Financial Protection

SAFE Lending Act introduced to protect consumers from predatory lending

Today, the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act was introduced by Sen. Jeff Merkley (OR) and Reps. Suzanne Bonamici (OR) and Pramila Jayapal (WA).

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The SAFE Lending Act would protect consumers from a number of predatory practices and would require all lenders, including banks, to abide by state interest rate caps. Although 18 states and the District of Columbia have state interest rate caps to protect their residents from payday loan debt traps, predatory lenders use online lending to evade state laws. 

These protections would also help crack down on “rent-a-bank” schemes for loans with up to 12 month terms. “Rent-a-bank” is a practice where predatory lenders partner with or “rent” federally regulated banks to evade state limits on interest rates, because banks are exempt from those caps.

The bill is co-sponsored in the Senate by Sens. Edward J. Markey (MA), Tina Smith (MN), Cory Booker (NJ), Bernie Sanders (VT), Dick Durbin (IL), Tammy Duckworth (IL), Chris Van Hollen (MD), Dianne Feinstein (CA), Ron Wyden (OR), Richard Blumenthal (CT), Kirsten Gillibrand (NY), and Martin Heinrich (NM). 

The bill is co-sponsored in the House by Reps. Earl Blumenauer (OR), Jesús G. “Chuy” García (IL), Sylvia Garcia (TX), Sheila Jackson Lee (TX), Eleanor Holmes Norton (DC), and Katie Porter (CA).

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