When Ohio passed a law limiting the fees and interest payday lenders could charge borrowers, most believed it would end the practice of costing people exorbitant amounts of money.
But a federal rule has allowed short-term lenders to circumvent state laws. Congress is now working to repeal the rule.
In a narrow 52-47 vote, the Senate repealed the so-called “true lender rule”.
Three Republicans – Susan Collins of Maine, Cynthia Lummis of Wyoming, and Marco Rubio of Florida – joined the Democrats, including Banking Committee Chairman Sherrod Brown (D-OH) who spearheaded the effort.
“Payday lenders had not suffered a loss in the Senate on a recorded vote in 15 years,” Brown said.
Supporters of the rule fear its repeal could cause regulatory uncertainty for domestic lenders who partner with local entities.
But Brown says it allowed these national companies to avoid state interest rate caps.
“These shady practices they prey on working families and families where things have gone wrong … their car breaks down, they’ve lost their jobs, they turn to payday lenders and they never can. get out of it, “Brown said,” That’ll stop it. ”
If approved by the House, President Joe Biden has indicated he will sign the repeal.
Brown is also working to expand a measure that protects active duty members from predatory lending practices.
The Military Loans Act caps the interest rates on most consumer loans at 36% for active-duty military personnel and their dependents. He wants to see all Americans protected.
Senator Sherrod Brown (D-OH) is working with Senator Jack Reed (D-RI) to pursue a national interest rate cap on short-term loans.
“It should apply to everyone. And this is our next step in this area. Work with the Senator [Jack] Reed (D-RI), a West Point graduate, Democrat on my banking and housing committee, who led this, and he and I are teaming up to work on this and we know we’re against the big banks at this. topic, but we plan to win on it.