Predatory Lending Elimination Act

Madam President, today I am reintroducing the Predatory Lending Elimination Act along with along with Senator Merkley, Senate Banking Committee Chairman Brown, and many of my colleagues. This important legislation would extend the bipartisan Military Lending Act's, MLA, projections for Active-Duty servicemembers and their families to all Americans by imposing a nationwide 36-percent cap on the annual percentage rate APR for most extensions of consumer credit.

To The MLA was enacted on a bipartisan basis in 2006 to rein in payday and other unscrupulous lenders that targeted American troops with abusive and predatory loans. Unfortunately, the MLA does not protect veterans or Gold Star families from these exploitative practices. Our servicemembers and their families should not lose important consumer protections simply because they retire, separate from honorable service, or lose their loved ones. As such, our legislation would extend the MLA's protections to veterans and Gold Star families as well as ensure that all Americans are shielded from predatory loans.

Hundreds of millions of American consumers could benefit from a 36- percent APR cap. In States that do not have such a cap, predatory lenders are permitted to offer loans with triple-digit APRs that trap individuals in cycles of debt. For instance, the Consumer Financial Protection Bureau found that 80 percent of payday loans are rolled over or renewed within 2 weeks. This practice can subject borrowers not just to high nominal interest rates but also to high fees that can quickly surpass the amount of money originally borrowed. These are hallmarks of predatory lending and poor underwriting.

According to a coalition of community organizations, payday lenders are known to target the most vulnerable, including seniors, veterans, and low-income borrowers. Many in these communities were already struggling to make ends meet before the COVID-19 pandemic, and continuing to pay exorbitant APRs may cause them to fall deeper into economic insecurity. This is why it is important to extend strong protections against unscrupulous lenders to all Americans.

The MLA's successful track record demonstrates that providing reasonable, responsible limits on interest

rates does not cut off consumers' access to credit. According to a May 2021 report from the Department of Defense, ``credit cards, auto loans, and personal loans are widely available at risk-based rates under the 36 percent [military] APR'' and ``[s]ervice members continue to have ample access to necessary credit.''

Moreover, this legislation would follow the trend in many States towards greater protections against predatory loans. Nineteen States and the District of Columbia have enacted 36 percent APR caps or banned payday loans. Lenders in these States have incentives to offer more affordable loans that borrowers have an ability to repay. The same incentives should apply across the Nation.

I thank the 170 consumer advocacy groups, faith-based organizations, veteran service organizations, and trade associations that support this bill, including the Consumer Federation of America, the National Consumer Law Center on behalf of its low-income clients, the Center for Responsible Lending, Americans for Financial Reform, Amalgamated Bank, the Military Officers Association of America, and the National Military Family Association.

I urge our colleagues to join us in supporting this important legislation.

Madam President, today I am reintroducing the Predatory Lending Elimination Act along with along with Senator Merkley, Senate Banking Committee Chairman Brown, and many of my colleagues. This important legislation would extend the bipartisan Military Lending Act's, MLA, projections for Active-Duty servicemembers and their families to all Americans by imposing a nationwide 36-percent cap on the annual percentage rate APR for most extensions of consumer credit.

To The MLA was enacted on a bipartisan basis in 2006 to rein in payday and other unscrupulous lenders that targeted American troops with abusive and predatory loans. Unfortunately, the MLA does not protect veterans or Gold Star families from these exploitative practices. Our servicemembers and their families should not lose important consumer protections simply because they retire, separate from honorable service, or lose their loved ones. As such, our legislation would extend the MLA's protections to veterans and Gold Star families as well as ensure that all Americans are shielded from predatory loans.

Hundreds of millions of American consumers could benefit from a 36- percent APR cap. In States that do not have such a cap, predatory lenders are permitted to offer loans with triple-digit APRs that trap individuals in cycles of debt. For instance, the Consumer Financial Protection Bureau found that 80 percent of payday loans are rolled over or renewed within 2 weeks. This practice can subject borrowers not just to high nominal interest rates but also to high fees that can quickly surpass the amount of money originally borrowed. These are hallmarks of predatory lending and poor underwriting.

