Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER (Mr. Begich.) Without objection, it is so ordered. Mr. President, I ask unanimous consent to speak for 10 minutes as in morning…
Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Begich.) Without objection, it is so ordered.
Mr. President, I ask unanimous consent to speak for 10 minutes as in morning business.
Mr. President, I rise to offer my support for the amendment on usury from my colleague from Arkansas, Senator Lincoln. As some of you know--not all but some of you--Arkansas has a very strict usury limit in its State constitution, and it is been there for a long time. In fact, it used to be even more restrictive. Back in the 1980s, the people went to the ballot box, and they changed the constitution and made it much less restrictive than it was originally, but it is still very restrictive by national standards. But what has happened nationally has changed things in Arkansas and put Arkansas at a disadvantage.
I know there have been bills here like the Gramm-Leach-Bliley Financial Modernization Act in 1999. I know it was well intentioned. I know there were good reasons, good national reasons and good financial reasons and a lot of good reasons to do that. However, what that act did is it preempted the Arkansas State Constitution by permitting in- state banks to charge the same rate of interest as the home State of any out-of-State bank that has a branch in that State. It was not specifically designed for or against Arkansas, but it was in the bill, it was in the law, and it has been the law since 1999. What that did is it, in effect, nationalized the usury rate for banks. Arkansas banks can now charge a higher interest rate than they could before Gramm- Leach-Bliley.
The injustice occurs when you look at the lending institutions that are not banks--maybe the State Student Loan Authority, maybe captive finance companies, maybe other types of lenders that are not banks. What has happened is it has worked a hardship, and some of those lenders cannot do business in Arkansas; they cannot afford to. So many small businesses, family-owned businesses such as car dealers and furniture retailers, cannot finance their goods to Arkansas consumers. The Arkansas consumer, if they can do it, maybe goes to a bank or a credit union or some other lending institution, in many cases paying a pretty high interest rate in order to get the money to do business. This hurts the Arkansas business community. It hurts the Arkansas economy.
Right now, what has happened is, given the stimulus bill--there are many financing tools in the stimulus bill for constructing roads and schools, for building renewable energy projects, the Build America Bonds, et cetera. But Build America Bonds are not available in our State because of the lack of competitiveness in the bond market. Again, it is our interest rate.
Given the financial times we are in, we find we are put at a disadvantage. No one intended this. Congress never did, the White House never did, the Congress back in 1999 did not want this to happen. But it is where we find ourselves today.
The people of Arkansas have once again decided to put this issue on the ballot, and they are going to do it. It has been referred out to the people. The legislature made that decision. It is on the ballot. The problem is, it is not until November 2010. So we have a year and a half to try to struggle through this economy with this very difficult, very adverse usury limit in our State.
What we are asking, what Senator Lincoln and I are asking, given this amendment, is that we get temporary relief only through November 2010. This is just about an 18-month fix, to give us some relief during this time, get the credit flowing in our State the way it has been able to flow in other States, and let us take advantage of the stimulus bill, the stimulus package, the America Recovery Act we have already passed, that we all benefit in certain ways, to let us in the State of Arkansas have the full benefit. The Governor supports this, and members of the legislature support this. They have asked us to do this for the people of the State of Arkansas.
People need to understand what this amendment will do. It will permit the current interest rate not to exceed--once this is passed, the interest rate cannot exceed 17 percent. We are not talking about taking the usury rate completely out of our State law; we are talking about giving us some temporary relief, up to 17 percent. Again, when it comes to some of the financing vehicles, such as student loans and bonds of various types, this is crucial to letting investment happen in our State.
There is precedent for this. Congress enacted, several years ago, laws that preempted Arkansas' usury provision for, as I mentioned before, the banking industry and for some other businesses. So we have done this before. Again, I am not sure those laws just affected Arkansas; they probably affected a lot of States. But basically, right now Arkansas is the only State left that needs some relief under the current situation in which we find ourselves.
The way it works right now, to let you all know, in our State, the limit for usury--an interest rate in our State is 5.5 percent. And 5.5 percent is a very low rate. It is a historically low rate. But it is because the Fed rate and some of the other things have gone so low. Our rate is tied to those Fed rates, those national rates. Again, in a good economy, in most years that makes sense, but right now it does not.
So what Senator Lincoln and I are respectfully asking our colleagues to do is support her amendment, allow it to become law, allow Arkansas this temporary relief, not just to benefit from the stimulus bill we have already passed but also to benefit from--or at least find some relief in this very tight economy, to ease some credit in our State, to help the recovery in our State as we are hoping to find in every other State in the Union.
With that, I ask that when we do vote on the Lincoln amendment, we would all support it and that we would help relief come to all 50 States, not just 49 States. Again, this is temporary. It caps the interest rate at 17 percent, which by most standards is a very reasonable cap. It is something that will allow the credit to flow in our State and will allow student loans, the Build America Bond Program to have the full effect they need to have here in Arkansas.
With that, I thank my colleagues for their attention.