facebook linkedin twitter

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.

Loud Climate Policy

Let me set the stage: There’s a Democratic majority in both houses of Congress and a Democrat in the White... Read More

Let me set the stage: There’s a Democratic majority in both houses of Congress and a Democrat in the White House. Climate advocates have spent the last few years in the exile of a Republican Administration, one quarter drawing more and more attention to hurricanes and... Read More

October 15, 2021
by Reece Nations
Tech Innovation ‘Fundamental Foundation’ of Feasibly Solving Climate Crisis

WASHINGTON -- The foundations of what could prove to be the next great innovations in climate change prevention technology were... Read More

WASHINGTON -- The foundations of what could prove to be the next great innovations in climate change prevention technology were laid out and dissected during a Brookings Institution webinar this week. Sanjay Patnaik, director of Brookings Center on Regulation and Markets, hosted a virtual discussion on... Read More

October 15, 2021
by Reece Nations
Texas Removes LGBTQ Youth Suicide Hotline After Primary Challenger Goads Abbott

AUSTIN, Texas — The Texas Department of Family and Protective Services has taken down a webpage that offered resources to... Read More

AUSTIN, Texas — The Texas Department of Family and Protective Services has taken down a webpage that offered resources to LGBTQ youth after criticism was leveled at Gov. Greg Abbott by a primary challenger for its inclusion. Former Texas state Sen. Don Huffines, who announced his... Read More

October 15, 2021
by Victoria Turner
Panelist Says Counterfeit Goods a 'Globalized Business’

WASHINGTON -- If you do a quick Google search for fake Apple Airpods, an almost endless list of options will... Read More

WASHINGTON -- If you do a quick Google search for fake Apple Airpods, an almost endless list of options will come up, said Piotr Stryszowski, senior project manager at the Organization for Economic Development and Cooperation, Thursday.  Not only does the counterfeit problem affect the U.S.... Read More

FDA Panel Takes Up Tough Questions on J&J COVID-19 Boosters

WASHINGTON (AP) — U.S. health advisers on Friday tackled who should get boosters of Johnson & Johnson's single-shot COVID-19 vaccine... Read More

WASHINGTON (AP) — U.S. health advisers on Friday tackled who should get boosters of Johnson & Johnson's single-shot COVID-19 vaccine and when — and whether using a competing brand for the second dose might provide better protection. The push for boosters kicked off last month after... Read More

Report: Offshore Wind Supply Chain Worth $109B Over 10 Years

ATLANTIC CITY, N.J. (AP) — A group studying the economics of offshore wind energy in the U.S. says building and... Read More

ATLANTIC CITY, N.J. (AP) — A group studying the economics of offshore wind energy in the U.S. says building and operating the nascent industry will be worth $109 billion to businesses in its supply chain over the next 10 years. The report by the Special Initiative... Read More

News From The Well
scroll top