[dPayday Loan Sharks Have Good Friend in Government: Democratic Party Chair

In backing bill to delay or block payday lender regulations, DNC chair Debbie Wasserman Shultz is aligning herself with the Republican Party

tchy payday loan sharks, whose short-term, high-interest loans trap millions of Americans in a cycle of debt, have a new ally on Capitol Hill—Democratic National Committee chair Debbie Wasserman Schultz, who is reportedly pushing a bill that would "gut" forthcoming industry regulations.

According to a memo seen by the Huffington Post, Rep. Wasserman Schultz (D-Fla.) is co-sponsoring legislation (pdf) to delay new rules from the Consumer Financial Protection Bureau (CFPB), meant to crack down on abusive payday lending that profits off deceptive terms, automatic "rollovers," staggering fees, and interest rates averaging over 300 percent annual percentage rate (APR).

The so-called "Consumer Protection and Choice Act" would delay those rules for two years and "permanently block them in any state that enacts the sort of ineffectual, industry-crafted regulatory sham that Florida adopted in 2001," ThinkProgress reports.

DNC chair Debbie Wasserman Schultz just signed onto a bill that would gut the agency conceived by progressive icon Elizabeth Warren.

Rep. Schultz (D-Florida) is cosponsoring H.R. 4018, which, among other things, delays the Consumer Financial Protection Bureau’s regulations on payday lenders for two years. The regulations are meant to stop the practice of “turned” loans, which are additional loans borrowers are forced to take on to pay back the abnormally-high interest rates attached to payday loans, which then leads to a cycle of debt for the borrower.

According to an internal memo obtained by the Huffington Post, Schultz is not only cosponsoring the bill, but is enlisting Democratic support for the measure.

While Schultz maintains she wants to model the CFPB’s regulations on payday lenders on a Florida payday lending law, advocates maintain that the Florida law is toothless, and that it is backed by the industry it was supposedly meant to regulate. But in fact, groups like the NAACP, the Southern Poverty Law Center, and the National Council of La Raza, among many others, have signed onto a letter urging Congress to vote NO to H.R. 4018. In this letter, they claim a typical APR interest rate on a payday loan in Florida is around 300 percent — and yes, you read that correctly. Furthermore, they also state that interest rates such as these were illegal until “relatively recently.”

“Florida’s law is a sham,” Gynnie Robnett, of Americans for Financial Reform (AFR), told the Huffington Post. AFR estimates that 76 percent of payday loans issued in the Sunshine State are taken out to pay back previous payday loan interest, meaning the law Schultz says should be a model for national reform is essentially ineffective. The aforementioned letter from consumer group calls the industry in its current form a “payday debt trap.”

Sen. Elizabeth Warren is on the opposite side of the issue. In fact, she’s openly called for payday lenders to be replaced by the U.S. Postal Service in a 2014 bill. In an op-ed to the Huffington Post, Warren expressed many reasons for supporting the bill, including those below.