‘Debt Trap Debbie’ Wasserman Schultz slammed in new ad for siding with predatory lenders
Ads that label DNC Chair Debbie Wasserman Schultz as “Debt Trap Debbie” were set to debut on Miami-area television stations on Tuesday, CBS Miami reported. “President Obama was right when he condemned predatory payday lenders for ‘trapping hard-working Americans into a vicious cycle of debt,’ with interest rates of over 300 percent,” the ad begins, before urging viewers to go to DebtTrapDebbie.com and sign a petition telling Wasserman Schultz not to “sabotage President Obama’s hard work to hold payday lenders accountable.”
The ad cites the $68,000 that she has received from payday lenders, a number investigated by Politifact Florida. “At PolitiFact Florida’s request, the Center for Responsive Politics compiled the large individual donations (more than $200) and donations to her PAC starting with her 2006 election,” the website reported. “The center found she received $309,020 from commercial banks, which represented about 2 percent of the total; $408,450 from securities/investment firms, and $325,850 from finance/credit companies.”
Wasserman Schultz, who has incurred the wrath of Bernie Sanders and his supporters because she has upheld Democratic party rules regarding the awarding of delegates to Hillary Clinton, is being challenged for her long-term Congressional seat by Tim Canova, a law school professor and progressive activist.
The 30-second ad is sponsored by Allied Progress, a “grassroots progressive” organization headed by Karl Frisch, a long-time liberal political activist who previously served as communications director, and then fellow, at Media Matters for America.
“Payday lenders” account for $7.4 billion lending debt annually in America. The lender promises “quick cash” for emergencies–such as car repairs–and loan out amounts ranging from $300 to $1000. In order to secure the loan, a borrower writes out a check for the loan amount, plus the interest and service charges, which is then scheduled to be withdrawn from the borrower’s checking account on their next payday. The loans carry annual interest rates above 30 percent and some go as high as 300 percent, depending on state regulations.
A thorough study by Pew Trusts, a charitable organization found: “Pew’s survey found 5.5 percent of adults nationwide have used a payday loan in the past five years, with three-quarters of borrowers using storefront lenders and almost one-quarter borrowing online. State regulatory data show that borrowers take out eight payday loans a year, spending about $520 on interest with an average loan size of $375. Overall, 12 million Americans used a storefront or online payday loan in 2010, the most recent year for which substantial data are available.”
Wasserman Schultz has come into conflict with Senator Elizabeth Warren, who pushed hard for the creation of the Consumer Financial Protection Bureau,(CFPB) which is charged with investigating fraud committed against consumers by predatory lending agencies. Wasserman Schultz has co-sponsored a bill by the GOP which would delay the enforcement of payday lender restrictions for two years. She favors allowing each state to regulate its own payday lenders, and cites Florida’s existing law as a model for other states to follow.
But, according to NBC News,
Nick Bourke of the Pew Charitable Trusts said the CFPB should instead follow the approach of Colorado, which ensures that borrowers face affordable payments and a reasonable time frame to pay back the loan.
The numbers appear to make clear that Colorado has gotten far better results. In Florida, it costs $345 on average to borrow $300 for five months. In Colorado, it costs $172. And to make their next loan payment, Floridians on average must pay 35 percent of their next paycheck. For Coloradans, that figure is just 4 percent.
“Payday loans as they exist today in a state like Florida don’t help consumers, they harm them,” said Bourke.
In his piece on payday lenders, John Oliver likened the 20,000 lenders, who outnumber McDonald’s franchises in America, to Ebola in their ability to spread so fast.
Watch the political ad here:
John Oliver’s piece on payday loans: