Tomorrow (Tuesday) a House Financial Services subcommittee will hold a hearing on the bill, which would establish a bulwark to defend Americans from predatory lending, and also on the CFPB’s move to roll back consumer protections on payday loan

Click here for this map, showing the APR of a typical payday loan in those states without strong interest rate caps. For example, the typical payday loan in Illinois has an APR of approximately 400%.

WASHINGTON, D.C. – The Center for Responsible Lending (CRL) has announced support for legislation introduced today by Senator Dick Durbin (D-Ill.), the Protecting Consumers from Unreasonable Credit Rates Act of 2019. The bill would forbid lenders nationwide from charging any higher than 36% annual percentage rate (APR). The legislation makes clear that it would not interfere with state rate caps that are lower than 36% APR. The legislative proposal will be considered at a House Financial Services subcommittee hearing, entitled “Ending Debt Traps in the Payday and Small Dollar Credit Industry,” which will be live-streamed (at this link), on Tuesday at 2 PM ET.

“Senator Durbin’s legislation is the best way for our country to keep the loan sharks at bay,” said Center for Responsible Lending (CRL) Senior Policy Counsel Rebecca Borné. “This bill would free people from the crushing consequences of debt trap loans and usury, which can include losing a bank account, having your car seized, and falling into bankruptcy.”

Additional Background

CRL has calculated that every year consumers lose approximately $8 billion in fees to payday and car title lenders. These businesses also target low-income consumers and communities of color with their debt trap products.

Today, there are rate caps, of no higher than 36% APR, in place for military servicemembers and residents of 16 states and the District of Columbia, leaving these consumers better off.

Senator Durbin’s bill comes at an important time as the new, Trump-appointed Director of the Consumer Financial Protection Bureau (CFPB) has issued a plan to eliminate protections from payday and car title loan debt traps. (PDF) Comments on this CFPB proposal are due by May 15.

For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Matthew Kravitz at matthew.kravitz@responsiblelending.org or 202-349-1859.