Washington, D.C. — Ahead of today’s Senate Banking Committee hearing on a proposed national interest rate cap, government watchdog Accountable.US called on Senate Republicans to put consumers and vulnerable borrowers ahead of the payday loan industry that has poured over $800,000 into their campaign war chests. The hearing follows the introduction of the “Veterans and Consumers Fair Credit Act” in the Senate, arguably the strongest measure to come before Congress to keep consumers out of the payday loan debt trap. The bipartisan bill, backed by several veterans’ advocacy groups and even conservative Congressman Glenn Grothman (R-WI), would expand the Military Lending Act’s 36 percent interest rate cap to veterans, Gold Star Families, and all consumers nationwide – a blessing for borrowers in states where 400 percent or higher APRs are commonplace and perfectly legal.
“As American families continue to navigate a pandemic and fragile economic recovery, the last thing they need is a mountain of new debt from abusive fees and penalties from ruthless payday lenders,” said Jeremy Funk, spokesman for Accountable.US. “Congress knows an interest rate cap has already worked wonders to keep predatory lenders off the backs of our brave service members and their families. Lawmakers now have a bipartisan opportunity to build on that success and afford the same protections from financial ruin for veterans and all hard-working Americans. It would put billions more dollars in consumers’ pockets and help grow the economy rather than the profits of financial industry vultures. All eyes are on committee members who have taken contributions hand over fist from the payday industry: will they make excuses for predatory lending practices that exploit veterans and vulnerable communities, or will they put consumers first?”
The bipartisan “Veterans and Consumers Fair Credit Act” would also help mitigate the mass consumer harm done by the Trump-Kraninger CFPB’s rule that rolled back the ability-to-repay standard, a critical protection against the payday loan debt trap. The payday industry has already padded its profits by over $13 billion (due to abusive fees and penalties) under the Trump administration’s decision in August 2019 to delay the implementation of the safeguard that would keep payday lenders from approving high-interest loans to vulnerable people they know cannot pay back them back in time. A national interest rate cap would stop the economic hemorrhaging.
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