[Congressional Record Volume 169, Number 143 (Wednesday, September 6, 2023)]
[Senate]
[Pages S4230-S4231]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. DURBIN (for himself, Mr. Blumenthal, Mr. Merkley, and Mr.
Whitehouse):
S. 2730. A bill to amend the Truth in Lending Act to establish a
national usury rate for consumer credit transactions; to the Committee
on Banking, Housing, and Urban Affairs.
Mr. DURBIN. Madam President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
[[Page S4231]]
S. 2730
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting Consumers from
Unreasonable Credit Rates Act of 2023''.
SEC. 2. FINDINGS.
Congress finds that--
(1) attempts have been made to prohibit usurious interest
rates in America since colonial times;
(2) at the Federal level, in 2006, Congress enacted a
Federal 36-percent annualized usury cap for servicemembers
and their families for covered credit products, as defined by
the Department of Defense, which curbed payday, car title,
and tax refund lending around military bases;
(3) notwithstanding such attempts to curb predatory
lending, high-cost lending persists in all 50 States due to
loopholes in State laws, safe harbor laws for specific forms
of credit, and the exportation of unregulated interest rates
permitted by preemption;
(4) due to the lack of a comprehensive Federal usury cap,
consumers have paid as much as approximately $14,000,000,000
on high-cost overdraft loans, $9,000,000,000 on storefront
and online payday loans, $3,800,000,000 on car title loans,
and additional amounts in unreported revenues on high-cost
online installment loans;
(5) cash-strapped consumers pay on average approximately
400-percent annual interest for payday loans, 300-percent
annual interest for car title loans, 17,000 percent for bank
overdraft loans, and triple-digit rates for online
installment loans;
(6) a national maximum interest rate that includes all
forms of fees and closes all loopholes is necessary to
eliminate such predatory lending; and
(7) alternatives to predatory lending that encourage small
dollar loans with minimal or no fees, installment payment
schedules, and affordable repayment periods should be
encouraged.
SEC. 3. NATIONAL MAXIMUM INTEREST RATE.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et
seq.) is amended by adding at the end the following:
``SEC. 140B. MAXIMUM RATES OF INTEREST.
``(a) In General.--Notwithstanding any other provision of
law, no creditor may make an extension of credit to a
consumer with respect to which the fee and interest rate, as
defined in subsection (b), exceeds 36 percent.
``(b) Fee and Interest Rate Defined.--
``(1) In general.--For purposes of this section, the fee
and interest rate includes all charges payable, directly or
indirectly, incident to, ancillary to, or as a condition of
the extension of credit, including--
``(A) any payment compensating a creditor or prospective
creditor for--
``(i) an extension of credit or making available a line of
credit, such as fees connected with credit extension or
availability such as numerical periodic rates, annual fees,
cash advance fees, and membership fees; or
``(ii) any fees for default or breach by a borrower of a
condition upon which credit was extended, such as late fees,
insufficient funds fees, overdraft fees, and over-limit fees;
``(B) all fees which constitute a finance charge, as
defined by rules of the Bureau in accordance with this title;
``(C) credit insurance premiums, whether optional or
required; and
``(D) all charges and costs for ancillary products sold in
connection with or incidental to the credit transaction.
``(2) Tolerances.--
``(A) In general.--With respect to a credit obligation that
is payable in at least 3 fully amortizing installments over
at least 90 days, the term `fee and interest rate' does not
include--
``(i) application or participation fees that in total do
not exceed the greater of $30 or, if there is a limit to the
credit line, 5 percent of the credit limit, up to $120, if--
``(I) such fees are excludable from the finance charge
pursuant to section 106 and regulations issued thereunder;
``(II) such fees cover all credit extended or renewed by
the creditor for 12 months; and
``(III) the minimum amount of credit extended or available
on a credit line is equal to $300 or more;
``(ii) a late fee charged as authorized by State law and by
the agreement that does not exceed either $20 per late
payment or $20 per month; or
``(iii) a creditor-imposed insufficient funds fee charged
when a borrower tenders payment on a debt with a check drawn
on insufficient funds that does not exceed $15.
