Legislation Would Preempt State Authority, Undermine Consumer Safeguards
CHICAGO, ILÂ â€“ Illinois Attorney General Lisa Madigan and 40 of her counterparts called on Congressional leaders to oppose legislation that would preempt statesâ€™ authority to crackdown on predatory high-cost, short-term loans.
In a joint letter initiated by Illinois Attorney General Lisa Madigan and Indiana Attorney General Greg Zoeller, the attorneys general issued a warning to House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell to the effects of H.R. 6139 â€“ the Consumer Credit Access, Innovation, and Modernization Act.
In effect, the legislation would undermine the power of individual states to protect their residents from the high costs of short-term loans and other financial services, including payday and car title loans and check cashing. These loans typically carry triple-digit interest rates and can quickly trap consumers in an endless cycle of debt.
â€œThe legislation is nothing more than a shameless attempt by the payday lending industry to do an end run around statesâ€™ decadesâ€™ long battle to protect low-income families from becoming trapped in a downward spiral of debt,â€ Madigan said.
Many states have established a framework of regulation to protect consumers from the risk associated with payday lenders, installment lenders, car title lenders, prepaid card issuers and check cashers. The bill threatens to turn back these protections by giving these non-bank lenders the ability to obtain a federal charter that would allow them to sidestep more stringent state laws.
Signing onto Madigan and Zoellerâ€™s letter were attorneys general from Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Guam, Hawaii, Idaho, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, Washington, West Virginia, Wisconsin and Wyoming.