S.Amdt. 3744

SA 3744. Mrs. HAGAN (for herself, Mr. Durbin, and Mr. Schumer)
submitted an amendment intended to be proposed to amendment SA 3739
proposed by Mr. Reid (for Mr. Dodd (for himself and Mrs. Lincoln)) to
the bill S. 3217, to promote the financial stability of the United
States by improving accountability and transparency in the financial
system, to end ``too big to fail'', to protect the American taxpayer by
ending bailouts, to protect consumers from abusive financial services
practices, and for other purposes; which was ordered to lie on the
table; as follows:

At the end of subtitle G of title X, add the following:

SEC. 1268. REGULATION OF COVERED LOANS.

Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is
amended by adding at the end the following:
``(e) Terms and Conditions for Covered Loans.--
``(1) Definitions.--As used in this subsection--
``(A) the term `covered' loan--
``(i) means a consumer credit transaction in which the loan
amount, or, in the case of a line of credit, the credit
limit, is $3,000 or less that--

``(I) in the case of a closed-end credit transaction, has a
term of 91 days or less and an annual percentage rate
exceeding 36 percent (include all cost elements (other than
the minimum deposit amount necessary to open a secured card
account) associated with the extension of credit, including
fees, service charges, renewal charges, credit insurance
premiums, and any other charge or premium with respect to the
extension of consumer credit);
``(II) in the case of an open-end credit transaction, has
an amortization period of 91 days or less and the annual
percentage rate exceeds 36 percent (calculated as though the
transaction were a closed-end transaction pursuant to
subclause (I)); or
``(III) in the case of an open-end credit transaction, the
cost elements associated with the extension of credit and due
in the first 91 days, including finance charges, fees,
service charges, renewals, credit insurance premiums, and any
other charge or premium with respect to consumer credit,
exceed 25 percent of the line of credit; and

``(ii) does not include--

``(I) a credit transaction that is secured by an interest
in real estate, a vehicle, or other goods both listed and
valued individually over $3,000;
``(II) overdraft services that are not covered by this
title; or
``(III) an extension of credit in which a consumer sells an
item of goods to a pawn-broker creditor and retains the right
to redeem the item for a greater sum within a specified time,
provided that the consumer has no obligation to repay the
credit, and the creditor takes no security other than the
goods and makes no effort to collect the credit; and

``(B) the term `extended payment plan' means an amendment
to the covered loan that is signed in person or
electronically by both the consumer and the creditor
reflecting an agreement that the consumer pay the outstanding
balance on a covered loan in not fewer than 4 equal payments,
where the period between each payment may not be less than
the duration of the original covered loan.
``(2) Limits on borrower indebtedness.--Notwithstanding any
other provision of law, no covered loan may be extended to
any individual, if such individual, considering all covered
loans by the consumer during such time period, in the
aggregate, has had--
``(A) 6 covered loans extended during the preceding 12-
month period; or
``(B) covered loan obligations of 90 days or longer during
the preceding 12-month period.
``(3) Board rulemaking required.--Not later than 180 days
after the date of enactment of this subsection, the Board
shall issue final rules with respect to covered loans, which
rules shall--
``(A) require each issuer of a covered loan--
``(i) to offer extended repayment plans, if the borrower is
unable to pay under the terms of the original loan;
``(ii) to accept equal payments over a series of pay checks
or pay periods of the consumer;
``(iii) to obtain a surety bond, in such amounts as the
Board determines appropriate; and
``(iv) to comply with appropriate licensing requirements
established by the Board;
``(B) create a mechanism for lenders to determine whether a
potential borrower is eligible for a covered loan,
``(C) provide for enforcement by State attorneys general;
``(D) prohibit the purchase or sale, at the same location
at which covered loans are offered, of other products or
services; and
``(E) prohibit the imposition of any fee or penalty for the
early repayment of the obligation, including under any
extension described in subparagraph (A)(i).
``(4) Nonenforceability of contracts.--No contract made in
violation of this Act may be enforced with respect to any
consumer.
``(5) Other fees.--The Board may impose such fees on
issuers of covered loans under this subsection as may be
necessary to pay the administrative costs of the Board in
carrying out and enforcing this subsection.
``(6) Treatment of state law.--Nothing in this subsection
may be construed as--
``(A) preempting any provision of State law, to the extent
that such State law provides greater protection to consumers
than is provided under this subsection;
``(B) preventing any State from enacting any provision of
law that provides greater protection to consumers than is
provided under this subsection;
``(C) authorizing covered loans to be made in a State where
they are otherwise not permitted under State law; or
``(D) authorizing an extension of credit at an annual
percentage rate that would be prohibited by applicable State
law.''.
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