Statements on Introduced Bills and Joint Resolutions

Floor Speech

BREAK IN TRANSCRIPT

Mr. REED. Mr. President, today I am reintroducing the Veterans and Consumers Fair Credit Act (VCFCA) 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) protections 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.

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 two weeks. This practice can cause borrowers to pay more in fees than the amount of money they originally borrowed, which is a sign 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 pandemic, and continuing to pay exorbitant APRs may cause them to fall deeper into economic insecurity. This is why it's important to extend strong protections against unscrupulous lenders to all Americans.

The MLA's successful track record demonstrates that providing for 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. Eighteen states and the District of Columbia have enacted APR caps of 36% or lower for payday loans or banned them altogether. 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 bill's supporters, 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, Veterans Education Success, the Military Officers Association of America, and the National Military Family Association.

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

By Mr. KAINE (for himself and Mr. Rubio):

S. 2509. A bill to authorize the New Partnerships Initiative to expand and diversify the partner base of the United States Agency for International Development and to provide more entry points for organizations to work with USAID; to the Committee on Foreign Relations.

BREAK IN TRANSCRIPT

Source