Policy & Legislation
HIGHLIGHT
Battles rage across the country between the payday lending industry and coalitions of citizens groups who are increasingly insisting they will not accept 400 percent interest lending. Fifteen states plus the District of Columbia have outlawed triple-digit interest, and two states rejected them in ballot measures last November – Ohio and Arizona. If Arizona’s exemption for payday lenders from its 36 percent cap expires in 2010 as scheduled, it will be the sixteenth state to put a stop to the predation through an interest rate cap.
This year Congress is taking up the cause. A 36 percent cap on annual interest rates for consumer credit has been introduced in the House and the Senate. At a time when lawmakers are looking for ways to stimulate the economy, the cap makes sense – it would save $5 billion in abusive fees stripped from working families at no cost to taxpayers.
- Mainstream banks making payday loans
February 24, 2010National bank regulator, the OCC, must stop this trend before it takes off among more national banks, making millions vulnerable to predatory loans even in states that don't allow it from payday lending stores
- Interest Rate Survey
March 30, 2009CRL conducted a national survey to measure public support for one strategy on the table: a 36 percent cap on annual interest rates for consumer loans. The survey found high levels of support for such a measure, which had very little variance across different demographic groups.
- A 36% APR Cap on High-Cost Loans Promotes Financial Recovery
January 31, 2009Explains the importance of a federal 36% interest rate cap in stopping predatory lending and stimulating the economy.
- Ohio Payday Hearing
May 7, 2008Testimony of Uriah King, Center for Responsible Lending before the Ohio Senate Finance and Financial Institutions Committee
- Comment: Implementation of Military Lending Amendment
February 26, 2008Comments on Implementation of Limitations on Terms of Consumer Credit Extended to Service Members and Dependents
- Springing the Debt Trap-Exec Summary
December 13, 2007Executive summary of Springing the Debt Trap - outlines what reforms states have tried, documents that none have worked except for the 36% rate cap.
- CRL Critique of “Payday Holiday: How Households Fare After Payday Credit Bans” by Donald P. Morgan and Michael R. Strain
December 10, 2007A working paper by a staffer at the Fed Bank of NY is fundamentally flawed, offers no valid information, and is being used to justify policy that keeps low-wealth borrowers trapped in income-draining payday loans. The paper is not a Federal Reserve Bank report as a payday industry press release implies. Our critique exposes the fatal errors in the paper's methodology.
- The Payment Plan Smokescreen
June 4, 2007Facing increasing scrutiny of the problems caused by payday lending, the industry trade group recently announced a new public relations campaign that claims to address the problem of loan flipping by requiring its lenders to offer borrowers an extended payment plan. However, this plan will not give borrowers a viable option for escaping the debt trap, and a description of the guidelines suggests lenders will offer the plan to borrowers in trouble only once per year despite the fact that the typical borrower has nine loans per year.
- Comment: To Department of Defense on Military Lending Act
February 8, 2007Comments on Military Lending Act submitted to Department of Defense by Consumer Coalition on Feb. 5, 2007.
- Small Loan CRA Comment
February 2, 2007CRL Comment to the Federal Deposit Insurance Corporation on its proposed guidelines for affordable small-dollar loans.
