Online Lenders Alliance CEO Mary Jackson told Breitbart News in a statement on Tuesday that Sens. Sherrod Brown (D-OH) and Chris Van Hollen’s (D-MD) legislation to cap consumer lending rates during the coronavirus outbreak would cut off Americans’ access to credit.
Brown and Van Hollen’s legislation would temporarily cap consumer lending rates, also known as usury rates, at 36 percent during the coronavirus outbreak. The Democrat senators, who have also voted to block the bipartisan coronavirus package, urged Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY) to include the proposal in the coronavirus bill.
Brown said in a statement on Sunday:
During this time of crisis, American consumers and small business owners need support. They should not be preyed upon by unscrupulous lenders and loan sharks seeking to capitalize on those most in need. That is why I am proud to join my colleague Senator Van Hollen in calling for an immediate cap on lending rates and will continue to fight to ensure fairer lending practices now and in the future.
The exorbitant fees charged by payday lenders are abhorrent, even under normal circumstances – but in an emergency, these fees should be criminal. Loan sharks should not be able to profit on those who are struggling to get by, due to the impacts of the coronavirus. We should immediately cap consumer lending rates to ensure fairer lending practices across the country.
Lauren Saunders, associate director of the National Consumer Law Center, supported the proposal. She said:
It’s astonishing that even in this emergency predatory lenders are exploiting people’s hardships by charging 100% APR or more. A temporary 36% rate cap would put a stop to that. I applaud Senator Van Hollen and Senator Brown for their efforts on this issue.
In contrast, Jackson told Breitbart News in a statement that capping consumer lending rates would cut off access to credit, especially for Americans with lower credit ratings.
Now is not the time to take away credit options from non-prime consumers by limiting annual interest rates on short-term loans. Those who see the COVID-19 crisis as an opportunity to cap interest rates will hurt non-prime consumers who need access to credit now more than ever. A temporary rate cap is a temporary ban on credit options that consumers need as they face other financial difficulties. A rate cap of 36 percent has already been tested with the Military Lending Act and the results are in: it eliminated credit options and left servicemembers facing financial insecurity, missed payments, dependency on charity, and depleted savings.
She added, “It is irresponsible to include it in any COVID-19 aid package. Consumers are facing unprecedented financial stresses, and they need options.”