Washington, DC – U.S. Senator Sheldon Whitehouse (D-RI) today released the following statement on the unsuccessful vote on his Interstate Lending Amendment as part of the Wall Street reform debate.
“While I am certainly disappointed with the outcome of the vote today, I feel that we have come further than ever before toward correcting this unfair and abusive loophole,” Whitehouse said. “States should have the right to protect their residents from usurious and excessive interest rates, and I will keep fighting to stop the practice of allowing those states with weak consumer protection to set the standard for the rest of the nation. It is long past time we stop allowing these Wall Street banks and their credit card subsidiaries to take advantage of struggling families in Rhode Island and across the nation.”
Whitehouse’s amendment to the Wall Street reform bill would have addressed the loophole created by the 1978 Supreme Court decision in Marquette National Bank of Minneapolis v. First of Omaha Service Corp., which interpreted the word “located” in the National Bank Act of 1863 as meaning the location of the business and not the location of the customer. This loophole opened the door for national banks to relocate to those states that lack interest rate limits. The Whitehouse amendment would have changed the law to make clear that credit card companies and other national bank lenders — no matter where in the country they are located — must abide by the interest rate limits of the states in which their customers reside.
In 2009, Whitehouse introduced the Empowering States’ Right to Protect Consumers Act (S. 255) as a standalone bill to correct this loophole.
“I will work to advance this critical legislation at every opportunity. My sixteen cosponsors and I surprised the powerful special interests by getting as far as we did on the Wall Street bill, and next time we fully intend to pass this legislation and permit states to once again protect their citizens from unfair lending practices.”
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