Patrick Murphy says Florida payday lender law should be national 'model,' contrary to what consumer groups say
WASHINGTON - Rep. Patrick Murphy says Florida’s payday lender law is a model that should be implemented nationally, weighing in on an issue that has pitted consumer groups against him and other Democrats, including Debbie Wasserman Schultz.
“The regulations on the industry are some of the strongest here in Florida, stronger than almost any other state,” Murphy said during a conference call with reporters Wednesday. “This was legislation passed at the state level after years and years of back and forth, bipartisan legislation, cracking down on the bad actors, making sure that people are not being taken advantage of.”
Increasingly, that position is coming under attack from liberal and consumer groups, who point to interest rates that approach 300 percent and argue Murphy, Wasserman Schultz and others are trying to block reforms championed by Sen. Elizabeth Warren of Massachusetts.
“The persistent pattern of repeat lending in Florida occurs despite the 2001-enacted Deferred Presentment Act, a state law that limits borrowers to only one loan at a time and includes a 24-hour wait period between loans,” reads a recent report from the Center for Responsible Lending, National Council of La Raza, Latino Leadership, Inc. and the Florida Alliance for Consumer Protection. “Passed with bipartisan support in the legislature along with that of the payday industry, today payday lenders in Florida are more commonplace than Starbucks’ 642 coffee shop locations and charge on average 278% annual percentage rate.”
Murphy, who is running for Senate, has sponsored legislation that would prevent proposed regulations under the Warren-White House backed Consumer Financial Protection Bureau.
“There are many studies out there showing that Florida's model works, especially compared to a lot of what’s going around the country,” Murphy said. “That is a model that has to be, I believe, implemented because it’s much stronger than many other states.”
Nearly all members of Florida's congressional delegation signed onto a 2015 letter praising Florida's law.
But a report issued by an array of consumer groups criticized the regulations, noting the high interest and calling the 24-hour cooling off period insufficient. “In spite of the industry-backed Florida law, 88% of repeat loans were made before the borrower’s next paycheck,” a December memo says.
Last month Warren criticized the legisaltion before the House. "The @CFPB is doing a great job to crack down on the tricks & traps in payday loans. Congress should back the @CFPB, not sabotage it," she wrote on Twitter.
Murphy has received at least $46,000 from the payday lending industry, according to the Center for Responsive Politics. Wasserman Schultz, who has been hammered with TV ads and billboards, has gotten $63,000.
Murphy said the lenders help people.
“That’s one of the biggest things holding back the middle class right now, lack of access to capital,” he said.