TV ad blasts "Debt Trap Debbie" Wasserman Schultz for supporting predatory payday lenders

Allied Progress campaign condemns the DNC chair for "sabotaging" federal regulation of payday lenders, who fund her

Published May 31, 2016 7:30PM (EDT)

Democratic National Committee Chairwoman Debbie Wasserman Schultz in Weston, Fla. on Aug. 26, 2014  (AP/Lynne Sladky)
Democratic National Committee Chairwoman Debbie Wasserman Schultz in Weston, Fla. on Aug. 26, 2014 (AP/Lynne Sladky)

A progressive non-profit organization is slamming Florida congresswoman and Democratic National Committee chair Debbie Wasserman Schultz for supporting predatory payday lenders.

A new $100,000 television ad began broadcasting in Wasserman Schultz's South Florida district on Tuesday, days before the Consumer Financial Protection Bureau is expected to announce new national rules regulating the payday lending industry.

Wasserman Schultz, a close ally of Hillary Clinton who served as the co-chair of Clinton's 2008 presidential campaign, has opposed federal regulation of the predatory payday lenders, which disproportionately target poor and uneducated Americans.

She has joined primarily Republicans, along with several other pro-corporate Democrats, in co-sponsoring H.R. 4018, a bill that would effectively gut the Consumer Financial Protection Bureau's forthcoming payday loan regulations.

The new TV ad, which was paid for by left-wing NGO Allied Progress, features a clip of Wasserman Schultz insisting in a CBS interview in April that "payday lending is unfortunately… necessary."

The CBS host, Jim DeFede, pushes back, noting that these loans have "high interest rate[s], upwards of 300 percent."

DeFede adds that the bill that Wasserman Schultz supports is opposed by a variety of civil society groups, including the NAACP, the Southern Poverty Law Center, Florida Legal Services and more.

Wasserman Schultz refuses to budge, maintaining that payday lending is "necessary."

"No, Congresswoman, it’s predatory," the narrator replies, imploring viewers, "Tell Debbie Wasserman Schultz to stop siding with payday lenders."

You can watch the ad below:

"What’s truly ‘unfortunate’ is that Debbie Wasserman Schultz is still refusing to put her constituents and millions of vulnerable Americans ahead of an industry that has given her more than $68,000 in campaign cash,” said Karl Frisch, executive director of Allied Progress, the nonprofit organization that paid for the ad.

Wasserman Schultz has received tens of thousands of dollars in contributions from payday lenders, in the election cycles every two years since her 2006 election, according to research by the watchdog NGO Center for Responsive Politics. In 2010 alone, payday lenders gave her $28,000.

The average payday loan borrower in Florida pays more than 300 percent interest and takes out nine loans each year, Frisch explained. "They find themselves trapped in a cycle of debt while payday lenders rake in piles of cash they then turn around and donate to powerful politicians like Wasserman Schultz."

In Florida, under legislation Wasserman Schultz has called a “model” alternative to pending federal regulation, 85 percent of payday loans go to people with seven or more loans per year. This drains $280 million in fees from lower-income Floridians every year (and $3.6 billion in fees annually from consumers across the country).

"How anyone could describe this racket as ‘necessary’ – unfortunate or not – is beyond me," Frisch said.

Wasserman Schultz's campaign criticized the ad in an email to Salon.

"Congresswoman Wasserman Schultz trusts that the CFPB, regardless of whether this bill becomes law, will ultimately do what's right," said spokesperson Ryan Banfill, referring to the Consumer Financial Protection Bureau.

"The ad, like all the others, intentionally takes her out of context. Here's what Congresswoman Wasserman Schultz actually said: 'Payday lending is unfortunately a necessary component of how people get access to capital that are working poor,'" Banfill added.

The campaign spokesperson said Wasserman Schultz has supported increasing the minimum wage to $15 an hour so payday loans are no longer needed.

Wasserman Schultz's campaign accused Allied Progress of "distortions and bullying." "That's unfortunate for the people who just want to responsibly pay their bills but are short on cash," Banfill said. "Debbie Wasserman Schultz will continue to fight hard to protect consumers as her constituents know she always has."

Law professor Tim Canova, who is running for Wasserman Schultz's seat in Congress, has echoed Allied Progress' criticisms.

"After taking hundreds of thousands of dollars from Goldman Sachs and other Wall Street banks, [Wasserman Schultz] has voted to prevent the Consumer Financial Protection Bureau from regulating payday loans and addressing racial discrimination in car loans," he stresses on his campaign website.

Bernie Sanders has endorsed Wasserman Schultz's opponent, "breathing life" into Canova's "long-shot primary challenge," as The Washington Post put it.

“She’s emblematic of an establishment not serving the grass roots,” Canova told the newspaper. He noted that his Florida district "is such a safe Democratic district that there’s" no need to worry of a Republican. "So it’s really pitting a progressive grass-roots campaign against a corporate machine. What’s it going to be?"

Allied Progress launched a campaign in March to pressure members of congress who support H.R. 4018, the bill that would undermine federal regulation of payday lenders.

It designed the website, with an online petition that calls on Wasserman Schultz to stop "sabotaging" the federal government's "hard work to hold payday lenders accountable."

In April, the organization sponsored two billboards in Wasserman Schultz's district, along with a mobile billboard in Washington, D.C.

In March, Allied Progress created another TV ad that blasts "Debt Trap Debbie" for her support for payday lenders. It cites a 2015 speech in which President Obama condemned payday lenders for making profits by "trapping hard-working Americans into a vicious cycle of debt."

The March ad can be watched below:

The ad will be airing on network and cable television for at least a week, and was scheduled on the eve of the Consumer Financial Protection Bureau's expected June 2 announcement.

Sen. Elizabeth Warren and others created the bureau in the wake of the 2008 financial crisis in order to protect Americans from the malicious practices of the financial industry, including payday loan companies, along with banks, toxic mortgage lenders and debt collectors.

The bureau is expected to announce new national regulations in a field hearing in Kansas City on Thursday, June 2.

Allied Progress says it "will be watching to see how Rep. Wasserman Schultz and other members of the Florida delegation respond to the announcement – whether they endorse the tough new rules or continue standing with predatory payday lenders."

"It’s time for the Congresswoman to abandon her support for this unsavory industry and instead throw her considerable political capital behind the CFPB's effort to end the debt trap once and for all," Frisch said.

Frisch is a longtime Democratic Party strategist and former communications director for the liberal media watchdog Media Matters for America. He has worked on a variety of Democratic campaigns, and previously served as the national press secretary for the Democratic Senatorial Campaign Committee.

Allied Progress appears to have only just been launched in 2015, and thus does not yet have publicly available tax information. Its address is registered with a UPS Store mailbox in Washington, D.C.

(This article was updated after it was published with statements from the Wasserman Schultz campaign.)

By Ben Norton

Ben Norton is a politics reporter and staff writer at AlterNet. You can find him on Twitter at @BenjaminNorton.

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