Sanders--No More Usury (Valley Advocate)

Vermont's outspoken senator would cap credit card and loan interest at 15 percent.

By Stephanie Kraft

Once again we're tuning in to the voice of U.S. Sen. Bernie Sanders of Vermont, an Independent who is less cozy with the financial service industry than most people in a Congress that garners big donations from that industry. Sanders is pushing legislation that would cap interest on credit cards and all consumer loans in the country at 15 percent.

The growing number of rationales credit card companies exploit to raise customers' interest rates, from late payments to defaults on other loans that have nothing to do with the customers' credit cards, are among the reasons Sanders wants to cap interest rates.

Sanders points out that "one-third of all credit card holders in this country are now paying interest rates above 20 percent and as high as 41 percent—more than double what they paid in interest in 1990. Recently, some major institutions, such as Bank of America, have informed responsible cardholders that their interest rates would be doubled to as high as 28 percent, without offering any explanation or excuse why the increase was taking place."

To Sanders, this is loansharking.

Sanders chose 15 percent, he says, because under federal law that's the highest rate credit unions can charge unless they get special permission to charge a higher rate to protect their bottom line. And, says Sanders, 15 percent has worked for them.

"Unlike their counterparts at the big banks, credit unions are not lining up for hundreds of billions in bailouts. In fact, they're doing quite well," he wrote in a statement announcing his proposed new legislation. "They are responding to the credit needs of the small businesses in their communities and to individuals. They have not only survived this regulation, but also they are functioning exactly the way they are supposed to function. In my view, the rules that have worked well for credit unions for decades can work for all financial institutions."