[Congressional Record Volume 155, Number 77 (Tuesday, May 19, 2009)]
[Senate]
[Pages S5568-S5570]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                 USURY

  Mr. SANDERS. Madam President, I am assuming today we are, in fact, 
going to vote on the credit card legislation, which is a very important 
step forward in beginning to address some of the outrages the large 
banks and credit card industry are perpetrating on the American people.
  A few weeks ago, I asked folks on my mailing list to tell me what 
credit card companies are doing to them. Within 3 days, we had over 
5,000 responses, and many of these responses were hair-raising. People 
have seen their interest rates on their credit cards double, triple. 
People are now paying 25 or 30 percent interest rates, which to my mind 
is unacceptable.
  The issue we are dealing with on credit cards is something I have 
been involved in for many years. I was a member of the Financial 
Services Committee in the House of Representatives in 2003. We 
introduced legislation entitled the ``Credit Bait and Switch Prevention 
Act,'' which deals with many of the same issues that, in fact, we are 
going to be dealing with today. So it has taken us a little bit of time 
to get to where we are, but I think it is a step forward.
  What I do wish to say is, while the legislation we are passing today 
is important--and it is a very good piece of legislation; I 
congratulate Chairman Dodd for his work on it--it does not go far 
enough. One of the areas where it is not going anywhere near as far as 
it should be is finally addressing the issue of usury in the United 
States of America and making a moral determination whether it is 
acceptable, whether it is moral for banks to be charging Americans 25 
or 30 percent interest rates and, in some cases, in terms of payday 
lending, significantly higher than that. Is that what we want to be 
doing as a nation? What I would like to do now is briefly read from 
what I thought was a very thoughtful article by Arianna Huffington in 
the Huffington Post, where she touches on the issue of usury, which is 
an issue we have to address.
  This is what she says:

       Throughout history, usury has been decried by writers, 
     philosophers, and religious leaders.
       Aristotle called usury the ``sordid love of gain,'' and a 
     ``sordid trade.''
       Thomas Aquinas said it was ``contrary to justice.''
       In The Divine Comedy Dante assigned usurers to the seventh 
     circle of hell.
       Deuteronomy 23:19 says, ``thou shalt not lend upon usury to 
     thy brother.''
       Ezekiel 18:10 compares a usurer to someone who ``is a 
     thief, a murderer . . . defiles the wife of his neighbor, 
     oppresses the poor and needy, commits robbery, does not give 
     back a pledge, raises his eyes to idols, does abominable 
     things.''
       The Koran is equally unequivocal: ``God condemns usury.'' 
     And it goes on to say that ``those who charge usury are in 
     the same position as those controlled by the devil's 
     influence.''

  In other words, throughout history, and in all the major religions, 
usury has been condemned. What civilization has said is that it is 
simply wrong and immoral for those people who have

[[Page S5569]]

money to take advantage of those people who need that money by charging 
them outrageously high interest rates. In my view, interest rates of 
25, 30, 35, 50 percent are outrageous and it is usury, and it is time 
the Senate address those issues.

       Up until the late 1970s--

  and I am quoting Arianna Huffington again--

     America's laws followed suit, keeping interest rates in 
     check.
       Then, in 1979, a Supreme Court ruling allowed banks to 
     charge the top interest rate allowed by the State where a 
     bank is incorporated as opposed to the borrower's home State. 
     Hoping to lure banks' business, States like South Dakota and 
     Delaware repealed their usury laws--and off we went.
       That same year, Congress passed the Depository Institutions 
     Deregulation and Monetary Control Act which, among other 
     things, allowed federally chartered savings banks and loan 
     companies to charge any interest rates they chose--putting us 
     on the path that led us to today, where banks routinely gouge 
     their most vulnerable customers.

  So here is where we are today. The bottom line is we are going to 
pass a bill that is long overdue. It is a good bill. I commend Chairman 
Dodd for his hard work. It is an important step forward in protecting 
consumers. But I am going to be back on this issue of usury. In the 
United States of America, we have to finally tell banks and credit card 
companies it is simply not acceptable to charge people 25, 30, 35 
percent interest rates. We have to end that abominable practice, and I 
intend to be playing an active role in that.
  I ask unanimous consent that the article to which I have been 
referring be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                (From the Huffington Post, May 18, 2009)

Obama Calls for An Extreme Makeover of Our Culture: Are the Credit Card 
                          Companies Listening?

