Loan Shark Prevention Act

II 116TH CONGRESS 1ST SESSION S. 1389 To protect consumers from usury. IN THE SENATE OF THE UNITED STATES MAY 9, 2019 Mr. SANDERS (for himself and Mr. WHITEHOUSE) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To protect consumers from usury. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Loan Shark Prevention 4 Act’’. 5 SEC. 2. INTEREST RATE REDUCTION. 6 (a) NATIONAL CONSUMER CREDIT USURY RATE.— 7 Section 107 of the Truth in Lending Act (15 U.S.C. 1606) 8 is amended by adding at the end the following new sub- 9 section: 10 ‘‘(f) NATIONAL CONSUMER CREDIT USURY RATE.— 11 VerDate Sep 11 2014 04:17 May 17, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42 with BILLS 2 •S 1389 IS ‘‘(1) LIMITATION ESTABLISHED.— 1 ‘‘(A) IN GENERAL.—Notwithstanding sub- 2 section (a) or any other provision of law, but 3 except as provided in paragraph (2), the annual 4 percentage rate applicable to any extension of 5 credit may not exceed the lesser of— 6 ‘‘(i) 15 percent on unpaid balances, 7 inclusive of all finance charges; or 8 ‘‘(ii) the maximum rate permitted by 9 the laws of the State in which the con- 10 sumer resides. 11 ‘‘(B) OTHER FEES.—Any fees that are not 12 considered finance charges under section 106(a) 13 may not be used to evade the limitations of this 14 paragraph, and the total sum of such fees may 15 not exceed the total amount of finance charges 16 assessed. 17 ‘‘(2) EXCEPTIONS.— 18 ‘‘(A) BOARD AUTHORITY.—The Board may 19 establish, after consultation with the appro- 20 priate committees of Congress, the Secretary of 21 the Treasury, and any other interested Federal 22 financial institution regulatory agency, an an- 23 nual percentage rate of interest ceiling exceed- 24 ing the 15-percent annual rate under paragraph 25 VerDate Sep 11 2014 04:17 May 17, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42 with BILLS 3 •S 1389 IS (1) for periods of not to exceed 18 months, 1 upon a determination that— 2 ‘‘(i) money market interest rates have 3 risen over the preceding 6-month period; 4 and 5 ‘‘(ii) prevailing interest rate levels 6 threaten the safety and soundness of indi- 7 vidual lenders, as evidenced by adverse 8 trends in liquidity, capital, earnings, and 9 growth. 10 ‘‘(B) TREATMENT OF CREDIT UNIONS.— 11 The limitation in paragraph (1) does not apply 12 with respect to any extension of credit by an in- 13 sured credit union, as that term is defined in 14 section 101 of the Federal Credit Union Act 15 (12 U.S.C. 1752). 16 ‘‘(3) PENALTIES FOR CHARGING HIGHER 17 RATES.— 18 ‘‘(A) VIOLATION.—The taking, receiving, 19 reserving, or charging of an annual percentage 20 rate or fee greater than that permitted by para- 21 graph (1), when knowingly done, shall be 22 deemed a violation of this title, and a forfeiture 23 of the entire interest which the note, bill, or 24 VerDate Sep 11 2014 04:17 May 17, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42 with BILLS 4 •S 1389 IS other evidence of the obligation carries with it, 1 or which has been agreed to be paid thereon. 2 ‘‘(B) REFUND OF INTEREST AMOUNTS.—If 3 an annual percentage rate or fee greater than 4 that permitted under paragraph (1) has been 5 paid, the person by whom it has been paid, or 6 the legal representative thereof, may, by bring- 7 ing an action not later than 2 years after the 8 date on which the usurious collection was last 9 made, recover back from the lender in an action 10 in the nature of an action of debt, the entire 11 amount of interest, finance charges, or fees 12 paid. 13 ‘‘(4) CIVIL LIABILITY.—Any creditor who vio- 14 lates this subsection shall be subject to the provi- 15 sions of section 130. 16 ‘‘(g) RELATION TO STATE LAW.—Nothing in this 17 section may be construed to preempt any provision of 18 State law that provides greater protection to consumers 19 than is provided in this section.’’. 20 (b) CIVIL LIABILITY CONFORMING AMENDMENT.— 21 Section 130(a) of the Truth in Lending Act (15 U.S.C. 22 1640(a)) is amended by inserting ‘‘section 107(f),’’ before 23 ‘‘this chapter’’. 24 Æ VerDate Sep 11 2014 04:17 May 17, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S1389.IS S1389 kjohnson on DSK79L0C42 with BILLS