The Center for Responsible Lending (CRL), the National Consumer Law Center (NCLC), and 150 national and state organizations urge Members of Congress to reject S. 1642 and H.R. 3299, legislation that pose serious risks of enabling a vast expansion of predatory lending across the country. Specifically, the legislation makes it easier for payday lenders and other nonbanks to use rent-a bank arrangements to ignore state interest rate caps and make high-rate loans.
The potential costs and damage to consumers are significant, the groups warn. S. 1642 and H.R. 3299 could 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. In addition, it could expand high-cost longer-term loans, the groups note. In about 34 states, a $2,000, 2-year installment nonbank loan exceeding 36% APR is illegal. But this legislation could effectively allow high-cost lenders to partner with banks to ignore rate caps across the country.... Read the enitre letter to Congress.