                        (By Arianna Huffington)

       In his masterful commencement speech at Notre Dame this 
     weekend, President Obama took his campaign theme of Change to 
     a whole new level, telling the graduates--and the rest of 
     us--that we find ourselves at ``a rare inflection point in 
     history where the size and scope of the challenges before us 
     require that we remake our world to renew its promise.''
       So, as we stand at this inflection point and gradually move 
     from what Jonas Salk called Epoch A (our survival-focused 
     past) to Epoch B (our meaning-focused future), we have to ask 
     ourselves what this remade world will look like--and what 
     steps we need to take to get there.
       At Notre Dame, Obama offered a devastating teardown of 
     Epoch A and its ``economy that left millions behind even 
     before this crisis hit--an economy where greed and short-term 
     thinking were too often rewarded at the expense of fairness, 
     and diligence, and an honest day's work.''
       The problem, according to the president: ``Too many of us 
     view life only through the lens of immediate self-interest 
     and crass materialism; in which the world is necessarily a 
     zero-sum game. The strong too often dominate the weak, and 
     too many of those with wealth and power find all manner of 
     justification for their own privilege in the face of poverty 
     and injustice.''
       The president should email his speech to Wall Street. And 
     while he's at it, he should also blast it out to the people 
     running the giant pharmaceutical companies, the ones who 
     knowingly allow deadly drugs to remain on the shelves; to the 
     people running chemical plants releasing deadly toxins into 
     the water and air; to the factory farmers filling our food 
     with steroids and additives; to the dentists exposed for 
     trading their Hippocratic oath for profit by performing 
     unnecessary surgeries on children.
       And he should definitely send it to the credit card 
     companies, which, faced with customers choking on debt and 
     forced to use their credits cards to pay for essentials like 
     food and medical care, respond by jacking up interest rates 
     and tacking on penalties and fees. Even as credit card 
     defaults reached record levels in April.
       As we move to Epoch B, we need to ask ourselves: do we want 
     to continue living in a world where banks can gouge their 
     customers with sky-high interest rates?
       The Senate seems to think so. Last week it voted down a 
     measure introduced by Bernie Sanders that would cap interest 
     rates at 15 percent. And it wasn't even close. Sanders' 
     amendment only got 33 votes, with 22 Democrats joining those 
     who voted against the interests of their constituents (a 
     shout out to Sen. Grassley, the lone Republican to vote for 
     the amendment).
       ``When banks are charging 30 percent interest rates, they 
     are not making credit available,'' said Senator Sanders. 
     ``They are engaged in loan sharking.'' Also known as usury.
       Throughout history, usury has been decried by writers, 
     philosophers, and religious leaders.
       Aristotle called usury the ``sordid love of gain,'' and a 
     ``sordid trade.''
       Thomas Aquinas said it was ``contrary to justice.''
       In The Divine Comedy Dante assigned usurers to the seventh 
     circle of hell.
       Deuteronomy 23:19 says, ``thou shalt not lend upon usury to 
     thy brother.''
       Ezekiel 18:10 compares a usurer to someone who ``is a 
     thief, a murderer . . . defiles the wife of his neighbor, 
     oppresses the poor and needy, commits robbery, does not give 
     back a pledge, raises his eyes to idols, does abominable 
     things.''
       The Koran is equally unequivocal: ``God condemns usury.'' 
     And it goes on to say that ``those who charge usury are in 
     the same position as those controlled by the devil's 
     influence.''
       Up until the late 1970s, America's laws followed suit, 
     keeping interest rates in check.
       Then, in 1979, a Supreme Court ruling allowed banks to 
     charge the top interest rate allowed by the state where a 
     bank is incorporated as opposed to the borrower's home state. 
     Hoping to lure banks' business, states like South Dakota and 
     Delaware repealed their usury laws--and off we went.
       That same year, Congress passed the Depository Institutions 
     Deregulation and Monetary Control Act which, among other 
     things, allowed federally chartered savings banks and loan 
     companies to charge any interest rates they chose--putting us 
     on the path that led us to today, where banks routinely gouge 
     their most vulnerable customers.
       According to Elizabeth Warren, credit card companies ``have 
     switched from the notion of `I'll lend you money because I 
     think you'll be able to repay and we'll find a reasonable 
     rate for doing that' over to a tricks and traps model . . . 
     The job is to trick people and trap them and that' s how you 
