Statements On Introduced Bills And Joint Resolutions

Floor Speech

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By Mr. SANDERS (for himself and Mr. DURBIN):

S. 582. A bill to amend the Truth in Lending Act to protect consumers from usury, and for other purposes; to the Committee on Banking, Housing, and Urban affairs.

Mr. SANDERS. Mr. President, as I think all Americans understand, there is a new sense of outrage today at what Wall Street has done through their greed, their recklessness and, perhaps, illegal behavior, in plunging this Nation and, in fact, the world into a deep recession, which has caused the loss of millions and millions of jobs, had an extraordinarily negative impact on so many people's lives in terms of their savings and their ability to send their kids to college, and in terms of the loss of their homes. That is what Wall Street has done.

In my view, as I have said time and time before, we must have a deep investigation to understand what this crisis was, who are the people responsible for all of this damage, and we must hold them accountable. In fact, it will be a test of the criminal justice system of this country if, in fact, we have the courage to say to these millionaires and billionaires: You know what, the law applies to you too, and you cannot act illegally and cause so much damage to our country and the world.

One of the many senses of anger and frustration that we hear from the American people, one of them that I hear about very often from Vermonters, as well as people all over this country, is that at a time when we are providing hundreds of billions of dollars to bail out Wall Street, at a time when large banks are borrowing money from the Fed at a zero interest rate, the response of Wall Street has been to say: Thank you very much for all of that, and now we are going to charge you 15, 20, 25, 30 percent interest rates on your credit cards.

It seems to me that when the middle class is shrinking, when people are losing their savings, when people are losing their jobs, it is an absolute outrage that Wall Street, which is being bailed out by the taxpayers of this country, is now charging exorbitant and usurious interest rates for the American people.

What we are seeing now all over this country is millions of people who are suddenly receiving notices from these banks that say, oh, by the way, we are going to double or triple your interest rate. That is wrong and that has to end.

I am not going to quote from the Bible, but trust me, it goes back to the Bible, where there are very clear references to the immorality of usury. In fact, what we have to understand is that what Wall Street and these credit card companies today are doing is not anything different than what gangsters and loan shark artists do who break people's kneecaps when they don't pay back, only these gangsters have three-piece suits and have millions of dollars. But at the same time they are destroying people's lives by charging 25, 30 percent interest rates.

Today, I will be introducing legislation that will require any lender in this country to immediately cap all interest rates on consumer loans at 15 percent, including credit cards.

How do we select 15 percent as the appropriate number to deal with the usury which is going on in this country? The reason we selected that number is because 15 percent is the same interest rate cap Congress imposed on credit union loans almost 30 years ago when it amended the Federal Credit Union Act.

Many people do not know this, but, in fact, right now credit unions, with certain exceptions, have to charge interest rates of 15 percent or lower. I do not see the credit unions of this country coming to Congress for hundreds of billions of dollars in bailouts. In fact, they are doing quite well. They are responding to the credit needs of their small businesses in their communities and to individuals. They are doing well. They have survived and have thrived with this regulation.

Right now, the National Credit Union Administration imposes a 15-percent cap, except under certain circumstances where the interest rate can go as high as 18 percent. The legislation I will be introducing today also would allow banks to charge higher interest rates if the Federal Reserve determines that is a necessity to maintain the safety and the soundness of lenders.

Essentially all we are saying today is we have to end the outrage by which Wall Street and large credit card companies are ripping off the American people, and the solution we are proposing is to simply emulate what the Federal Credit Union Act does for the credit unions all over this country.

I am very proud Senator Dick Durbin is an original cosponsor of this legislation. I hope many of my colleagues will join him in sponsoring this bill.

Interestingly enough, the proposal we are introducing today is very similar to one former Senator Al D'Amato advocated for in 1991 when he offered an amendment to cap credit card interest rates. The D'Amato amendment would have capped all credit card interest rates at 14 percent. I should mention that amendment was adopted by the Senate with a vote of 74 to 19. If the Senate voted overwhelmingly in favor of that amendment back in 1991, I hope we will have at least or more support for my bill today because the problem today actually is far more severe.

This is legislation the American people want. The American people are sick and tired of being ripped off by Wall Street, especially when they are bailing out these large financial institutions.

Credit card use today is no longer just for luxuries. All over this country, people are buying their groceries with credit cards, and they are buying other basic necessities with credit cards because they have no other alternative. Young people are paying some of their college expenses with credit cards. Given that reality, given the fact that the middle class is hurting, it seems to me that if we are going to respond to the needs of the American people, we need to deal with the usury that is going on in this country. We need to cap interest rates.

I look forward very much to my colleagues supporting this legislation.

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