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Debbie Wasserman Schultz's performance in her post as the head of the Democratic National Committee has famously come under fire. She has been in control of scheduling debates among Democratic candidates for president, for example, infrequently and at inconvenient times. The scheduling decisions have been mistakes.
For example, one such debate came on Sunday night, March 6, 2016 in Michigan on the night when the final episode of "Downton Abbey" was scheduled, perhaps the most popular TV series ever and definitely the most popular TV series ever broadcast by Public Television.
Ms. Schultz or her staff members have consistently denied that such arrangements were designed to help Hillary Rodham Clinton more easily gain the Democratic presidential nomination. Nonetheless, such arrangements have had the effect of an insurance policy for Ms. Clinton's candidacy since they clearly have made it more difficult for other candidates to become better known themselves.
Now, in her capacity as a Democratic Member of Congress, Ms. Schultz has made another mistake. She signed on to what amounts to an insurance policy for payday lenders. Ms. Schultz has become a co-sponsor of a bill that would preempt any Federal regulations which might be issued to curb payday lending, entirely in favor of State-based regulation of payday lenders such as in Florida. Ms. Schultz describes Florida's regulation laws as the example to follow, an example of how to regulate payday lenders.
The problem of course is that Florida's payday lending regulations, at best, have been described as regulations in name only. To begin with, Florida's law, introduced by Ms. Schultz when she was a member of the Florida House, may have originated with and certainly was backed by the payday lending industry. "The problem here is that Florida's law is a sham." Gynnie Robnett, Director of Campaign to Stop the Debt Trap at Americans for Financial Reform, quoted by Zach Carter, "DNC Chair Joins GOP Attack on Elizabeth Warren's Agency," huffingtonpost.com, posted on March 1, 2016.
The results of the Florida payday lending law have been bad for consumers and worse than that for consumers who are poor. The results of a study by the Pew Charitable Trusts reveals that a "typical Florida payday loan customer ends up taking out nine payday loans a year and is stuck in debt for nearly half" of the year. The average Florida payday loan is $389.00 with an average interest rate of 304%. Id.
"Very few borrowers can afford to sacrifice one-third of their paycheck and still cover all their expenses." Alex Horowitz, a senior research officer at the Pew Charitable Trusts, quoted in id.
"There are a host of alternatives to the Florida law." Id. The Florida law of not regulating payday lenders should never be allowed to preempt actual regulation of payday lenders. Causing moral hazard for payday lenders, it would be the equivalent of giving payday lenders insurance without limits.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Insurance Claims and Issues" (forthcoming Thomson Reuters 2016). All rights reserved.