Payday loan issue divides U.S. Senate candidates Murphy and Grayson
WASHINGTON — Rep. Debbie Wasserman Schultz is facing intense criticism, including TV ads, for supporting a bill consumer advocates say weakens regulations on payday lenders.
But less noticed is support from other Florida Democrats, including U.S. Senate candidate Patrick Murphy, who like Wasserman Schultz has received significant contributions from the industry.
Their stance puts them at odds with Murphy's rival in the Senate primary race, Rep. Alan Grayson, along with other Democratic leaders and the Consumer Financial Protection Bureau, or CFPB, which seeks to crackdown on payday lenders charging exorbitant interest.
"Murphy is an original co-sponsor of the bill along with several other Florida lawmakers, who say it would harm regulations passed years ago by the state Legislature. The bill was introduced by Rep. Dennis Ross, R-Lakeland, and has gained the backing of much of the Florida delegation.
“Florida lawmakers know that before 2001, the payday lending industry was running roughshod over consumers in the Sunshine State. The State House and Senate voted unanimously at the time to make reforms that fifteen years later, better protect consumers while still preserving access to credit for working families who need it. The cosponsors of H.R. 4018 believe Florida's model and experience can be instructive to CFPB as it considers its national rulemaking,” said Sean Bartlett, Wasserman Schutlz’s communications director.
But consumer advocates say the Florida law was heavily influenced by payday lenders.
“In exchange for minimal regulatory requirements, the industry was permitted to issue predatory loans, extracting millions in exorbitant fees each year from the Floridians that can least afford it,” says the Florida Allicance for Consumer Protection, which is fighting the House bill.
The average payday loan in Florida is $250 with an annual interest rate of 312 percent, according to the Center for Responsible Lending.
"I would hope Rep. Murphy and others who have been involved just pause and tune out those industry talking points and take a hard look at what’s happening in Florida," Gynnie Robnett, payday campaign director at Americans for Financial Reform, said in an interview Wednesday. "It's time to admit Florida is not a model for the nation and we shouldn't be bending over backward to accommodate this unscrupulous behavior."
The issue has potential to surface in the widely-watched U.S. Senate race.
Grayson, Murphy’s primary opponent, did not sign on to the bill. He cited a provision in the bill that bars the CFPB from imposing payday regulations for two years anywhere in the country.
“I agree with Elizabeth Warren that it’s an important and legitimate purpose of the federal government to have that kind of protection nationwide and not simply leave it to haphazard regulation by the states, often heavily influenced by industry,” Grayson said in an interview.
Grayson, however, signed onto an April 2015 letter to CFPB Director Richard Cordray touting the Florida regulations as “among the most progressive and effective in the nation” and warning about “a one-size-fits all policy.” He said he stood by that and a fix would have legislation say it does not specifically pre-empt good legislation such as Florida’s.
Murphy sits on the Financial Services Committee, which is a cash cow for lawmakers, particularly young ones favored by party leaders. Murphy has received $46,000 in contributions from payday lenders.
His campaign did not respond to questions.
Wasserman Schultz has gotten $63,000 from payday lenders and Rep. Alcee Hastings $107,000, according to the Center for Responsive Politics. Ross has gotten $25,850.
Grayson has received $8,300. He’s also held stock in a payday loan company, though said he no longer does. Grayson has made an issue out of some of Murphy’s support for the financial industry, including a bill easing reporting on securities sales.
The issue has caused big headaches for Wasserman Schulz, a high profile target given she’s DNC chairwoman. A TV ad launched this month accuses her of trying to “sabotage” President Obama’s efforts against payday lenders.