MLA in Congress: Senate Hearing on All-In Lending Rate Cap

Sen. Catherine Cortez Masto (D-NV) at the hearing
Sen. Catherine Cortez Masto (D-NV) at the hearing

On Thursday, the Senate Banking Committee held an informational hearing on a proposed bill to extend the Military Lending Act (MLA) to all consumers, which would include an all-in percentage rate of 36 percent.

The base text of the proposed bill included an exemption for federally chartered credit unions. However, state-chartered credit unions would be subject to this proposal.

Opponents from consumer groups have charged that without a national usury, work-arounds could be sought through credit unions.

Sen. Catherine Cortez Masto (D-NV) challenged that point in coming to the defense of credit unions. Working with her staff, the Nevada Credit Union League provided a considerable amount of data and research to aid the senator’s effort.

She specifically asked the witnesses if they ever heard of a rent-a-credit union scheme. The Center for Responsible Lending (CRL) witness said she had not.

The senator also asked if any of the PALS loans (Payday Alternative Loans) had been predatory and whether the bill should exempt state-chartered credit unions. The CRL witness said she hadn’t heard of problems, even though CRL does not support a state-chartered exemption.

The League applauds the senator's effort, which essentially pointed out the flawed logic to this bill. You can find the hearing here.

The effort on this bill is just beginning. You will likely hear of more in the next few days. The Credit Union National Association (CUNA), the League, and many others are working (aligned together) against this bill.

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