WASHINGTON–Two Democratic members of Congress say they will propose new laws capping loan interest rates as well as encouraging the Postal Service to get into the banking business, and credit unions are already pushing back.
Sen. Bernie Sanders (D-VT) and Rep. Alexandria Ocasio-Cortez (D-NY) said they plan to put forth a proposal that would limit interest rates on credit cards and other loans, in addition to empowering the Postal Service to provide more affordable financial services products to consumers.
The Sanders/Ocasio-Cortez proposal would cap credit card interest rates at 15% (the national average is 17.73%, while the median was 21.36%, according to CreditCards.com).
"Today, we're telling Wall Street and the payday lenders that enough is enough," Sanders and Ocasio-Cortez said in a joint statement treamed on Twitter.
Speaking to potential criticism, Ocasio-Cortez told the Washington Post a 15% interest rate on credit cards "is a lot,” adding, "You can run a bank" and "continue to be profitable" at those levels.
CUNA’s Response
CUNA has responded to the proposal with a letter that seeks to refute the need for any such legislation, and further argues credit unions are already available as the best option for consumers and are providing safe, affordable and quality financial services to local communities.
According to CUNA, CU membership provides a consumer with all the protections Sanders and Ocasio-Cortez are seeking, including:
- A usury cap on most financial product, including credit cards
- Broad, surcharge-free ATM networks across the country
- Lower rates and fewer fees on credit cards.
“Congress doesn’t need to ask the postal service to something it was not intended to do. Congress should encourage all consumers — and certainly the most vulnerable — to seek out service from credit unions,” said CUNA Chief Advocacy Officer Ryan Donovan in a statement.
CUNA said it is looking to work with Congress to increase awareness among unbanked consumers that options for affordable financial services are available and convenient through the credit union system.
“While everyone cannot join the same credit union, there is a credit union for everyone to join,” CUNA President/CEO Jim Nussle wrote.