MIAMI (CBSMiami) – South Florida Congresswoman Debbie Wasserman Schultz, chair of the Democratic National Committee, reversed herself Friday in her support of Florida’s payday loan stores and her support of delaying strict federal oversight of the operations that make small loans to poor clients at exorbitant rates.
On Tuesday, an activist group launched an ad attacking Wasserman Schultz for her support of the payday check stores, that some have called legal loan sharking.
Wasserman Schultz called the attack ad distorted at a news conference on Tuesday.
“The ad, if you look at it, very obviously splices together the words that I used in an interview with local CBS (WFOR/CBS4),” Wasserman Schultz said.
But her words were clear in the interview the ad was based on, and she repeated them Tuesday.
“The working poor have only payday loans to turn to. So they are necessary to ensure that people have short term access to capital,” she said.
She supported a bill in Congress that would delay strict, federal controls over the payday loan operations by the Consumer Financial Protection Bureau.
Under withering attack, Wasserman Schultz did an about face on payday loan oversight on Friday.
The congresswoman issued a statement saying, “I stand with the Consumer Financial Protection Bureau in its efforts to protect Americans from predatory lending…I look forward to working with my constituents and consumer groups as the CFPB works toward a final rule.”
Wasserman Schultz praised portions of the proposed rule for its tight controls.
Wasserman Schultz had previously called Florida’s payday loan regulations a “model” for the nation. The proposed federal rules would be much more strict. Florida payday loan operations charge interest upwards of 400 percent. Many clients are unable to repay, and fall into spiraling debt.
Wasserman Schwartz’ first-ever challenger in a primary election for Congress pounced on her reversal.
“It’s a big flip flop. She’s surrendered. She just realized she was on the wrong side, and she couldn’t defend the indefensible,” said Tim Canova, a Nova University law professor.
Canova has criticized Wasserman Schultz for accepting thousands of dollars from the payday loan industry.
“Who funds the payday lenders? Big Wall Street banks,” Canova said. “She’s been taking hundreds of thousands of dollars from the big Wall Street banks.”
An enthusiastic endorsement from Democratic presidential candidate Bernie Sanders has boosted Canova’s campaign. He has amassed nearly two million dollars in contributions that he says average less than twenty dollars each. He sees Wasserman Schultz as a Hillary Clinton establishment look-alike.
“She’s an insider who has taken millions of dollars in corporate money. There’s going to be a progressive alternative for folks (to vote for) for the first time in her career,” Canova said.
A spokesman for Wasserman Schultz said she was unavailable for an interview on Friday.