Only three months ago, Florida Congresswoman and chair of the Democratic National Committee Debbie Wasserman-Schultz was actively lobbying her fellow lawmakers in opposition to pending reforms for the payday loan industry, finding nothing wrong with lenders who charge interest rates in the range of 300% to people in dire need of cash. Now that the actual rules have been announced, the legislator has had a sudden change of heart.
Wasserman-Schultz not only co-sponsored the misnamed Consumer Protection and Choice Act — which was intended to delay implementation of the payday rules, and exempt states, like Florida, that already have some minor restrictions on payday lending — but then circulated a letter on Capitol Hill that held up Florida’s mild regulations on these costly loans as the real model for the rest of the country to follow.
Florida regulations include limiting borrowers to a single loan at a time; requiring a 24-hour cooling-off period between loans; and a $500 maximum for a single loan.
However, lenders could charge upwards of $55 for that two-week, $500 loan, effectively resulting in an interest rate of nearly 300%. Critics of the Florida rules also note that a one-day cooling off period between loans is not a viable deterrent to re-borrowing.
In spite of her efforts to scuttle the entire process months before the proposed payday rules were even introduced, Wasserman-Schultz nonetheless referred to herself this morning as a “strong supporter and partner of the Consumer Financial Protection Bureau.”
“From the outset of this process, I have said that I trust the CFPB to do what’s right for consumers,” writes Wasserman-Schultz, glossing over the fact that her name is attached to piece of legislation that explicitly expresses a distrust for the CFPB and would prevent the Bureau from doing its job.
The congresswoman singles out a few aspects of the proposed rules for applause, including its restrictions on automated withdrawals from borrowers’ checking accounts.
“This practice results in heavy overdraft fees for borrowers, and I support the CFPB’s plan to help rein it in and preserve access to credit without the burden of unexpected costs,” writes Wasserman-Schultz. “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.”
We’ve reached out to the congresswoman’s office to find out if she still intends to remain a co-sponsor on the anti-CFPB bill, even though that legislation may be moot at this point.
Some may question the sincerity of Wasserman-Schultz’s change of heart, coming as it does during an election year, and on the heels of criticism from religious groups in her home state who called on her to rethink her position on payday lending.
by Chris Morran via Consumerist
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