Lawmakers want to cap interest rates at 36% for all American consumers. Similar legislation is already on the books limiting interest rates lenders charge military members and their families. We have a great love for our active-duty military members. They often run to the fire when we are running away from it.
Active military members are more courageous than the average American citizen. However, they are not less prone to predatory lending than the country’s civilian population.
The Military Lending Act
In 2006 Congress passed, and President George W. Bush signed the Military Lending Act. The law put a 36% limit on most consumer loans, and it is super popular with active Military members and their families. Since the law enacted, payday lenders don’t target the military community as much. All consumers can learn how to learn without those predatory financial products.
The legislation protects military members against payday lenders whose interest rate can be north of 400 percent based on St. Louis Fed’s calculation.
Veterans and Consumers Fair Credit Act
Last week, Congressmen Jesús “Chuy” García (IL-04) and Glenn Grothman (WI-06) introduced the Veterans and Consumers Fair Credit Act, which will limit the interest rate lenders charge on all loans to 36 percent. The legislation is gaining bipartisan momentum. Predatory lending does not have a political party.
If the law passed both chambers of Congress and President Trump signed it, interest rates on payday, car title, and installment loans would cap at 36 percent. The lenders, as mentioned earlier, have been taking advantage of American consumers for a long time.
The Fight
If the Veterans and Consumers Fair Credit Act passed, it would eradicate the payday lending industry and other shady lending businesses. The unemployment rate is at historic lows, but the industry is going through a resurgence.
The Obama Administration, through the Consumer Financial Protection Bureau (CFPB), banned, sued, or fined big payday lending companies. Dodd-Frank created CFPB, and its purpose is to make sure financial companies don’t abuse their clients. By the end of the administrative, the industry was on life support.
When the Trump administration took office in 2017, they dropped most of the pending lawsuits against the payday lending companies and stopped enforcing any regulations. Business is again is excellent for the big payday lending companies. There are more payday lending stores than McDonald’s in America.
According to ProPublica, payday lenders spent more than $1 million at President Trump Resort since he got elected.
Will It Become Law?
All Americans deserve the same consumer protection as active military members. Numerous states already have laws on their books that limit interest rates on payday, car title, and installment loans. Few states have gone as far as banning payday loans altogether. Predatory lending does not have a political party. President Trump would have to sign the law if Congress sent it to him.