     boost profits.''
       This profit-uber-alles mindset is why the banking industry, 
     looking at the world through what Obama described as the 
     ``lens of immediate self-interest and crass materialism,'' is 
     fighting tooth and nail against the Senate's new credit card 
     reform bill that is set to come up for a vote this week (the 
     industry already having spent $42 million on lobbying this 
     year alone). Although, to hear the bankers' lobbyists tell 
     it, all they really want is what is best for the consumer.
       ``It is vitally important for policymakers to get the right 
     balance of better consumer protection while not jeopardizing 
     access to credit and the credit markets,'' said Ken Clayton 
     of the American Bankers Association. ``We are very worried 
     that the Senate bill fails to achieve this balance, to the 
     detriment of American consumers.''
       Yes, I'm sure they are losing a lot of sleep worrying about 
     American consumers. But the problem for most consumers isn't 
     getting access to credit cards (see the endless credit card 
     come-ons clogging our mailboxes). It's being hammered with 36 
     per cent interest rates for missing a single payment or 
     bombarded with a never-ending array of fees (lenders raked in 
     over $18 billion on penalties and fees alone in 2007).
       In any case, the Senate bill, while definitely a step in 
     the right direction (and even tougher than the measure the 
     House passed in April), will, with a few worthy differences, 
     impose the same limits on the credit card industry as the new 
     rules passed by the Fed in December. And, like the new Fed 
     regulations, the Senate legislation won't take effect for 
     close to a year.
       Don't get me wrong: having the president sign the bill into 
     law will send the right message to the banking industry 
     (important after the cramdown debacle) and offer added 
     protection against a future Fed chairman arbitrarily rolling 
     back the new rules.
       But if the new rules are important enough to consumers for 
     Congress to enshrine them into law, why not make them 
     effective immediately? As Obama said at last week's town hall 
     meeting on credit cards, the predatory practices of the 
     credit industry have ``only grown worse in the middle of this 
     recession, when people can afford them least.'' Almost a year 
     is too long to wait when people are struggling--and being 
     bled dry.
       ``Both the politicians and the regulators are riding in 
     like the cavalry, and the settlers are already dead,'' David 
     Robertson, publisher of the Nilson Report, a newsletter that 
     monitors the credit card industry, told the Washington Post.
       As HuffPost's Ryan Grim reported, Obama has been much more 
     involved with the credit card bill than he was with the anti-
     foreclosure legislation. But, given the impassioned case he 
     made at Notre Dame and his call to ``align our deepest values 
     and commitments to the demands of a new age,'' he should take 
     it one step further and throw his weight behind Sanders' 
     effort to limit usurious interest rates.
       Just because it didn't pass doesn't mean it's dead. History 
     is filled with causes that took many battles before they were 
     victorious (women's suffrage, the Voting Rights Act, the 
     Clean Air Act, the American with Disabilities Act, etc., 
     etc., etc.).
       Our deepest values and commitments are certainly being put 
     to the test. Questions we thought had been settled for 
     hundreds of years are suddenly back on the table. Are we a 
     country that tortures or not? Are we a country that 
     financially tricks and traps millions of vulnerable working 
     families, binding them to the whims of bankers who have lost 
     all sight of fairness?
       Appearing on Real Time with Bill Maher, Elizabeth Warren 
     put the question this way:
       ``This is really about whether we have a government that 
     just recedes and says, in effect, `Hey, the strong can take 
     from everybody, they can write these [rules] however

[[Page S5570]]

     they want . . .we can have a totally broken market that makes 
     a few people very rich and robs the rest of them. Or you can 
     write a set of rules that says, `You know, it's just gotta be 
     kind of level out there.' . . . Everything we have, your 
     shoes, your clothes, the water you drink, the air you 
     breathe, we have basic safety rules in the United States. . . 
     . But we don't have them for consumer credit products.''
       Heading into Epoch B, and seeing the devastation all around 
     us here at the tail end Epoch A, can anyone--other than the 
     banking lobby, that is--argue that we shouldn't?
       The moment to act is now. Inflection points in history 
     don't come along very often.

  Mr. SANDERS. I yield the floor.
  I note the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DODD. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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