Senate Democrats Attempt to Federally Enforce State Usury Laws

Senator Jeff Merkley (D-OR) and Congresswoman Suzanne Bonamici (D-OR) recently introduced the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act, a bill that would require small-dollar lenders to register with the Consumer Financial Protection Bureau (CFPB) and adhere to state usury caps when offering credit to consumers.

According to a press release from Representative Bonamici, “Under Trump Administration leadership, the [CFPB] reversed course on national rules slated to go into effect this year instituting consumer protections from payday loan predators. Without strong CFPB protections at a national level, state laws protecting consumers will be all the more important.”

The federal government does not currently mandate licensing or registration for small-dollar lenders, and the Dodd-Frank Act expressly forbids the CFPB from setting interest rate caps for small-dollar loans.

The SAFE Lending Act stands as a troubling initiative by some in Congress to effectively impose state laws upon sovereign tribal lending entities (TLEs). The bill was introduced during the last Congress, but it failed to make it out of committee.