[Congressional Record Volume 167, Number 132 (Wednesday, July 28, 2021)]
[Senate]
[Page S5143]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mr. Merkley, Mr. Brown, Mr. Van Hollen, 
        Ms. Smith, Mr. Booker, Mr. Blumenthal, Mr. Schatz, Mrs. 
        Feinstein, Mr. Warnock, Mr. Leahy, and Mr. Wyden):
  S. 2508. A bill to amend the Truth in Lending Act to extend the 
consumer credit protections provided to members of the Armed Forces and 
their dependents under title 10, United States Code, to all consumers; 
to the Committee on Banking, Housing, and Urban Affairs.
  Mr. REED. Mr. President, today I am reintroducing the Veterans and 
Consumers Fair Credit Act (VCFCA) along with Senator Merkley, Senate 
Banking Committee Chairman Brown, and many of my colleagues. This 
important legislation would extend the bipartisan Military Lending 
Act's (MLA) protections for active-duty servicemembers and their 
families to all Americans by imposing a nationwide 36 percent cap on 
the annual percentage rate (APR) for most extensions of consumer 
credit.
  The MLA was enacted on a bipartisan basis in 2006 to rein in payday 
and other unscrupulous lenders that targeted American troops with 
abusive and predatory loans. Unfortunately, the MLA does not protect 
veterans or Gold Star families from these exploitative practices. Our 
servicemembers and their families should not lose important consumer 
protections simply because they retire, separate from honorable 
service, or lose their loved ones. 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.
  Hundreds of millions of American consumers could benefit from a 36 
percent APR cap. In states that do not have such a cap, predatory 
lenders are permitted to offer loans with triple-digit APRs that trap 
individuals in cycles of debt. For instance, the Consumer Financial 
Protection Bureau found that 80 percent of payday loans are rolled over 
or renewed within two weeks. This practice can cause borrowers to pay 
more in fees than the amount of money they originally borrowed, which 
is a sign of predatory lending and poor underwriting.
  According to a coalition of community organizations, payday lenders 
are known to target the most vulnerable, including seniors, veterans, 
and low-income borrowers. Many in these communities were already 
struggling to make ends meet before the pandemic, and continuing to pay 
exorbitant APRs may cause them to fall deeper into economic insecurity. 
This is why it's important to extend strong protections against 
unscrupulous lenders to all Americans.
  The MLA's successful track record demonstrates that providing for 
reasonable, responsible limits on interest rates does not cut off 
consumers' access to credit. According to a May 2021 report from the 
Department of Defense, ``credit cards, auto loans, and personal loans 
are widely available at risk-based rates under the 36 percent 
[military] APR'' and ``[s]ervice members continue to have ample access 
to necessary credit.''
  Moreover, this legislation would follow the trend in many states 
towards greater protections against predatory loans. Eighteen states 
and the District of Columbia have enacted APR caps of 36% or lower for 
payday loans or banned them altogether. Lenders in these states have 
incentives to offer more affordable loans that borrowers have an 
ability to repay. The same incentives should apply across the nation.
  I thank the bill's supporters, including the Consumer Federation of 
America, the National Consumer Law Center (on behalf of its low income 
clients), the Center for Responsible Lending, Americans for Financial 
Reform, Veterans Education Success, the Military Officers Association 
of America, and the National Military Family Association.
  I urge our colleagues to join us in supporting this important 
legislation.
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