Low-income workers living from paycheck to paycheck, especially women and minorities, are the payday lenders’ prime targets — easy pickings because they’re often desperate. Twelve million Americans reportedly borrow nearly $50 billion a year through payday loans, at rates that can soar above 300 percent, sometimes even beyond 500 percent. Bethany McLean at The Atlantic recently reported that the government’s Consumer Financial Protection Bureau (CFPB) studied millions of payday loans and found that “67 percent went to borrowers with seven or more transactions a year and that a majority of those borrowers paid more in fees than the amount of their initial loan.”
Yet when the CFPB was drawing up new rules to make it harder for payday predators to feast on the poor, Rep. Wasserman Schultz co-sponsored a bill to delay those new rules by two years. How, you ask, could the head of the party’s national committee embrace such an appalling exploitation of working people?
Just follow the money. Last year, the payday loan industry spent $3.5 million lobbying; and as we wrote two weeks ago, in Wasserman Schultz’s home state, since 2009, payday lenders have bought protection from Democrats and Republicans alike by contributing $2.5 million or so to candidates from both parties, including her. That’s how “Representative” Wasserman Schultz, among others, wound up representing the predators instead of the poor.
That position became a major issue in her campaign for reelection to the House this year — she has a primary opponent for the first time since she entered Congress — and was even threatening the prospect of her continuing as DNC chair and presiding over the Democratic National Convention next month in Philadelphia. More than 40,000 have signed a petition calling for her removal from that post.
She had become a symbol of the failure of Democratic elites to understand that there is an uprising in the land. Millions of Americans are rebelling against the leadership of both parties. They are fed up with inside-the-Beltway politicians who pay only lip service to the deep needs of everyday people and the country; fed up with incumbents who ask for their votes, are given them in good faith, and then return to Washington to do the bidding of the donor class and its lobbyists.
Donald Trump gets it. He has roiled and humiliated and conquered an out-of-touch Republican establishment in Washington that also ignored the popular uprising against corporate domination and crony capitalism, and now GOP titans such as Senate Majority Leader Mitch McConnell and Speaker of the House Paul Ryan, spear carriers for Big Money, are being hauled around the talk-show circuit in Trump’s tumbrel, eating crow and swearing fealty to the misogynistic, bigoted and pathologically lying brute who bestrides their party.
Democratic insiders like Wasserman Schultz, however, continued to whistle past the graveyard, believing that the well-funded and well-connected Clinton machine -- and general fear of a Trump regime -- were enough to carry them to victory in November, despite the grass-roots disgust with a party that reeks of rot from the top. Once the champions of people who came home from work with hands dirty from toil and sweat, too many establishment Democrats went over to the dark side, taking up the cause of the well-manicured executives (think: Goldman Sachs) who write the checks and the mercenaries who deliver them (for a substantial cut, of course).
The lust for loot, which now defines the Democratic establishment, became pronounced in the Bill Clinton years, when the Clinton-friendly Democratic Leadership Council (DLC) abandoned its liberal roots and embraced “market-based solutions” that led to deregulation, tax breaks, and subsidies for the 1 percent. Seeking to fill coffers emptied by the loss of support from a declining labor movement, Democrats rushed into the arms of big business and crony capitalists.
Another case in point (and, alas, there are many): the Democratic governor of Connecticut, Dan Malloy, who seems to treat his state’s corporate residents far better than the 1 in 10 of his citizens who live at or below the poverty line.
At International Business Times last week, investigative reporter David Sirota analyzed the proposed merger of Cigna and Anthem Blue Cross Blue Shield, a deal that would create the biggest health insurance company in the country. Cigna is based in Connecticut and Katharine Wade, the state’s insurance commissioner, appointed by Governor Malloy, is a former Cigna lobbyist with deep family ties to the company.
Sirota reported, "Malloy’s decision to appoint Wade to such a powerful regulatory post on the eve of the merger was not made in a vacuum,” Sirota reported. “It came after employees of Cigna, its lobbying firm Robinson & Cole and Anthem delivered more than $1.3 million to national and state political groups affiliated with Malloy, including the Democratic Governors Association (DGA), the Connecticut Democratic Party, Malloy’s own gubernatorial campaign and a political action committee supporting Connecticut Democrats [our italics].
“Since Malloy’s first successful run for governor in the 2010 election cycle, donors from the insurance companies and the lobbying firm have given more than $2 million to Malloy-linked groups, according to the figures compiled by PoliticalMoneyLine and the National Institute on Money In State Politics. Almost half that cash has come in since 2015, the year the merger was announced.”
Sirota now reports that since his investigation first was published, the state has "formally denied open records requests for information about their meetings with Cigna and Anthem, and declared that 'any' documents about the health insurance companies' proposed merger that haven't already been made public will be kept secret." His FOIA request was turned down "one day after Anthem requested [state insurance commissioner] Wade approve an average 26 percent increase in health insurance premiums for individual plans." So much for transparency.
