Attorney General Jim Hood is urging lawmakers to vote against bills that he warns could invalidate a state’s ability to protect consumers from high-interest loans and undermine a state’s ability to enforce consumer protection laws.
Highlighted in a news release from Hood’s office, HR 3299 (“Protecting Consumers’ Access to Credit Act of 2017”) and HR 4439 (“Modernizing Credit Opportunities Act”) are to two bills in question.
General Hood sent a letter to Congressional leaders last week with a bipartisan group of 20 other attorneys general expressing their opposition to the proposed legislation.
“It is my duty as attorney general to protect Mississippians from predatory business practices and those who take advantage of their customers in financial need,” Hood said. “The bills in front of Congress would limit a state’s ability to protect consumer rights and make it easier for non-bank lenders to deceive and mislead. I urge our Congressional leaders to stand up for consumers by voting against this legislation.”
As the attorneys general expressed in the attached letter, HR 3299 and HR 4439 would constitute a substantial expansion of the preemption of state usury laws, which have long been recognized as the purview of the individual states. Over decades, states have crafted laws that create a careful balance between the need for access to credit and the need to ensure that loans are offered on terms that do not create consumer harm. However, if passed, these bills would allow non-bank lenders to sidestep state usury laws and charge excessive interest rates that would otherwise be illegal under state law.
The letter specifically calls upon the “Comptroller of the Currency” which explained why this may be a dangerous particle back in 2002.
“Not only do these arrangements constitute an abuse of the national charter, but they are highly conducive to the creation of safety and soundness problems at the bank, which may not have the capacity to manage effectively a multistate loan origination operation that is in reality the business of the payday lender.”
In addition to Mississippi, attorneys general from the following states signed the letter: California, Colorado District of Columbia, Hawaii, Illinois, Iowa, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Washington.