``(B) Adjustments for inflation.--The Bureau may adjust the
amounts of the tolerances established under this paragraph
for inflation over time, consistent with the primary goals of
protecting consumers and ensuring that the 36-percent fee and
interest rate limitation is not circumvented.
``(c) Calculations.--
``(1) Open end credit plans.--For an open end credit plan--
``(A) the fee and interest rate shall be calculated each
month, based upon the sum of all fees and finance charges
described in subsection (b) charged by the creditor during
the preceding 1-year period, divided by the average daily
balance; and
``(B) if the credit account has been open less than 1 year,
the fee and interest rate shall be calculated based upon the
total of all fees and finance charges described in subsection
(b)(1) charged by the creditor since the plan was opened,
divided by the average daily balance, and multiplied by the
quotient of 12 divided by the number of full months that the
credit plan has been in existence.
``(2) Other credit plans.--For purposes of this section, in
calculating the fee and interest rate, the Bureau shall
require the method of calculation of annual percentage rate
specified in section 107(a)(1), except that the amount
referred to in that section 107(a)(1) as the `finance charge'
shall include all fees, charges, and payments described in
subsection (b)(1) of this section.
``(3) Adjustments authorized.--The Bureau may make
adjustments to the calculations in paragraphs (1) and (2),
but the primary goals of such adjustment shall be to protect
consumers and to ensure that the 36-percent fee and interest
rate limitation is not circumvented.
``(d) Definition of Creditor.--As used in this section, the
term `creditor' has the same meaning as in section 702(e) of
the Equal Credit Opportunity Act (15 U.S.C. 1691a(e)).
``(e) No Exemptions Permitted.--The exemption authority of
the Bureau under section 105 shall not apply to the rates
established under this section or the disclosure requirements
under section 127(b)(6).
``(f) Disclosure of Fee and Interest Rate for Credit Other
Than Open End Credit Plans.--In addition to the disclosure
requirements under section 127(b)(6), the Bureau may
prescribe regulations requiring disclosure of the fee and
interest rate established under this section.
``(g) Relation to State Law.--Nothing in this section may
be construed to preempt any provision of State law that
provides greater protection to consumers than is provided in
this section.
``(h) Civil Liability and Enforcement.--In addition to
remedies available to the consumer under section 130(a), any
payment compensating a creditor or prospective creditor, to
the extent that such payment is a transaction made in
violation of this section, shall be null and void, and not
enforceable by any party in any court or alternative dispute
resolution forum, and the creditor or any subsequent holder
of the obligation shall promptly return to the consumer any
principal, interest, charges, and fees, and any security
interest associated with such transaction. Notwithstanding
any statute of limitations or repose, a violation of this
section may be raised as a matter of defense by recoupment or
setoff to an action to collect such debt or repossess related
security at any time.
``(i) Violations.--Any person that violates this section,
or seeks to enforce an agreement made in violation of this
section, shall be subject to, for each such violation, 1 year
in prison and a fine in an amount equal to the greater of--
``(1) three times the amount of the total accrued debt
associated with the subject transaction; or
``(2) $50,000.
``(j) State Attorneys General.--An action to enforce this
section may be brought by the appropriate State attorney
general in any United States district court or any other
court of competent jurisdiction within 3 years from the date
of the violation, and such attorney general may obtain
injunctive relief.''.
SEC. 4. DISCLOSURE OF FEE AND INTEREST RATE FOR OPEN END
CREDIT PLANS.
Section 127(b)(6) of the Truth in Lending Act (15 U.S.C.
1637(b)(6)) is amended by striking ``the total finance charge
expressed'' and all that follows through the end of the
paragraph and inserting ``the fee and interest rate,
displayed as `FAIR', established under section 141.''.
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