Policy & Legislation
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, which becomes the sixteenth state to put a stop to the predation through an interest rate cap as of July 2010.
Other than protecting military families with a 36% APR cap on small predatory loans, Congress has not yet moved to expand reforms across the country, and some big national banks are beginning to get into the business with loans that are virtually indistinguishable from storefront payday loans.
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- Interest Rate Survey
March 30, 2009
CRL 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.
- Comments on Regulation E—Overdraft Practices
March 30, 2009
The Center for Responsible Lending, along with Consumer Action, Consumer Federation of America, Consumers Union, National Association of Consumer Advocates, National Consumer Law Center (on behalf of its low-income clients), and U.S. PIRG provide the following comments regarding the Federal Reserve Board’s proposed rule to amend Regulation E pursuant to the Electronic Funds Transfer Act.
- Key protections in H.R. 1456 - Consumer Overdraft Protection Fair Practices Act
March 30, 2009
Listing of major elements in HR 1456, introduced by Rep. Maloney
- Support HR 1456
March 12, 2009
On March 12, 2009, Representative Carolyn Maloney, Chairwoman of the Financial Institutions Subcommittee (D-NY), and Representatives Ackerman, Miller of North Carolina, Ellison, Speier, Tierney, and Eshoo introduced legislation to protect consumers from abusive overdraft loan programs and stop financial institutions from deliberately manipulating their systems to generate more overdrafts—while preserving the institutions' ability to cover occasional overdrafts as a courtesy without triggering the Act's requirements. The Act would: Amend the Truth in Lending Act to clarify that overdraft fees are finance charges, so that annual interest rates are reported. Consumers would then be able to compare the cost of overdraft loans with the cost of other credit options. Require written consent before enrollment in the overdraft loan program. Require financial institutions to warn the customer when an ATM withdrawal will trigger a fee—and allow the customer to cancel the transaction at that time. Prohibit financial institutions from manipulating the order of check clearing to increase customers' overdraft loan fees.
- A 36% APR Cap on High-Cost Loans Promotes Financial Recovery
January 31, 2009
Explains the importance of a federal 36% interest rate cap in stopping predatory lending and stimulating the economy.