INDIANAPOLIS (Legal Newsline) - Indiana Attorney General Greg Zoeller joined 39 other attorneys general on Friday in urging Congress to oppose a bill that would preempt the states' authority to crackdown on short-term, high cost, predatory lending practices.
The attorneys general penned a joint letter that was initiated by Zoeller and Illinois Attorney General Lisa Madigan. The letter warned House Minority Leader Nancy Pelosi, House Speaker John Boehner, Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid about what they say is the potentially negative impact of the Consumer Credit Access, Innovation and Modernization Act, also known as H.R. 6139.
"It's critical for states to both preserve consumers' access to alternative forms of credit and retain the ability to take quick action against short-term lenders that prey on those already in financial distress," Zoeller said.
"This joint effort among attorneys general underscores the importance of killing this federal legislation that would provide no significant protections for consumers and have unintended consequences."
Multiple states have created their own regulatory framework to protect consumers from risks connected with nonbank credit service providers. H.R. 6139 would allow providers such as check cashers, prepaid card issuers, car title lenders, installment lenders and payday lenders to obtain a federal charter and get around the more stringent state laws.
The bill would give lenders the opportunity to extend credit to consumers if there is a reasonable basis for thinking the consumers can repay the loan, but it does not spell out standards for what that reasonable basis is, the AGs say.
H.R. 6139 also would exempt loans with terms of one year or less from the disclosure requirements of the Truth in Lending Act and substitute it with a cost metric, the AGs say. The proposed legislation could get in the way of state efforts to directly and immediately protect consumers, the AGs say.
The bill is currently assigned to a congressional committee which will determine if the legislation should be sent to the full Senate or House.
Other attorneys general signing onto the letter included officials from Wyoming, Wisconsin, West Virginia, Washington, Vermont, Tennessee, South Dakota, Rhode Island, Puerto Rico, Pennsylvania, Oregon, Ohio, North Dakota, North Carolina, New York, New Mexico, New Jersey, New Hampshire, Montana, Mississippi, Minnesota, Michigan, Massachusetts, Maryland, Maine, Louisiana, Iowa, Idaho, Hawaii, Guam, Georgia, the District of Columbia, Delaware, Connecticut, Colorado, California, Arkansas, Arizona and Alaska.