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 letterurging 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.
“The report found that 68 million Americans don’t have bank accounts and spent $89 billion in 2012 on interest and fees for the kinds of basic financial services that USPS could begin offering. The average un-banked household spent more than $2,400, or about 10 percent of its income, just to access its own money through things like check cashing and payday lending stores. USPS would generate savings for those families and revenue for itself by stepping in to replace those non-bank financial services companies.”
Bernie Sanders has also endorsed the idea of postal banking, as six out of ten post offices are in ZIP codes with either one or zero bank branches.
Campaign finance records show it’s not inaccurate to say Debbie Wasserman Schultz is a friend of the financial industry. The securities/investment industry is Schultz’s fourth-biggest donor demographic according to OpenSecrets.org, having given $23,000 to her campaign committee in the 2016 cycle. The industry has given Schultz over $267,000 throughout the course of her 12-year Congressional career.
Debbie Wasserman Schultz’s office did not respond to a request for an interview.