Sanders, AOC Propose 15% Cap on Credit Card Interest Rates – Do You Support Their Proposal?

What’s the story?

• Sen. Bernie Sanders (I-VT) and Rep. Alexandria Ocasio-Cortez (D-NY) have teamed up to introduce legislation that would cap credit card interest rates at 15%.
• "Let's be clear what we're talking about: We're talking about economic brutality," Sanders said in announcing the plan during a Facebook livestream with Ocasio-Cortez.

"We are talking about some of the most powerful people in the world, people who make millions and millions of dollars a year, and banks that make billions of dollars a year in profit. And they see a real profit center in going after desperate people...who cannot afford the basic necessities of life."

What would the Loan Shark Prevention Act do?

• Cap the interest rate on both credit cards and consumer loans at 15%.
• The Federal reserve would have the authority to raise interest rates above 15% for 18 months, but only “if the Fed determines that the national usury cap would threaten the safety and soundness of financial institutions.”

What are people saying?

Supporters

“Today we don’t need the hellfire, the pitchforks, or the rivers of boiling blood, but we do need a national usury law that caps interest rates on credit cards and consumer loans at 15%,” a briefing document states.

• "This isn't anything radical, because we had these laws for a very long time," Ocasio-Cortez said. "We had them in red states, we had them in blue states. We had them in half of the United States ... Ever since then, it's given credit card companies and for big banks to charge extortion level interest rates to the poor."
• AOC was referring to the 15% interest rate cap that Congress imposed on credit unions almost 40 years ago.

Critics

• “This specific proposal will only harm consumers by restricting access to credit for those who need it the most and driving them toward less regulated, more costly alternatives,” Jeff Sigmund, a spokesman for the American Bankers Association, said in a statement.
• Richard Hunt, chief executive of the Consumer Bankers Association, said in a statement to the Washington Post that the 15% cap was “arbitrary.”

“One-size-fits-all caps would make all loans ... harder for Americans with lower credit scores or non-traditional sources of income to receive.”

What do you think?

Do you support the Loan Shark Prevention Act? Or do you consider the 15% cap “arbitrary”? Take action and tell your reps, then share your thoughts below.

—Josh Herman

(Photo Credit: Creative Commons)