Runaway Credit Card interest Rates

Floor Speech

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Mr. MERKLEY. Madam President, I rise to praise my colleague from Rhode Island for producing this amendment. I look forward to seeing it offered. I certainly am honored to be able to cosponsor it. I thought I would share with him a story that goes back to my days as a member of the Oregon legislature.

When I came to the Oregon legislature, I had a lot of folks in my house district saying: Wouldn't you do something about payday lending and other high-interest lending? How is it possibly reasonable to have payday loans, which are secured by the next paycheck at over 500 percent interest; and how is it reasonable or fair that I am being lent money through my credit card at 25 or 30 percent when the interest I am earning is just 1 or 2 percent? And I had no good answer for why it was fair, because it wasn't fair. It wasn't right.

So I proceeded to start working on this issue. When I went down to legal counsel, they advised me: Well, Representative MERKLEY, it works like this. You, at the State level, can apply rules to payday lending and to pawnbrokers and to title loans and to local consumer lending companies but not when it comes to credit cards. They explained to me the story that the Senator from Rhode Island just shared, that those rules are set by the States issuing the credit cards.

Well, certainly any State that has reasonable standards for a credit card, they are not going to be issued from within that State. Thus, we come to the race to the bottom my colleague was describing. So I proceeded to carry the fight and the battle over the payday lending, the title loans, the pawnbrokers and the local consumer loans, and we largely won that battle in Oregon, but we couldn't take on credit cards.

In the back of my mind, when I was running for the Senate, I thought, this will be an opportunity, if I join this body, to be able to weigh in on the issue of States rights in favor of consumers, in favor of common sense. So it is for all these reasons I am pleased to join Senator Whitehouse as a cosponsor of his amendment.

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Mr. MERKLEY. If I might chime in at this point and say that in terms of the discussion I saw at the State level in Oregon, this is a bipartisan discussion, because it is indeed deeply rooted in traditions and wisdom that extends back not just generations but thousands of years.

Indeed, time after time after time the leaders--the philosophical and the religious leaders, as well as political leaders--saw the damage that was done to the foundation of societies from extraordinarily high interest rates.

I think it goes back to understanding that the strength of a society is in the strength of its families. You do not build strong families when wealth is stripped away by usurious interest rates, by extraordinary interest rates, rates that exceed by many times the earnings on interest that a family can get by putting their money into a bank or lending their money into a financial system. There is a very small return there, but borrowing out of that financial system, very high charges.

If our goal is to build families, then this has all the wisdom in the world. I certainly want to note that the other aspect of this that helps tie together Democrats and Republicans is that it is an issue of local control. There was never a moment when this Chamber, or the Chamber a few yards from here, the House Chamber, proceeded to say we are going to take away States rights to control their own interest rates on cards. There was never a moment like that. Such a law was never passed.

Indeed, you have not just the fact that Federal law has trumped State law but has trumped it without any deliberate act of Congress and in the most bizarre of fashions. So I should think the reach in favor of building strong families, building strong communities, and local control will be high. I certainly look forward to a bipartisan effort to pass this legislation.

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