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State Attorneys General Rightly Urge Defeat of Congressional Bills That Would Preempt State Consumer Protections

Friday, June 29, 2018
Carol Hammerstein
Diane Standaert

WASHINGTON, D.C. – A bipartisan coalition of Attorneys General from 19 states plus D.C. asserted their states’ authority to protect consumers from financial abuse yesterday in a letter opposing two bills being considered in Congress that would allow lenders to sidestep state consumer protection laws.

HR 3299 and HR 4439 would override state interest rate caps by authorizing sham relationships between banks and predatory lenders. Though the bills are being pushed under the guise of promoting “fintech,” their passage would open the flood gates to predatory lending with annual interest rates of 100% to 400%, even in states that currently prohibit such exorbitant costs.

Center for Responsible Lending Executive Vice President and Director of State Policy Diane Standaert released the following statement:

We thank this bipartisan coalition of Attorneys General for asserting their legal authority to enact and enforce consumer protections, particularly usury laws. We especially thank the Attorneys General of Colorado and Massachusetts for their bipartisan leadership in this effort.

The bills opposed by the Attorneys General would enable predatory lenders to ignore state consumer protections so that they can make triple-digit interest loans that are designed to trap customers in a long-term cycle of debt.

These bills put millions of people across the country at risk to predatory lending.  In more than 30 states, consumers are protected from dangerous high-cost installment loans due to rate limits effectively enforced by their state law.  These bills will override those laws, as well as potentially expand short-term payday lending to the 15 states plus the District of Colombia whose state interest rate limits currently save borrowers over $2.2 billion annually in payday loan fees.

Allowing Congress to preempt those caps and let predatory lenders operate in protected states would devastate the low-income individuals and families who find their situations worsened by exposure to payday loans. 

The opposition of the Attorneys General to these bills adds them to the long list of other groups in opposition to HR 3299 and HR 4439, including the Conference of State Bank Supervisors, national civil rights organizations, military veterans, and hundreds of other organizations fighting to defend federal attacks on states’ ability to rein in predatory lending practices.

We appreciate that Attorneys General from both parties recognize the importance of fighting for state authority over consumer protections in general, and against these bills in particular.

For more information or to arrange an interview with a CRL spokesperson, please contact Carol Hammerstein at carol.hammerstein@responsiblelending.org.