The House Appropriations Committee voted Thursday to block proposed rules from the Obama administration that sought to crack down on short-term, high-interest payday loans. Photo by Flickr user Dan Iggers

WASHINGTON — A powerful House panel is coming to the aid of payday lenders, moving to delay Obama administration regulations aimed at cracking down on the much-criticized industry.

Thursday’s 30-18 vote by the Appropriations Committee would block proposed rules by the Consumer Financial Protection Bureau requiring payday lenders make sure customers are capable of repaying the loans, which typically come with high interest rates and fees.

The rules also would cap the number of successive loans consumers can take out and try to keep consumers out of the resulting spiral of debt. They would also restrict lenders from multiple attempts to collect payment from consumers’ bank accounts in order to protect them from excessive fees.

The proposal, by Mississippi GOP Rep. Steve Palazzo, would require reports before the rules could take effect and have the bureau identify products that could replace payday loans. It was attached to a spending bill with jurisdiction over the consumer bureau, which was established by the 2010 financial overhaul law. It faces a certain veto threat.

Palazzo said the new rules would restrict lending, especially in rural districts like his in southern Mississippi.

“I don’t want my constituents being forced to loan sharks or forced out onto the streets because another government agency wants to regulate businesses out of business,” Palazzo said. Drying up all of the access to credit will cause small businesses to close, people to lose their jobs, and many to turn to less-regulated, often illegal means of securing credit.”

But Democrats, for the most part, were strongly against the amendment, saying it would protect the payday industry at the expense of borrowers at risk of being trapped in a spiral of debt and losing their cars or other collateral along the way.

“Any proposal that would interfere with the CFPB’s ability to act on payday lending would be extremely damaging to the public interest and to millions of working families,” said Rep. Jose Serrano, D-N.Y.