WASHINGTON — Legislation to cap interest rates for all consumer loans at 36% was introduced Tuesday in the House and Senate.
Sens. Sherrod Brown, D-Ohio, Jeff Merkley, D-Ore., Jack Reed, D-R.I., and Chris Van Hollen, D-Md., introduced the Veterans and Consumers Fair Credit Act to extend to all consumers the Military Lending Act's protections for service members. Companion legislation was introduced in the House by Reps. Jesús “Chuy” Garcia, D-Ill., and Glenn Grothman, R-Wis.
“This bipartisan bill is an incredibly important piece of legislation that extends a critical protection for service members to all consumers,” said Chris Peterson, director of financial services at the Consumer Federation of America. “A supermajority of both Republican and Democratic voters support reestablishing the traditional interest rate limits that were in effect throughout the vast majority of American history.”
Under the legislation, the 36% cap on payday and car title loans for service members in current law would apply to all consumers loans. The Military Lending Act currently protects only active service members and their families, and not veterans or survivors of miltary personnel.
The legislation comes more than a year after then-acting Consumer Financial Protection Bureau Director Mick Mulvaney ended supervisory examinations of lenders' compliance with the Military Lending Act. The bureau lacked the statutory authority to enforce the act, he argued.
The current CFPB director, Kathy Kraninger, in January sided with Mulvaney's decision and urged Congress to give the CFPB clear power to conduct exams under the act.
