A bill has been introduced in the Senate that would allow state governments to put caps on credit card interest rates within their own jurisdictions.
Introduced by Senator Sheldon Whitehouse of Rhode Island on Tuesday, the bill amends the Truth in Lending Act of 1968, to empower the 50 states to put caps on credit card interest rates. The bill would upend a 1978 Supreme Court decision, Marquette National Bank of Minneapolis v. First of Omaha Service Corp., which changed the laws on the books so that banks are subject only to the lending laws of the state in which they are incorporated — presumably Delaware for most.
Bill Quite Popular Among Left-Leaning Dems
Senator Whitehouse’s bill, cosponsored by Sens. Carl Levin, Dick Durbin, Bernie Sanders, Mark Begich, Jeff Merkley, Al Franken, and fellow Ocean Stater Jack Reed, would make it so that banks are subject to the APR caps of whichever states they operate in.
This has been something of a pet issue for Senator Whitehouse, who has tried to create this law as an amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, and as a stand-alone bill in 2009, with the same title: Empowering States’ Rights to Protect Consumers Act.
Bill Aims to Curb Predatory Lending
“It’s time to stop Wall Street banks and their credit card subsidiaries from taking advantage of struggling families in Rhode Island and across the nation,” Whitehouse said in prepared remarks.
The proposed law — the text of which is not yet publicly available — aims to further prevent predatory lending on the part of banks and credit card issuers. Co-sponsoring Senator Sanders noted that “more than a quarter of all credit card holders in this country are paying interest rates above 20 percent and as high as 59 percent,” in his prepared remarks.
The bill was read twice and referred to the Senate Committee on Banking, Housing, and Urban Affairs. Last time the law went to a vote, as a Dodd-Frank amdenment in 2010, it lost 60-35; the stand-alone bill languished in committee. In the philosophical battle between states’ rights and keeping the finance industry under-regulated, it’s clear that Republicans believe the latter is more important than the former.