State Attorneys General Boost U.S. House Payday Lender Bill

May 28, 2019 by Tom Ramstack
Rick Moseley Sr., one of a few Kansas City payday lenders whose usurious business practices came under scrutiny by federal investigators, was sentenced on June 12, 2018, by a federal judge in New York to 10 years in prison. (Jonathan Weiss/Dreamstime/TNS)

WASHINGTON – Twenty-five state attorneys general are giving a boost to a bill introduced in Congress this month that seeks to rein in excessive interest rates on payday loans.

The attorneys general filed a comment letter with the Consumer Financial Protection Bureau opposing the agency’s proposed repeal of rules it adopted in 2017 to protect consumers from excessive interest rates and other predatory practices.

The letter argues that eliminating the protections, which were set to go into effect in August 2019, would harm consumers and reduce states’ ability to protect their residents from predatory lending. It also says the planned repeal is inconsistent with the CFPB’s legal obligations.

“The proposal also neglects the experiences of states that have successfully curbed abuses associated with payday and vehicle title lending without hurting consumers,” the letter says.

District of Columbia Attorney General Karl Racine, who helped organize the joint letter, added in a statement, “Rolling back consumer protections on high-interest short-term loans will trap low and middle income borrowers in endless cycles of debt.”

Payday loans are high-interest, short-term loans that must be paid in full when borrowers receive their next paychecks. The lenders who grant them often are called loan sharks.

Days before the attorneys general sent the letter, Democrats introduced a bill in Congress that would cap the interest rates that credit card companies and payday lenders can charge consumers at 15 percent.

The Loan Shark Prevention Act also would allow the postal service to perform some financial functions, such as check-cashing and allowing customers to pay bills through the postal service. Payments through the postal service are intended to eliminate profiteering by intermediaries, such as payday lenders.

Some Republicans are joining Democrats in supporting the bill.

“The bill will officially cap all interest rates on consumer loans at 15 percent, lowering the credit card rates of millions of Americans and functionally destroying the predatory ‘payday’ loan industry,” a statement from Representative Alexandria Ocasio-Cortez, D-N.Y, said. She introduced the bill along with Senator Bernie Sanders, I-Vt., who is running for president.

Credit card interest rates now average as much as 19.24 percent, according to a recent WalletHub’s Credit Card Landscape Report. The rates have been increasing in recent years as the Federal Reserve Bank raises the target rate.

Predatory lending has trapped “millions in a cycle of systemic poverty as their hard-earned money is funneled into exorbitant bonuses for Wall Street executives,” the statement from Ocasio-Cortez says. She is a member of the House Financial Services Committee.

Critics of the legislation say it would hurt credit card companies’ profits and force them to cut out loyalty rewards programs and other popular perks for customers.

Ultimately, it would end up costing consumers more money than it saves them, according to corporate financial advisor Karen Webster.

“Every time governments try to implement price controls to prevent market-based prices from balancing supply and demand, they eventually experience the law of unintended consequences,” Webster wrote in a recent editorial posted on the website Pymnts.com.

She mentioned the example of gasoline price caps the federal government imposed during an oil shortage crisis in 1973.

“So who got hurt the most,” Webster asked. “Not the oil companies, and not the gas station operators. It was the average, hard-working consumers who were ‘supposed to’ have benefited from not having to pay ‘exorbitant’ prices.

“But, of course, they paid – just in a myriad of other ways, including even losing their jobs,” she wrote.

In The News

Health

Voting


Notice: Undefined variable: pc_ID in /var/www/html/thewellnews/wp-content/themes/twentynineteen-child/template-parts/content/content-single.php on line 263


Notice: Undefined variable: primary_cat in /var/www/html/thewellnews/wp-content/themes/twentynineteen-child/template-parts/content/content-single.php on line 268

To Pay for Green Infrastructure, Cities are Turning Stormwater Into an Economic Resource
In The News
To Pay for Green Infrastructure, Cities are Turning Stormwater Into an Economic Resource

This article was originally published by Anthropocene magazine. Stormwater is a big problem for cities—and a growing one. Lots of urban surface area is impermeable, so stormwater can’t sink into the ground but instead flows through the city. Meanwhile, climate change is altering and often intensifying... Read More

US Forces to Leave Afghanistan By Sept. 11
Military
US Forces to Leave Afghanistan By Sept. 11
April 13, 2021
by Dan McCue

WASHINGTON - U.S. military forces will leave Afghanistan by Sept. 11, the 20th anniversary of the attacks on the World Trade Center and the Pentagon, Biden administration officials revealed Tuesday. President Joe Biden is expected to formally announce the plan, which is not conditions-based, unlike previous... Read More

Spoleto Festival USA Resuming In Charleson
Arts
Spoleto Festival USA Resuming In Charleson
April 13, 2021
by Dan McCue

CHARLESTON, S.C. - Charleston, S.C., is known for many things.  Southern charm.  Restaurants. Idyllic, Sun-soaked days. Being home to one of the nation’s busiest and most successful ports. But perhaps nothing brings more visitors to the city and the surrounding Lowcountry than the annual Spoleto Festival... Read More

Murphy Sets Sights On China’s Influence Campaign in Latin America, Caribbean
Geopolitics
Murphy Sets Sights On China’s Influence Campaign in Latin America, Caribbean
April 13, 2021
by TWN Staff

WASHINGTON - Rep. Stephanie Murphy, D-Fla., is pressing for a comprehensive assessment of China’s efforts to expand its presence and influence in Latin America and the Caribbean and how these efforts could undermine American interests. Under the auspices of a new bill Murphy has authored, the... Read More

U.S. Airline Struggles Continue a Year After Onset of Pandemic
Travel
U.S. Airline Struggles Continue a Year After Onset of Pandemic
April 13, 2021
by TWN Staff

WASHINGTON - U.S. airlines carried 61% fewer passengers in February 2021 than in February 2020, according to preliminary data from the U.S. Transportation Department. The analysis, which was carried out by the department's Bureau of Transportation Statistics, suggests airlines serving U.S. passengers are still a long... Read More

Boeing Resumes 787 Dreamliner Deliveries
Aviation
Boeing Resumes 787 Dreamliner Deliveries
April 13, 2021
by TWN Staff

Boeing's massive aircraft assembly facility in North Charleston, S.C. has resumed deliveries of the aerospace giant's 787 Dreamliner passenger jet, after the discovery of structural flaws in some of the planes led to five months of engineering analysis and inspection work. "Our commitment to safety and... Read More

News From The Well
scroll top