May 6, 2010

Financial Reform Coalition Urges Support for Whitehouse Measure to Reduce Credit Card Interest Rates and Protect Consumers

Washington, DC – Following last week’s introduction by U.S. Senator Sheldon Whitehouse (D-RI) of an amendment to address high credit card interest rates, a coalition of more than 200 national and state organizations — including the AARP, Consumer Federation of America, and Consumers Union — is urging members of the Senate to support this reform. In a letter dated yesterday, Americans for Financial Reform asked that all Senators support the consumer protections provided by the Whitehouse amendment.

Whitehouse’s amendment, which is cosponsored by Senators Jeff Merkley (D-OR), Dick Durbin (D-IL), Bernie Sanders (I-VT), Carl Levin (D-MI), Roland Burris (D-IL), Al Franken (D-MN), Sherrod Brown (D-OH), Patrick Leahy (D-VT), Jim Webb (D-VA), Robert Casey (D-PA), Ron Wyden (D-OR), Jack Reed (D-RI), and Robert Menendez (D-NJ) would restore to each state its historic power to protect citizens from unscrupulous lenders based in other states.

In their letter, Americans for Financial Reform argued that the amendment “takes a strong step towards restoring to each state the ability to protect its citizens from lenders based in other states.” They continued, “By leveling the playing field between national banks and local lenders, you will send a strong signal to Main Street that their interests count.”

“My amendment would address an area that is not yet covered by the Wall Street reform bill; that is, runaway credit card interest rates,” said Senator Whitehouse. “It would do so not by imposing new restrictions on lending but, rather, by restoring historic State powers–powers that were eliminated in the relatively recent past.”

For over 200 years, each state had the ability enforce usury laws against any lender doing business with its citizens. In 1978, a Supreme Court case, Marquette National Bank of Minneapolis v. First of Omaha Service Corporation, opened up a loophole through which big national banks have been able to avoid state law interest rate caps. The Whitehouse amendment would change the law to make clear that credit card companies and other lenders — no matter where in the country they are located — must abide by the interest rate limits of the states in which their customers reside.

“Every voice counts in the fight to protect consumers from abusive lending practices, and the addition of these more than 200 respected voices is a helpful boost to the cause,” said Whitehouse.

A list of Americans for Financial Reform member organizations is available here:


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