WASHINGTON, D.C. – Last night, the U.S. House of Representatives voted to pass H.R. 3299, the so called “Madden fix” bill which would preempt state interest rate caps and open the flood gates to online predatory lending of 300% APR and higher loans. The bill passed despite opposition from consumer advocates. Several Members of Congress took to the floor to voice their firm opposition of this legislation and urged its sponsors to address predatory loopholes that exist in the bill. H.R. 3299 is sponsored by U.S. Reps. Patrick McHenry (R-N.C.) and Greg Meeks (D-N.Y.). The bill will now go to the Senate for consideration. A Senate companion bill, S. 1642, was introduced by U.S. Senator Mark Warner (D-Va.). View a fact sheet on the bill.
Center for Responsible Lending Director of North Carolina Policy Kelly Tornow released the following statement:
A broad coalition of veterans’, consumer, faith, and seniors groups, along with Republican and Democratic legislators, support North Carolina’s strong interest rate cap of 30% because it keeps predatory loans out of our state. While payday and other predatory loans were briefly allowed, we saw how they trapped North Carolinans in debt.
It is disappointing that Congressman McHenry sponsored legislation that could allow debt trap loans to weasel their way back into our state, which has firmly rejected them. It is our hope that the U.S. Senate will reject this misguided legislation.
If passed into law, predatory “fintech” lenders will capture more vulnerable borrowers in a debt trap, which already drains more than $8 billion a year from the working poor. It would allow for online payday and other predatory loans to reenter North Carolina, where strong state interest rate caps currently keep them out. North Carolina consumers save approximately $457,730,000 in payday and car-title loan fees by not having these predatory forms of lending in the state. This bill puts those savings at risk.
For more information or to arrange an interview with a CRL spokesperson, please contact Matthew Kravitz at Matthew.Kravitz@responsiblelending.org or 202-349-1859.