Tierney Introduces Bill to Protect Consumers from Exploitive Credit Card Interest Rates

Press Release

As part of his continuing consumer protection efforts, Congressman John F. Tierney today introduced the Empowering States' Rights to Protect Consumers Act, which would restore the ability of states to set limits on credit card and other consumer loan interest rates.

"Consumers in Massachusetts and around the nation should not have to live in fear that big banks located thousands of miles away are taking advantage of them. This legislation will bolster financial protections by reinstating historic standards that allowed states to set caps on credit card interest rates for lenders doing business within their borders. Not only will returning this long-standing right to states to protect consumers from loopholes that allow for exploitive rates, but it will also work to level the playing field between national credit card companies and their local and community oriented counterparts," said Congressman John Tierney.

Similar legislation was filed in the U.S. Senate by Senators Elizabeth Warren and Sheldon Whitehouse in June of last year.

"I applaud Congressman Tierney for introducing this important legislation in the House. States should be able to take action to protect families from tricks and traps in financial products," said U.S. Senator Elizabeth Warren (MA), co-sponsor of the Senate version. "I'm pleased to be an original co-sponsor of the Empowering States' Rights to Protect Consumers Act, which would restore states' ability to enforce their own rules against extremely high interest rates."

"It's time to stop Wall Street banks and their credit card subsidiaries from taking advantage of struggling families," said U.S. Senator Sheldon Whitehouse (RI), a co-sponsor of the Senate version. "This legislation would restore historic, long-standing states' rights to protect consumers from improperly high interest rates. I thank Congressman Tierney for leading this fight in the House, and I look forward to working with him."

For more than 200 years, states had the ability to cap interest rates for any lender doing business with its citizens. In 1978, a Supreme Court case, Marquette National Bank of Minneapolis v. First of Omaha Service Corporation, determined that national banks are bound only by the lending laws of the state in which the bank or its credit card subsidiary is based, rendering states powerless to impose rate restrictions against a lender headquartered in a different state. The Empowering States' Rights to Protect Consumers Act will amend the Truth in Lending Act of 1968 to clarify that all consumer lenders--regardless of their location or legal structure--must abide by the interest rate limits of the states in which their customers reside.

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