AFSA: Congress Must Protect Consumers’ Access to Credit
The American Financial Services Association (AFSA) this evening sent a letter to Reps. James McGovern (D-MA) and Tom Cole (R-OK), the Chair and Ranking Member of the House Rules Committee, and Reps. Adam Smith (D-WA) and Mac Thornberry (R-TX), Chair and Ranking Member of the House Armed Services Committee, which has jurisdiction over the National Defense Authorization Act (NDAA), calling on committee leaders to protect consumers’ access to credit. At issue are continued efforts by some Members to insert an amendment into the NDAA imposing a 36 percent interest rate cap on all American consumers. The NDAA is an annual “must pass” bill and is expected to be taken up by the Rules Committee Friday morning.
The letter notes that arbitrary rate caps have the unintended consequence of placing greater pressure on consumers to borrow more than they need, resulting in higher finance changes, longer repayment periods, and higher overall costs, despite having a lower interest rate.
“A consumer rate cap has been rejected by the Congress on several occasions, most of all due to its negative impacts on low- and moderate- income consumers, underserved and unbanked communities, and/or borrowers with little or no credit history,” wrote Bill Himpler, President & CEO of Congressional Affairs with AFSA. “Not being able to access credit from the traditional banking system will force these consumers outside the banking system to entities with greater risk, higher prices, and less protections.”
July 15th, 2020 by Dan Bucherer