On Thursday, July 29, the Senate Banking Commission will hold a hearing titled “Protect Americans From Debt Traps By Extending The Army’s 36% Interest Rate Cap To All.” ”

Witnesses scheduled for the first panel are Republican Congressman Glenn Grothman and Democratic Congressman Jesús G. “Chuy” García. The witnesses planned for the second panel are:

  • Holly Petraeus, Former Deputy Director of Military Affairs, CFPB
  • Ashley Harrington, Federal Director of Advocacy and Senior Counsel, Center for Responsible Lending
  • Richard Williams, President and CEO, Essential Federal Credit Union
  • Bill Himler, President and CEO, American Financial Services Association
  • Professor Thomas W. Miller, Jr., Jack Lee Chair in Financial Institutions and Consumer Finance, Mississippi State University
  • David Pommerehn, General Counsel and Senior Vice President, Consumer Bankers Association.

In 2019, Congressman García Grothman introduced the Fair Credit Act for Veterans and Consumers, which would extend the 36% overall rate cap of the Military Loans Act to most credit transactions at the consumption. Earlier this month, Democratic Senators Dick Durbin, Jeff Merkley, Richard Blumenthal and Sheldon Whitehouse introduced the “Protecting Consumers From Unreasonable Credit Rates Act,” which would set an overall rate cap of 36% for all open and closed funds. consumer credit transactions, including payday loans, auto title loans, overdrafts, credit cards, auto loans, mortgages and prepayment loans.

In anticipation of the hearing, a group of seven banking business groups that includes the American Bankers Association and the Consumer Bankers Association sent a letter to Senator Sherrod Brown, chair of the Senate Banking Committee; and Senator Pat Toomey, a senior member of the committee, who urge senators to oppose current legislation on fees and capped interest rates. In the letter, the business groups warn that the impact of a 36% all-inclusive national rate cap “would extend far beyond payday lenders to the larger consumer credit market to cover small loans. The affordable (including “home” loans) that depository institutions are encouraged to offer are credit cards, personal loans and overdraft lines of credit. They point out that the result will be to reduce access to credit and will force many consumers who are currently dependent on credit cards or personal loans “to look elsewhere for short-term financing needs, including pawn shops, online lenders – or worse – loan sharks, online lenders unregulated and the black market. According to professional groups, “[a] A 36% rate cap, regardless of how it’s calculated, means depository institutions will not be able to cost-effectively offer low dollar, affordable loans. They also warn that an overall rate cap of 36% would negatively impact credit cards by eliminating or reducing popular and beloved credit card features such as cash back and others. rewards and preventing innovative credit cards with non-credit features designed to attract underserved groups.