Washington, D.C. – As the Senate continues to debate landmark Wall Street reform legislation, U.S. Senators Sheldon Whitehouse (D-RI), Bernie Sanders (I-VT), and Sherrod Brown (D-OH) held a press conference to urge support for Whitehouse’s Interstate Lending Amendment to the Wall Street reform bill. The bipartisan amendment, which Whitehouse introduced on April 30, would eliminate a loophole that permits big credit card lenders to avoid state law interest rate caps. In doing so, it would level the playing field for local lenders who are already subject to limits in each state.
Whitehouse’s amendment is cosponsored by Senators Thad Cochran (R-MS), Jeff Merkley (D-OR), Dick Durbin (D-IL), Bernie Sanders (I-VT), Carl Levin (D-MI), Roland Burris (D-IL), Al Franken (D-MN), Sherrod Brown (D-OH), Robert Menendez (D-NJ), Patrick Leahy (D-VT), Jim Webb (D-VA), Bob Casey (D-PA), Ron Wyden (D-OR), and Jack Reed (D-RI). More than 200 national and state organizations – including the AARP, Consumer Federation of America, and Consumers Union, National Consumer Law Center (on behalf of its low-income clients), and Public Citizen – support this reform.
“We need to correct the historical anomaly that has allowed credit card companies to escape state law interest rate limits,” said Whitehouse. “Rhode Island and other states deserve the right to enforce interest rate limits and say enough to sky-high interest rates.”
“Credit card companies have long evaded the ability of states to regulate interest rates. It’s simply unfair that residents of Oregon may be harmed by high interest rates because of rules set by politicians they never voted for in a state capital a thousand miles away,” said Merkley. “Major credit card companies should compete on the quality of service they provide to their customers – it’s a matter of simple fairness for families and small businesses. This amendment is critical in making that happen.”
“For too long, the state of Michigan has been unable to protect its residents from unscrupulous lending practices by out-of-state lenders,” said Levin. “This amendment would mean that out-of-state lenders would have to abide by the same rules Michigan lenders must already follow.”
“Right now, federal banking law prevents states from stopping sky-high credit card rates and fees. All a credit card company needs to do is set up shop in a state with weak laws and start minting plastic. Ohioans should be able to decide the rules for Ohioans,” said Brown. “Given the sophistication they show when it comes to marketing, I am confident credit card companies will be able to determine the state in which a person lives and apply state laws accordingly.”
“Consumers are fed up with interest rates that are beyond reason and intended primarily for maximum profit,” said Menendez. “Consumers are fed up with interest rates that are beyond reason and intended primarily for maximum profit. Banking services – from credit cards to checking accounts – are essential to family finances, and we have to ensure that they can remain affordable.”
“Skyrocketing credit card interest rates are plaguing too many families, and it’s even worse in today’s tough economic climate. It’s time we allow states to do something about it,” said Franken. “This proposal would give states the authority to protect their citizens from unfair rate hikes and let credit card companies know they can’t get away with it anymore.”
“This measure appropriately restores to states the power to protect their citizens against abusive interest rates,” said Webb.
For over 200 years, each state had the ability enforce usury laws against any lender doing business with its citizens. In 1978, a Supreme Court case, Marquette National Bank of Minneapolis v. First of Omaha Service Corporation, opened up a loophole through which big national banks have been able to avoid state law interest rate caps. The Whitehouse amendment would close that loophole and make clear that credit card companies and other 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.
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