Congress bows down to payday loan industry.

Business: Now this is one industry that needs to be clamped down or shut down. But certain Congress critters especially Dems are looking to not only avert any clamping down but make matters worse.

The payday loan industry, threatened by Congress with extinction, has deployed well-connected lobbyists and hefty sums of campaign cash to key lawmakers to save itself. The strategy has paid off. Now a top Democrat who once tried to ban the practice is instead pushing to regulate it — a result, he says, of the industry's lobbying clout. The lawmaker, Rep. Luis Gutierrez, D-Ill., says his bill does have crucial protections for borrowers and represents the best deal he can manage in the face of the industry's aggressive lobbying. Consumer groups are condemning the bill as a loophole-riddled gift to the industry.

Indeed, the payday lending industry is strenuously resisting Gutierrez's measure, which it says would devastate its business. The measure would cap the annual interest rate for a payday loan at 391 percent, ban so-called "rollovers" — where a borrower who can't afford to pay off the loan essentially renews it and pays large fees — and prevent lenders from suing borrowers or docking their wages to collect the debt. But consumer groups say the legislation would do little to crack down on the most egregious payday lending practices. They argue it would for the first time lend federal legitimacy to usurious loans and undermine successful efforts under way in several states to slap tougher limits on it. ....The group has also helped host several fundraisers for lawmakers with say over what happens to the industry, according to invitations collected by the Sunlight Foundation, which tracks political parties. Those included a fundraiser last year for Rep. Joe Baca, D-Calif., a Financial Services committee member. Dinner and a reception at the fundraiser at a Capitol Hill townhouse cost at least $1,000. Baca on Wednesday introduced his own version of payday lending legislation that has gotten a warmer reception from the industry. It would allow some rollovers and pre-empt state laws, which would effectively pave the way for payday lending in states whose laws currently make it difficult or impossible. And it allows online lenders to charge higher fees than their bricks-and-mortar brethren.