Sen. Jack Reed (D-R.I.) introduced a new bill that would enable all consumers to benefit from certain consumer credit protections provided to veterans under the Military Lending Act (MLA). Titled the Predatory Lending Elimination Act, S. 3549 will extend the effective 36 percent interest rate cap on consumer loans (including fees) to all consumers, including veterans and Gold Star families.
“While servicemembers are protected by the MLA, predatory lenders, particularly payday lenders, continue to target vulnerable Americans with abusive loans that can reach APRs [annual percentage rates] as high as 664 percent, trapping individuals in cycles of debt,” Reed said in a release. “The MLA’s success demonstrates a feasible framework that protects consumers while preserving access to credit.
“Our servicemembers and their families should not lose important consumer protections simply because they retire, separate from honorable service, or lose their loved ones,” he added. “Frankly, no American should be subject to such exorbitant interest rates. 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.”
The bill was sponsored by 15 other senators, including Sherrod Brown (D-Ohio), chair of the Senate Committee on Banking, Housing and Urban Affairs, Jeff Merkley (D-Ore.), and Cory Booker (D-N.J.) Once introduced to the Senate, the bill was referred to Brown’s committee.
“Payday, car title, and other shady loan practices target Ohio’s military families, veterans, and vulnerable consumers with high-interest, predatory loans that are designed to trap them in a cycle of debt. Many Americans have to renew their loans so many times they end up paying more in fees than the amount they borrowed,” Brown said. “We can put an end to these abusive debt traps by extending the Military Lending Act’s 36 percent cap on interest rates to veterans, surviving family members, and all consumers.”
The bill was endorsed by over 170 consumer, civil rights, veterans, and servicemember organizations, including the National Fair Housing Alliance and the National Community Reinvestment Coalition. It also follows a trend established on the state level, Reed stated in a release, with 19 states and the District of Columbia passing similar laws.