WASHINGTON, March 11 – Senator Bernie Sanders (I-Vt.) today proposed legislation to cap interest rates on credit cards and loans issued to consumers and businesses.
Banks that have received the largest taxpayer bailout in U.S. history, the senator said, should not be allowed to slap consumers with heavy fees on top of interest rates that have shot up to as much as 30 percent.
“Every week I hear from Vermonters who are outraged at having to pay 25 or even 30 percent interest on their credit cards – especially at a time when their tax dollars are bailing out the large banks that issue those credit cards,” said Sanders. “Frankly, this is nothing less than loan sharking and it has got to end. We need a cap on interest rates in this country and that’s what my legislation will do.”
Sanders’ legislation, which he will formally introduce tomorrow, would cap credit card interest rates at 15 percent. It also would limit bank fees that have been increased dramatically over the past decade.
Fifteen percent is the same interest rate cap Congress placed on credit union loans almost 30 years ago under the Federal Credit Union Act. Like the law regulating credit unions, Sanders’ bill would give the Federal Reserve Board the flexibility to adjust the rate cap if it determines that the safety and soundness of lenders are in jeopardy.
“At a time when banks are receiving the largest taxpayer bailout in U.S. history, as Federal Reserve short-term interest rates have been lowered to zero percent, these same banks are charging consumers outrageous fees and sky-high interest rates on credit cards and other loans,” Sanders said. “Enough is enough. People are hurting. It is time to stop the rip offs by banks.”
Sanders also noted former Senate Banking Committee Chairman Alfonse D’Amato in 1991 proposed similar legislation that would have capped interest rates at 14 percent.
The amendment by D’Amato, a New York Republican, passed the Senate 74 to 19, but was never signed into law.
Senate Majority Whip Richard Durbin (D-Ill.) will cosponsor the Sanders legislation.