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The head of the Democratic Party is trying to weaken Sen. Warren's consumer protection agency

DNC Chair Debbie Wasserman Schultz.
DNC Chair Debbie Wasserman Schultz.
Andrew Burton/Getty Images

The head of the Democratic Party is supporting a Republican-backed effort to weaken Sen. Elizabeth Warren's Consumer Financial Protection Bureau, opening up a rift between the party's factions during an already bitter presidential primary fight.

Democratic National Committee Chair Rep. Debbie Wasserman Schultz has joined conservative lawmakers' efforts to curtail coming CFPB regulations about predatory payday lending — a practice that often traps poor borrowers in endless cycles of debt.

The Huffington Post broke the story on Tuesday, obtaining a memo showing Wasserman Schultz hoped to attract other Democrats to support a bill to rein in the CFPB. The Huffington Post reported:

The agency's proposed outline is designed to prohibit a cycle of debt in which borrowers take out a single payday loan expecting to pay a one-time fee, but end up taking out several more loans when they are unable to make ends meet at the end of the loan period.

… The misleadingly titled Consumer Protection and Choice Act would delay the CFPB's payday lending rules by two years, and nullify its rules in any state with a payday lending law like the one adopted in Florida.

DNC chair's explanation comes under attack

In a statement to the Huffington Post, Wasserman Schultz's staff defended her position on the CFPB by pointing to payday lending rules she had helped implement while a Florida state representative.

"The Congresswoman wants to work with the CFPB on the way forward, and believes the Florida law is an example of how to achieve their shared goals of balancing strong consumer protections with preserving access to credit in underserved communities," a Wasserman Schultz spokesperson told HuffPo.

This explanation quickly came under attack. At Salon, Ben Norton noted that 85 percent of payday loans in Florida go to those who have seven or more loans already every year. That leads to $280 million in fees for Floridians, and similar rules across the country lead to $3.6 billion in fees for often low-income consumers, Norton said.

A chorus of voices in left-leaning media echoed Norton's criticisms, with Jezebel, Bill Moyers, and New York magazine all publishing stories strongly skeptical of the DNC chair's position.

"This latest move by DWS completely undermines the work of the Consumer Finance Protection Bureau, which already is under siege from a number of different directions and will be one of the prime targets of any Republican president also armed with a Republican Congress," wrote Esquire's Charles Pierce in a piece titled, "It's Time for DNC Chair Debbie Wasserman Schultz to Ride Off into the Sunset."

2016 and the growing rift in the Democratic Party

With the rise of Donald Trump, most of the media attention during this primary season has focused on the wide rifts within the Republican Party.

But that's obscured the extent to which the 2016 presidential primary is also exposing important divisions in the Democratic Party. Bernie Sanders, while unlikely to win the nomination, has shown that a substantial section of Democrats yearn for their party to take a much more hard-line position on big business and champion the working poor.

The current fight over the CFPB's regulations of payday lenders is revealing a similar fault line among Democrats.

The CFPB was first proposed by then-Harvard law professor Elizabeth Warren, whom President Barack Obama then tried appointing as its first director. But Warren, and the bureau, has been under withering assault from conservatives and industry leaders since then — with the Republicans refusing to confirm Warren and then moving to gut several of the CFPB's key provisions.

The agency's ability to execute its founder's mission thus depends on strong political support from the Democrats. And that may hinge as much on what happens on the campaign trail as it does on what happens in the halls of Congress.