While Republicans work to tighten the purse strings of the Consumer Financial Protection Bureau (CFPB), a number of Democrats -- including Democratic National Chair Debbie Wasserman Schultz -- are co-sponsoring a bill that would restrict the CFPB's ability to regulate payday lenders.
An activist group says it has gathered 40,000 signatures demanding Wasserman Schultz' ouster and today, television viewers in her South Florida district are seeing TV and cable ads that include a recent news clip in which she calls payday lending "unfortunately ... necessary."
"What’s truly ‘unfortunate’ is that Debbie Wasserman Schultz is still refusing to put her constituents and millions of vulnerable Americans ahead of an industry that has given her more than $68,000 in campaign cash,” said Karl Frisch, executive director of Allied Progress, a liberal advocacy group.
Opponents of the measure Wasserman Schultz is co-sponsoring say it would encourage states to adopt the "Florida model" of regulating payday lenders, a model consumer groups have called "disastrous."
“The average borrower in Florida pays more than 300% interest and ends up taking out nine loans each year. They find themselves trapped in a cycle of debt while payday lenders rake in piles of cash they then turn around and donate to powerful politicians like Wasserman Schultz. How anyone could describe this racket as ‘necessary’ – unfortunate or not – is beyond me," Frisch said.
The controversy is raging as the CFPB is expected to announce new national rules reigning in some of the worst abuses of the payday lending industry during a field hearing in Kansas City later this week.
It also coincides with a nasty spat between Wasserman Schultz and Sen. Bernie Sanders (I-Vt.), who has accused Wasserman Schultz and other party bosses of being openly biased in favor of apparent front-runner Hillary Clinton in the contest for the Democratic Presidential nomination.
Sanders has called the fees charged by banks and other lenders "usury" and said he would open bank-like storefronts in post offices if elected.
Frisch says Wasserman Schultz should withdraw her support for H.R. 4018, the "Consumer Protection and Choice Act," which would prohibit the CFPB from enforcing its payday rules in any state that had enacted its own regulations.
Wasserman Schultz is one of nine Democratic co-sponsors of the bill, which has 15 Republican co-sponsors.
Allied Progress said it is making an initial investment of $100,000 to air its ad on network and cable television beginning May 31 and will be running it for at least a week.