WASHINGTON—The chairwoman of the House Financial Services Committee said she plans to advance a bipartisan bill to impose a strict limit on interest rates when Congress reconvenes this year.
Rep. Maxine Waters (D-CA) said in an interview with The Hill that her committee will take up the Veterans and Consumers Fair Credit Act, which would impose a national cap on interest rates at 36%.
Under federal law, lenders are banned from offering loans to active-duty military members with interest rates higher than 36%. But the bill, spearheaded by 16 Democrats and one Republican, would expand that protection to all Americans.
“Waters and dozens of Democrats have been fiercely critical of the payday loan industry, which offers loans at high interest rates and repayment deadlines as short as two weeks. The Consumer Financial Protection Bureau issued a rule in 2017 to impose strict limits on payday loans, but the regulation was gutted under Trump-appointed officials in 2019,” The Hill said. “It’s unlikely that a hard limit on payday loan interest rates would clear a Republican-controlled Senate. GOP lawmakers have been critical of Democratic efforts to curb payday lending through regulation and insist short-term, high-interest loans are a crucial financial lifeline for low-income Americans.”
But Waters, her Democratic colleagues and consumer advocates argue that payday loans are often used to trap vulnerable customers in cyclical debt that could decimate their financial health and credit, The Hill said.
“We're going to put a cap on them the same way we do for our service members,” Waters said.