of the bill makes her a bit of an oddball. As Allied Progress and a collection of other advocacy organizations pointed out in a letter sent to her office yesterday, she remains a co-sponsor of H.R. 4018. Wasserman Schultz previously faced widespread criticism from the progressive community over that bill because it is specifically designed to both make it harder for the CFPB to regulate payday lending and to encourage states outside of Florida to adopt policies favorable to payday lenders. As the Huffington Post explained:

Debbie Wasserman Schultz, via Wikimedia Commons

Debbie Wasserman Schultz, via Wikimedia Commons

The misleadingly titled Consumer Protection and Choice Act would delay the CFPB’s payday lending rules by two years, and nullify its rules in any state with a payday lending law like the one adopted in Florida. The memo being passed around by Wasserman Schultz staffers describes the Florida state law as a “model” for consumer laws on payday loans, and says the CFPB should “adjust their payday lending rules to take into account actions Florida has already taken.”

Among the CFPB’s planned rules include limits on the number of loans one can take out per year and the number of loans one can take out at a time, along with requirements that lenders check borrowers’ ability to pay before issuing loans.

Currently, payday borrowers often pay interest rates of more than 300%, with the average borrower taking out nine loans before exiting the cycle — often through default. Three quarters of the industry’s revenue comes through borrowers taking out loans to pay previous loans — not to pay off their original loan.

The industry was the perfect combination of shady and under the radar for John Oliver to make it the subject of a feature segment in 2014:

Technically, there isn’t anything contradictory between H.R. 4018 and the SAFE Lending Act. Nothing in the former would be negated by the latter; they affect different parts of the payday lending industry. However, the two bills definitely have opposite goals: One would make it easier for payday lenders to make gobs of cash off of low-income borrowers — both in Florida and elsewhere — while the other one would make it more difficult. Taken together, this makes it strange, to say the least, that Debbie Wasserman Schultz has her name on both of them — even stranger when one considers the fact that she is the only member of the House to be a co-sponsor of both bills.

Given the context, it certainly seems to be the case that Debbie Wasserman Schultz noticed the backlash she received for co-sponsoring H.R. 4018, and is using the SAFE Lending Act as progressive cover. She clearly gets that the politics surrounding this issue aren’t great — payday lenders don’t exactly have a high favorability rating — but she also apparently still wants to push legislation that will allow them to expand their predatory businesses.

She shouldn’t get off so easy. Until she drops her support from H.R. 4018, her co-sponsorship of the SAFE Lending Act simply can’t be taken seriously.

You can read Allied Progress’s letter for more background here.


Jon Green graduated from Kenyon College with a B.A. in Political Science and high honors in Political Cognition. He worked as a field organizer for Congressman Tom Perriello in 2010 and a Regional Field Director for President Obama's re-election campaign in 2012. Jon writes on a number of topics, but pays especially close attention to elections, religion and political cognition. Follow him on Twitter at @_Jon_Green, and on Google+. .

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