Reps. García, Grothman Introduce Bipartisan Veterans and Consumers Fair Credit Act
Washington, D.C. – Today, Congressmen Jesús “Chuy” García (IL-04) and Glenn Grothman (WI-06) introduced the Veterans and Consumers Fair Credit Act, which would extend small dollar “payday” and car-title 36% rate cap protections established under the Military Lending Act (MLA) to all consumers, including veterans and their families. The bill will better protect consumers, particularly military personnel, from certain predatory lending practices. A bicameral companion bill is being introduced in the Senate by Senators Jeff Merkley (D-OR), Jack Reed (D-RI), Sherrod Brown (D-OH) and Chris Van Hollen (D-MD).
“Predatory loans are trapping families in a cycle of debt. We know that the Military Lending Act has preserved access to credit while protecting consumers from predatory payday lenders. Some states have extended these proven protections to all their residents, but my constituents in Illinois remain vulnerable to payday loans, debt collection, vehicle repossessions, and more. Veterans and consumers deserve the same protections from vicious debt traps that active-duty service members receive, and the Veterans and Consumers Fair Credit Act will do just that,” said Rep. García.
“Usury has been condemned since Biblical times,” said Rep. Grothman. “Historically, the United States has had usury laws, putting a guard rail up for borrowers. As more and more loans are given online, it becomes more difficult for states to deal with the problem of snowballing debt.
“We already protect military service members under the Military Lending Act, which means that we have recognized the predatory nature of high-interest loans to our men and women in uniform. This raises the question – if it is wrong to allow predatory lenders to target our service members, why is it right to let them target the rest of the community?” continued Rep. Grothman.
A fact sheet for the bill can be found here.
In 2006, Congress imposed an interest rate cap on many consumer loans, including payday products, for active-duty servicemembers and their dependents under the MLA. Many payday and car-title loans force people that are already struggling financially and underbanked into worse circumstances, including losing their bank accounts, vehicles, or even bankruptcy. This legislation would extend that protection to all consumers.
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