Editorials

It’s ridiculous that the leader of the national Democratic Party is protecting payday lenders

Debbie Wasserman Schultz should not be chairing the Democratic National Committee while shilling for the payday loan industry.
Debbie Wasserman Schultz should not be chairing the Democratic National Committee while shilling for the payday loan industry. The Associated Press

Something is very wrong with this picture.

On the campaign trail, Democratic candidates Bernie Sanders and Hillary Clinton jockey to position themselves as the one who can best defend ordinary Americans against abusive practices by the financial industry.

But in Washington, Democratic Rep. Debbie Wasserman Schultz of Florida is pushing legislation to protect one of the most exploitative sectors of that industry — payday lenders.

And Wasserman Schultz is chairwoman of the Democratic National Committee.

Those dots don’t connect. Democrats can’t purport to be the party that champions consumer rights when their chairwoman is aggressively working to leave consumers at the mercy of an industry whose business model is to lure low-income people into debt traps.

Wasserman Schultz was installed as party leader in 2011 by President Barack Obama. She has a close relationship with Clinton and a frosty one with Sanders.

Progressives in the party already have been calling for Wasserman Schultz to step down as party leader. It’s time for Obama and Clinton to join them.

While attempting to protect payday lenders, Wasserman Schultz simultaneously seeks to undermine the Consumer Financial Protection Bureau.

A centerpiece of the 2010 Dodd-Frank financial reform act, the bureau is continually under attack from congressional Republicans because it defends consumers against predatory elements of the financial sector. It currently is drafting rules that would rein in payday lenders, in part by requiring lenders to verify that borrowers have the means to repay a loan before one is issued.

But Wasserman Schultz is urging other congressional Democrats to join her in support of a GOP bill that would delay any new regulations for two years and make them void in states that already regulate payday loans based on industry-friendly standards similar to those in Florida.

The bill might force states like Missouri, which has one of the nation’s weakest short-term lending laws, to tighten up a bit. But its provisions fall far short of the type of reform being contemplated by the Consumer Financial Protection Bureau.

It would still allow loans with annualized interest rates of 300 percent or more. Consumers could still take out multiple loans in a year’s time regardless of their ability to pay any of them.

And imagine the lobbying frenzy that a bill like this would set off in state legislatures. States that already protect consumers would be under heavy pressure from payday lenders to adopt the looser standards.

To have the titular head of the Democratic Party working on behalf of an industry that preys shamelessly upon the poor is damaging to the Democratic brand.

Now is the time for Clinton to clarify her position on payday lending, which is less defined than Sanders’ strident opposition.

And now is the time for Wasserman Schultz to depart her party post. She could use the extra time. Her re-election bid faces a challenge from an energetic primary opponent — who brings a strong record of activism against payday lending.

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