Democrats May Deny It, But This Bill Is A Handout To Payday Lenders
Gwen Moore is pushing legislation to undermine state consumer protection laws.
Rep. Gwen Moore (D-Wis.) has a payday lending problem.
On Tuesday, HuffPost published an article highlighting an obscure piece of legislation moving through Congress that would help payday lenders and other shady operators skirt predatory lending laws passed by state governments. It's the sort of bill Republicans sponsor all the time. Every now and then, Democrats quietly join them, hoping that a minor bill circling through the House Financial Services Committee will be overlooked in the grand legislative debates over taxes, health care and foreign policy.
The bill was introduced by Moore and archconservative Rep. Patrick McHenry (R-N.C.), and it exploits a weakness in national banking law to provide convoluted but very real aid to predatory lenders.
Thanks to a 1978 Supreme Court decision, national banks don't have to pay attention to usury laws, which regulate the interest rates they can charge on loans, outside their home state. A national bank headquartered in a state with weak usury laws, say, Delaware, doesn't have to abide by the more stringent standards in Colorado when it makes a loan to a family in Denver.
Consumer advocates don't like this situation. But in 2015, they got some help from a federal judge, who ruled that debt collectors and other opportunists who purchase debts from national banks couldn't enjoy the same freedom from state rules that national banks do.