“A rate cap means a ban…”
July 22, 2009 | Washington Post, federal legislation, industry | Comments (0)That’s the profound wisdom of CFSA spokesperson Steven Schlein in a Washington Post article in which an interfaith organization calls for a 10% federal rate cap:
….In May, an effort in Congress to set a 15 percent interest rate cap lead by Sen. Bernard Sanders (I-Vt.) garnered only 33 votes. However, three years ago Congress passed a 36 percent cap on loans to military borrowers after a Pentagon report documented the impact of payday loans on service members.
Lenders say a national interest rate cap would be bad for consumers.
“Payday loans are typically two weeks. A 10 percent rate cap would mean the industry could charge under 40 cents per $100 loaned for two weeks. Even a charity like Goodwill Industries charges $9 per $100 loaned for its payday loan alternative,” said Steven Schlein, a spokesman for the Community Financial Services Association of America, a trade group for payday lenders. “A rate cap simply means a ban on short-term loans.”
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