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Representative Patrick Murphy Touts Florida Payday Loans as a Potential National Model

Florida lawmakers worked diligently to create payday lending laws that would be beneficial to borrowers, while still allowing lending companies to do business in the state. Now, Rep. Patrick Murphy says that the payday lending laws in Florida are so good that they should serve as a model for any future regulations that get introduced on a federal level. By doing so, Murphy has inserted himself into a fray that has resulted in an outright battle of opinions between consumer advocate groups, himself and a handful of likeminded Democrats, including the high profile Debbie Wasserman Schultz.

During a conference call conducted with members of the press recently, Murphy said, “The regulations on the industry are some of the strongest here in Florida, stronger than almost any other state. This was legislation passed at the state level after years and years of back and forth, bipartisan legislation, cracking down on the bad actors, making sure that people are not being taken advantage of.”

It turns out, however, that Murphy’s position is fast becoming a target for the ire of liberals and some consumer advocate groups. These folks have pointed out that payday loans can result in consumers paying very high fees and that Murphy, Wasserman Shultz and other lawmakers are working to essentially block reforms that have been set in motion by Massachusetts Senator Elizabeth Warren.

The Center for Responsible Lending is a consumer watchdog group that apparently does not side with Murphy’s take on the Florida state payday lending laws. A recent report from this organization said, “The persistent pattern of repeat lending in Florida occurs despite the 2001-enacted Deferred Presentment Act, a state law that limits borrowers to only one loan at a time and includes a 24-hour wait period between loans. Passed with bipartisan support in the legislature along with that of the payday industry, today payday lenders in Florida are more commonplace than Starbucks’ 642 coffee shop locations and charge on average 278% annual percentage rate.” This report was put together by the Center for Responsible Lending, the Florida Alliance for Consumer Protection, Latino Leadership Inc. and the National Council of LaRaza.

Murphy is currently in the race for a Senate seat and has put his weight behind legislation that would stop the proposed regulations from coming to fruition. These regulations are expected to be announced fully to the public soon, according to the Consumer Financial Protection Bureau.

Murphy went on to defend his position by saying, “There are many studies out there showing that Florida’s model works, especially compared to a lot of what’s going around the country. That is a model that has to be, I believe, implemented because it’s much stronger than many other states.” Just about every member of the Florida congressional delegation signed a 2015 letter that gave high praises to Florida’s law. However, a report that was released by a consortium of consumer advocate groups attacked these regulations, saying that the 24 hour cooling off period and interest rate caps were not sufficient. A memo from this group of consumer advocates stated, “In spite of the industry-backed Florida law, 88% of repeat loans were made before the borrower’s next paycheck.”

Senator Warren was also critical of the proposed legislation. Warren recently tweeted out this message: “The @CFPB is doing a great job to crack down on the tricks & traps in payday loans. Congress should back the @CFPB, not sabotage it.”

Murphy, like others who support the concept of payday lenders being able to do business in a fairly regulated environment said, “That’s one of the biggest things holding back the middle class right now, lack of access to capital.”

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