(Senate - April 29, 2019)

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[Pages S2488-S2489]
From the Congressional Record Online through the Government Publishing Office []


      By Mr. DURBIN (for himself, Mr. Merkley, Mr. Blumenthal, and Mr. 
  S. 1230. 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. Mr. 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:

                                S. 1230

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Protecting Consumers from 
     Unreasonable Credit Rates Act of 2019''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) attempts have been made to prohibit usurious interest 
     rates in America since colonial times;

[[Page S2489]]

       (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 annually pay approximately $14,000,000,000 on high-
     cost overdraft loans, as much as approximately $7,000,000,000 
     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, up to 17,000 percent or 
     higher 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 


       Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et 
     seq.) is amended by adding at the end the following:


       ``(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, 
     creditor-imposed not sufficient funds fees charged when a 
     borrower tenders payment on a debt with a check drawn on 
     insufficient funds, 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 
       ``(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 not sufficient 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.''.

                   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.''.