Miller: Proposal could preempt Iowa laws and undermine consumer safeguards
(DES MOINES, Iowa) Attorney General Tom Miller joined 40 state attorneys general urging Congress to oppose a bill preempting states’ authority to crack down on predatory high cost, short-term lending practices.
In a joint letter, Miller and the attorneys general warned House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell about the negative effects of the Consumer Credit Access, Innovation and Modernization Act, or H.R. 6139.
“Here in Iowa, we have our own regulations that protect people from the risks associated with nonbank credit service providers,” Miller said. “This legislation would open the door for certain types of lenders – including payday lenders, installment lenders, car title lenders, prepaid card issuers and check cashers – to obtain a federal charter. The result is they would bypass our more stringent state regulations, and that’s bad for Iowa consumers.”
The bill would allow lenders to extend credit to consumers if there is a reasonable basis for believing the consumers can repay the loans, but without putting specific standards in place. The legislation also exempts loans with terms of one year or less from the disclosure requirements of the Truth in Lending Act and substitutes a cost metric. By preempting state laws, the proposed legislation would impede state efforts to immediately and directly protect consumers from harm.
This bill was assigned to a congressional committee which will consider the legislation and determine whether to send it to the full House or Senate.
Also signing onto the October 5 letter were attorneys general from Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, Washington, West Virginia, Wisconsin and Wyoming.
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