According to a coalition of community organizations, payday lenders are known to target the most vulnerable, including seniors, veterans, and low-income borrowers. Many in these communities were already struggling to make ends meet before the COVID-19 pandemic, and continuing to pay exorbitant APRs may cause them to fall deeper into economic insecurity. This is why it is important to extend strong protections against unscrupulous lenders to all Americans.

The MLA's successful track record demonstrates that providing reasonable, responsible limits on interest

rates does not cut off consumers' access to credit. According to a May 2021 report from the Department of Defense, ``credit cards, auto loans, and personal loans are widely available at risk-based rates under the 36 percent [military] APR'' and ``[s]ervice members continue to have ample access to necessary credit.''

Moreover, this legislation would follow the trend in many States towards greater protections against predatory loans. Nineteen States and the District of Columbia have enacted 36 percent APR caps or banned payday loans. Lenders in these States have incentives to offer more affordable loans that borrowers have an ability to repay. The same incentives should apply across the Nation.

I thank the 170 consumer advocacy groups, faith-based organizations, veteran service organizations, and trade associations that support this bill, including the Consumer Federation of America, the National Consumer Law Center on behalf of its low-income clients, the Center for Responsible Lending, Americans for Financial Reform, Amalgamated Bank, the Military Officers Association of America, and the National Military Family Association.

I urge our colleagues to join us in supporting this important legislation.

Madam President, I am pleased to join Senator Van Hollen in introducing legislation to honor my friend and former colleague, the late Senator Paul S. Sarbanes, for his ceaseless efforts to preserve Fort McHenry in Baltimore, MD. Senator Sarbanes worked tirelessly to honor the site and elevate the history of the War of 1812 in the national consciousness throughout his career. This legislation acknowledges his long-term advocacy for the preservation of the site and the improvement of the visitor experience by designating the visitor and education center the Paul S. Sarbanes Visitor and Education Center.

I first got to know Senator Sarbanes when he first ran for public office in 1966. We both were elected to the Maryland General Assembly that year, and we became good friends. Delegate Sarbanes at that point made a name for himself on the House Judiciary Committee in the Maryland General Assembly and was a rising star from his first day in the Maryland General Assembly. He shortly thereafter ran for the U.S. House of Representatives, where he served three terms with a very distinguished record. His service in the House occurred during the Watergate scandal. Representative Sarbanes was on the Judiciary Committee and was given the responsibility of the first Article of Impeachment against President Nixon. That article dealt with obstruction of justice. It was the key article against President Nixon on impeachment, and it is very telling that a relatively young and junior Member of the House of Representatives was entrusted with pursuing and presenting it. It was because of his work ethic, his commitment to scholarship, and his understanding of legal issues that he was entrusted with such an awesome responsibility.

Paul Sarbanes then served five terms in the U.S. Senate, the longest term for any Senator in Maryland's history, which Senator Barbara Mikulski ties 10 years later. Paul Sarbanes was known as a Senator's Senator for his integrity and for his principled commitment to public service. He was a Rhodes Scholar who chose to serve the public rather than using his skills in the private sector for his own personal gain. His entire life was devoted to public service. What a legacy he has left us by his incredible public service. In 2002, the Enron scandal hit America, and Senator Sarbanes, then chairing the Banking Committee, teamed up with House Financial Services Committee Chair Michael Oxley ass the Sarbanes-Oxley legislation. Then-President George W. Bush called the Sarbanes-Oxley bill ``the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.'' From Watergate to Enron and beyond, Paul Sarbanes stepped into the breach and he delivered on behalf of the American people. It is a fitting tribute to name the Visitor Center at Fort McHenry National Monument and Historic Shrine after a true American hero: Paul S. Sarbanes.