States Resist Congress' Payday Loan Bill | Jackson Free Press | Jackson, MS

States Resist Congress' Payday Loan Bill

The power to regulate controversial non-bank products such as installment, title and payday loans could be snatched away from states under a congressional proposal.

The power to regulate controversial non-bank products such as installment, title and payday loans could be snatched away from states under a congressional proposal. Photo by Courtesy Orin Zebest

The power to regulate controversial non-bank products such as installment, title and payday loans could be snatched away from states under a congressional proposal.

The Consumer Credit Access, Innovation and Modernization Act, or HR 6139, establishes a new federal charter for nonbanks--also called non-depository creditors--and regulates them.

If federally approved as a National Consumer Credit Corporation, critics say, the lenders will be able to circumvent state laws that have gotten tough on the installment loan industry in recent years.

In response to the resolution, sponsored by Rep. Blaine Luetkemeyer, R-Mo., 40 Republican and Democratic attorneys generals sent a letter to the majority and minority leaders in the House and Senate, warning of the act's potential negative effects.

"By preempting state laws, the proposed legislation would impede state efforts to immediately and directly protect consumers from harm," Mississippi Attorney General Jim Hood said in a news release.

Hood, a Democrat, joined two Republican AGs from the South--Sam Olens of Georgia and Buddy Caldwell of Louisiana--in signing a letter of opposition to House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

During the 2012 legislative session, a bill died that would have raised the interest cap from current levels of 36 percent to 99 percent.

The change would have meant that on a typical $1,500 loan with a 24-month term, the cost of repaying the sum, including interest and fees, would have gone up $884.88, about $37 per month.

HR 6139 awaits now awaits congressional committee action.

Comments

brjohn9 5 years, 7 months ago

Might this also be an attempt to circumvent the Consumer Financial Protection Bureau? The Bureau has already taken up payday lending, providing the first meaningful federal regulation of these operations. Given that the Republicans hate all things Dodd-Frank, it wouldn't surprise me. Fortunately, nothing will ever get through the Senate again. Ever.

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Oscar_Davis 5 years, 7 months ago

Yes, Brjohn, that's exactly what this bill is: the loan sharking industry's attempt to do an end run around the CFPB. If enacted, the bill would effectively legalize every bad practice of the industry, thereby thwarting the CFPB's authority to take action against practices that are demonstrably fraudulent, deceptive, and abusive. AG Hood is to be commended for standing with working families.

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morgan55 5 years, 7 months ago

Anyone needing a fast loan is obviously in serious financial difficulties caused either by desperation or foolishness. I do think that any advertising of these offers should show the rate of interest with at least 3 varying examples and should be highlighted clearly instead of being used as small print..which is unforgiveable. I don`t know what the advertising standards authority are thinking about when they allow these things to be offered in their present form....they deserve a thorough investigation into their practises.

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SlightlyAmused 5 years, 7 months ago

Non-banks? It's outrageous that nothing of consequence has been done about the behavior of the banks that brought down the economy. There has been no accountablity, no enforcement, but somehow now the Congress deems it important to wrangle payday lenders? Same goes for these attorneys general. I barely knew what a payday loan was until lately. But, I have neighbors and friends that all know too well what a predatory mortgage is.

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