Congresswoman Maxine Waters compared the hazards of payday loans to the water supply crisis in Flint, Mich., saying the loans are “contaminated with excess fees.”

Credit and drinking water are essential, but access to loans, like access to water, should be safe, said Waters during a hearing held by the House Financial Services Committee, where she serves as lead Democrat member.

“Anyone who says there is not a problem with payday loans is wrong,” Waters said Thursday. “We have a responsibility to step in when our constituents tell us they are hurting. Too many credit products are contaminated with excess fees.”

Waters was countering Republican claims that tightly regulating payday and other small dollar lenders would dangerously restrict the availability of credit.

She criticized the payday loan industry for sometimes approving multiple loans to the same people at interest rates that often exceed 500 percent.

Some of her colleagues agreed.

“The circle of debt from payday loans is one of the most painful things I have seen in peoples’ lives,” said Rep. Carolyn Maloney of New York, also a member of the finance committee

Rep. Ruben Hinojosa, a Texas Democrat, said small-dollar loans are a major reason people end up at the doors at social services agencies in his state.

Committee Democrats also said small-dollar loans can be toxic because thousands of borrowers have lost their means to get to their jobs because they have put their cars up them up as collateral for auto-title loans and have not been able to repay them.

The hearing came as the Consumer Financial Protection Bureau is preparing regulations of small dollar lenders.

Financial Services Financial Institutions Subcommittee Chair Randy Neugebauer of Texas said the loans are often needed to forestall consumer harm.

The marketplace is evolving and becoming very competitive, he added.

Republicans at the hearing cited payday loan regulation as an example why people in the presidential primaries have said they are frustrated that the Obama Administration is trying to tell them how to run their lives.

Sherry Treppa, chair for the Habematolel Pomo of Upper Lake Indian tribe in California, warned CFPB rules on small-dollar lenders would destroy economic development for tribes.

CFPB Acting Deputy Director David Silberman said the agency is still in the early stages of drafting regulations, but a core requirement is that the lenders would have to assess the ability of borrowers to pay back the loans.

The agency has enacted a similar requirement for mortgage lenders spurred by the Dodd-Frank Act.

Silberman said 35 percent of small-dollar loans work exactly as intended and the borrowers are able to pay them on time. But half the borrowers need to take repeated loans for the same amount and incurred high interest charges.

He said 20 percent of consumers who borrow multiple times on an original loan end up defaulting and become the subject of collection proceedings.

“With payday loans, people think they are taking a short ride, but they are taking a very long ride at a very great cost,” the CFPB executive said.