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In a bizarre display of bipartisan cooperation, a handful of Democratic lawmakers have joined Republicans in trying to cripple the Consumer Financial Protection Bureau.
The question is: Why?
Most notably, Florida Rep. Debbie Wasserman Schultz, who also serves as chairwoman of the Democratic National Committee, is co-sponsoring the deceptively titled Consumer Protection and Choice Act, which would undermine the watchdog agency's pending efforts to rein in predatory lending.
The bill would delay federal regulations for payday lenders by two years. It also would allow states to adopt more lenient rules for the industry.
Wasserman Schultz is joined by eight other Democrats in co-sponsoring the legislation alongside twice as many Republicans.
Weakening — or even better, shutting down — the Consumer Financial Protection Bureau has been high on Republicans' to-do list since the agency was created as part of the financial reform law passed in 2010. The law was a response to the mortgage meltdown that nearly plunged the world into a second Great Depression.
Critics of the bureau say it has too much power and that it places too heavy a regulatory burden on businesses. Supporters counter that if financial firms keep their noses clean, they have nothing to worry about.
"The bureau is effective precisely because it is an agency whose sole job is to look out for the best interests of consumers," said Emily Rusch, executive director of the California Public Interest Research Group. "No one should have to pay triple-digit interest rates on a loan."
The bureau has made no secret of its interest in establishing rules to safeguard consumers from being trapped by payday lenders in endless cycles of high-interest debt.
Under preliminary requirements unveiled last year, lenders would have to determine upfront if a borrower can repay the loan. They'd also face limits on how often the same borrower can be lent money. The bureau hopes to have final rules in place by the end of this year.
"Too many short-term and longer-term loans are made based on a lender's ability to collect and not on a borrower's ability to repay," said Richard Cordray, the head of the agency. "These common-sense protections are aimed at ensuring that consumers have access to credit that helps, not harms them."
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