End to interest rate imports
May 13, 2010 | federal legislation, industry | Comments (1)The New York Times “The Caucus” blog drills down on the Whitehouse amendment:
The efforts to restrict credit card companies are coming mostly from liberal Democrats. And while the changes are likely to have popular appeal with consumers, their prospects are uncertain given that Congress approved a bill rewriting the rules of the credit card industry not even a year ago.
The proposal with perhaps the best chances of being included in the financial regulatory bill, would restore states’ ability to enforce interest rate caps on out-of-state companies lending to their residents.
The amendment, sponsored by Senator Sheldon Whitehouse, Democrat of Rhode Island, and Senator Thad Cochran, Republican of Mississippi, would close a loophole created in 1978 when the Supreme Court ruled that the laws of a bank’s home state govern transactions across state lines, Mr. Whitehouse said.
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If the Whitehouse amendment allows each state to regulate and determine what credit card rates are best suited for their residents, then it is the same logic that allows the states to regulate and determine what payday loan rates are best suited for their residents. Payday loan companies are already heavily regulated with rate caps in most states. What am I missing?