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.

U.S. House

House Democrats’ Leadership Races Reflect Coming Generational Change
Political News
House Democrats’ Leadership Races Reflect Coming Generational Change

WASHINGTON — Only one House Democrat in the caucus’s 14-member elected leadership team is exiting the chamber next year, but that opening has created a competitive race for assistant speaker and cleared opportunities for other ambitious Democrats to run for the lower-ranking positions those candidates are... Read More

No Stimulus Checks for Americans in Slimmed-down GOP Coronavirus Relief Package
Economy
No Stimulus Checks for Americans in Slimmed-down GOP Coronavirus Relief Package

WASHINGTON — Senate Republicans plan to vote later this week on another economic relief package for Americans dealing with the COVID-19 pandemic, but the slimmed-down plan — which does not include new checks for individuals — is already a deal-breaker for Democrats, ensuring that the stalemate... Read More

QAnon Supporter Wins GOP’s US House Runoff in Georgia
2020 Elections
QAnon Supporter Wins GOP’s US House Runoff in Georgia

ROME, Ga. — Marjorie Taylor Greene was victorious in Georgia’s 14th Congressional District Republican runoff, and she is likely to become the first QAnon supporter to earn a seat in Congress. Addressing supporters shortly after 9 p.m. Eastern, she credited her willingness to buck party leadership... Read More

House, Senate Pass Bills to Study the Number of Cancers Striking Military Pilots
Military
House, Senate Pass Bills to Study the Number of Cancers Striking Military Pilots

WASHINGTON — The Department of Defense would be required to identify how many of its current or former aviators have been diagnosed with cancer in bills passed by the House and Senate this week, a study long sought by military pilots who have questioned why there... Read More

Cunningham Hit Ground Running When It Came To Tamping Down on Drug Prices
Prescription Drugs
Cunningham Hit Ground Running When It Came To Tamping Down on Drug Prices
December 4, 2019
by Dan McCue

WASHINGTON - In the Lowcountry of South Carolina, Rep. Joe Cunningham's race for Congress quickly became the stuff of local legend. Here was a first-time candidate, a Democrat running in a staunchly Republican district, who defeated a well-financed GOP opponent, to become the first Democratic representative... Read More

House Votes to Renew Export-Import Bank Charter Over GOP Opposition
Trade
House Votes to Renew Export-Import Bank Charter Over GOP Opposition
November 18, 2019
by Dan McCue

WASHINGTON - The House voted on Friday to renew the charter of the Export-Import Bank, the U.S. agency that provides loans and other help to foreign buyers of U.S. exports, despite opposition from Republican lawmakers. Despite the bank having historically enjoyed strong bipartisan support, only 13... Read More

News From The Well
scroll top