And while we’re in Connecticut, let’s also take a look at what Malloy is doing for the world’s biggest hedge fund — Bridgewater Associates, based in his state, with an estimated worth of $150 billion. The founder of the firm, Ray Dalio, is the richest man in Connecticut, by one estimate weighing in at $14.3 billion.
Dalio made $1.4 billion in 2015 alone, according to Institutional Investor's Alpha magazine. That same year, his top two executives pulled in $250 million each. Yet as part of Connecticut’s campaign to keep companies from leaving the state, Malloy is taking $22 million of the public’s money and giving it to Dalio to stay put.
You might think a Democratic governor would have thrown down the gauntlet and told Bridgewater’s top three, “Get outta here! You guys made almost $2 billion among yourselves. Shake your piggy bank or look under your sofa cushions for the $22 million; we’re not milking the public for it.”
But no, Malloy and his fellow Democrats buckled. Buckled to the one-tenth of the one-tenth of the one-hundredth percent of the rich. Ordinary taxpayers will now ante up.
So given all of that, guess who’s the chairman of the platform committee for the upcoming Democratic National Convention? Right: Dan Malloy, governor of Connecticut, subsidizer of billionaires. Guess who named him? Right again: Wasserman Schultz, “top Democratic ally” of “predatory payday lenders.” We’re not making this up.
Not only will Malloy be presiding over the priorities of the Democratic platform at the convention next month, he doubtless will be making the rounds with Wasserman Schultz and other party elites as they genuflect before the corporate sponsors and lobbyists she has invited to pay for the lavish fun-and-games that will surround the coronation. Many of those corporate sponsors and lobbyists have actively lobbied against progressive policies like health-care reform and a Wall Street cleanup and even contributed large sums to Republicans. Yes, we know, shocking.
So take the planks in the platform and the platitudes and promises in the speeches with a grain of salt. It’s all about the money.
Except when it’s not. Except for those moments when ordinary people rise up and declare: “Not this time!”
Which brings us back to predatory lenders and their buddy, Debbie Wasserman Schultz.
Look around: There’s an uprising in the land, remember, and it isn’t going away after Hillary Clinton, now the presumptive nominee, is crowned. This year even Wasserman Schultz couldn’t ignore the decibel level of an aroused public. Unaccustomed to a challenge in the Democratic “wealth primary” where money usually favors incumbents, she now finds herself called to account by an articulate opponent who champions working people, Tim Canova. Across the country tens of thousands of consumer advocates — and tens of thousands of other progressives angry at her perceived favoritism toward Hillary Clinton — have been demanding that Wasserman Schultz resign as the party’s chair or be dumped before the convention opens Philadelphia.
So last week the previously tone-deaf Wasserman Schultz perked up, did an about-face and announced she will go along with the proposed new rules on payday lending after all. At first blush, that’s good; the rules are a step in the right direction. But all that lobbying cash must have had some effect, because the new rules only go so far. A New York Times editorial calls them “a lame response” to predatory loans and says the final version of the new regulations “will need stronger, more explicit consumer protections for the new regulatory system to be effective.”
Nick Bourke, director of small-dollar loans for the Pew Charitable Trusts, is a man who closely follows these things and got to the heart of the matter: Not only do the proposed new rules “fall short,” they will allow payday lenders to lock out attempts at lower-cost bank loans.
His judgment is stark: “As drafted, the CFPB rule would allow lenders to continue to make high-cost loans, such as a line of credit with a 15-percent transaction fee and 299-percent interest rate, or a $1,250 loan on which the borrower would repay a total of $3,700 in fees, interest and principal,” Bourke wrote. “These and many other high-cost payday installment loans are already on the market in most states, and they will thrive if the regulation takes effect without change.”
Nonetheless, the new rules were improvement enough for Allied Progress, an organization that has taken on Wasserman Schultz in Florida’s late August primary, to declare victory. And they were enough for Wasserman Schultz to do a 180-degree turn which she clearly hopes will not too dramatically reveal her hypocrisy. “It is clear to me,” she said, “that the CFPB strikes the right balance and I look forward to working with my constituents and consumer groups as the CFPB works toward a final rule.”
All well and good, but if she survives her primary to return to Washington, be sure to keep the lights on in those rooms where the final version of the rules are negotiated. A powerful member of Congress with support from a Democrat in the White House could seriously weaken a law or a rule when the outcome is decided behind closed doors and money whispers in the ear of a politician supplicant: “I’m still here. Remember. Or else.”
But the times, they really may be a-changing, as the saga of Wasserman Schultz reveals. You can be deaf to the public’s shouts for only so long. The insurgency of popular discontent that has upended politics this year will continue no matter the results in November. For much too long now it’s been clear that money doesn’t just rule democracy, it is democracy.
Until we prove it isn’t.
Bill Moyers is the managing editor of Moyers & Company and BillMoyers.com.
Michael Winship is the Emmy Award-winning senior writer of Moyers & Company and BillMoyers.com, and a former senior writing fellow at the policy and advocacy group Demos. Follow him on Twitter at @MichaelWinship.
