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Statements on Introduced Bills and Joint Resolutions

Floor Speech

Date: July 17, 2008
Location: Washington, DC
Issues: Business and Consumers Finance and Banking Housing and Property


STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - July 17, 2008)

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By Mr. DURBIN:

S. 3287. A bill to amend the Truth in Lending Act to establish a national usury rate for consumer credit transactions; to the Committee on Banking, Housing, and Urban Affairs.

Mr. DURBIN. Mr. President, today I am introducing the Protecting Consumers from Unreasonable Credit Rates Act. The bill establishes a Federal usury cap of 36 percent on all consumer credit transactions, in an effort to eliminate the unconscionable interest rates that some consumers have been charged for payday loans, car title loans, and other forms of credit.

The bill protects all borrowers by establishing the same annual percentage rate cap already in place for military personnel and their families. That rate is similar to the usury caps already enacted in many states.

Specifically, the bill establishes a maximum interest rate of 36 percent on all consumer credit transactions, taking into account all interest, fees, defaults, and other finance charges.

The bill clarifies that this cap does not preempt any stricter State laws.

It applies civil penalties for violations, including nullification of the transaction, fines, and prison.

It empowers attorneys general to take action for up to three years after a violation.

Previous attempts to curb payday lending have often been evaded due to the challenges of defining what constitutes a predatory loan. This bill overcomes this challenge by setting a relatively high interest rate as the cap, and then applying that cap to all credit transactions of any kind.

With the economy in decline and consumer debt skyrocketing, it is vitally important that strong protections against predatory lending be enacted to protect consumers against unscrupulous lenders. The financial security of many working families depends on it.

Mr. President, I ask unanimous consent that the text of the bill be printed in the RECORD.

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