Durbin reintroduces bill to cap consumer loans at 36%
WASHINGTON — Sen. Dick Durbin, D-Ill., has reintroduced a bill that would create a national interest rate cap of 36% on consumer loans.
The legislation, which was unveiled Monday, aims to abolish the high rates charged by payday lenders. It would apply a 36% limit on annual percentage rates for all open-end and closed-end consumer credit including mortgages, car loans, overdraft protection and payday loans, according to a press release from Durbin's office.
The rate 36% cap would match the current limit for loans targeting service members and their families, and would not interfere with stricter state rate caps.
“For some Americans, payday lenders offer a quick way to make ends meet, but their outrageous interest rates and hidden fees can have crippling effects on the people who can least afford it,” Durbin said in a statement.
Durbin criticized a proposal by the Consumer Financial Protection Bureau to remove an underwriting requirement from the agencys' rule governing payday lenders.
"President Trump and his administration have opted to roll back the progress we have made on reforming predatory lending by quietly dismantling the rules that regulate these lenders," he said. "We need to take action — now more than ever — to protect working families from predatory lending practices by capping interest rates and fees.”
The “Protecting Consumers from Unreasonable Credit Rates Act of 2019” is cosponsored by Sens. Jeff Merkley, D-Ore., Sheldon Whitehouse, D-R.I., and Richard Blumenthal, D-Conn. Previous versions have been floated 2009, 2013, 2015 and 2017, but the bill has never made it to the House or Senate floor.
Durbin’s bill would also encourage the creation of alternatives to payday lending and establish penalties for violations of the maximum rate cap. A House Financial Services subcommittee was planning to discuss the legislation at a hearing Tuesday.