I 

111TH CONGRESS 

1ST SESSION H. R. 1640 

To amend the Truth in Lending Act to protect consumers from usury, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 19, 2009 

Mr. HINCHEY (for himself, Mr. COHEN, Mr. ELLISON, Ms. LEE of California, 

Mr. MCDERMOTT, Mr. GEORGE MILLER of California, and Ms. WOOLSEY) introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL 

To amend the Truth in Lending Act to protect consumers 

from usury, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Interest Rate Reduc5 tion Act’’. 

6 SEC. 2. NATIONAL CONSUMER CREDIT USURY RATE. 

7 Section 107 of the Truth in Lending Act (15 U.S.C. 

8 1606) is amended by adding at the end the following new 

9 subsection: 


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1 ‘‘(f) NATIONAL CONSUMER CREDIT USURY RATE.— 

2 ‘‘(1) LIMITATION ESTABLISHED.—Notwith3 standing subsection (a) or any other provision of 

4 law, but except as provided in paragraph (2), the an5 nual percentage rate applicable to any extension of 

6 credit may not exceed 15 percent on unpaid bal7 ances, inclusive of all finance charges. Any fees that 

8 are not considered finance charges under section 

9 106(a) may not be used to evade the limitations of 

10 this paragraph, and the total sum of such fees may 

11 not exceed the total amount of finance charges as12 sessed. 

13 ‘‘(2) EXCEPTIONS.— 

14 ‘‘(A) BOARD AUTHORITY.—The Board may 

15 establish, after consultation with the appro16 priate committees of Congress, the Secretary of 

17 the Treasury, and any other interested Federal 

18 financial institution regulatory agency, an an19 nual percentage rate of interest ceiling exceed20 ing the 15 percent annual rate under paragraph 

21 (1) for periods of not to exceed 18 months, 

22 upon a determination that— 

23 ‘‘(i) money market interest rates have 

24 risen over the preceding 6-month period; 

25 and 


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1 ‘‘(ii) prevailing interest rate levels 

2 threaten the safety and soundness of indi3 vidual lenders, as evidenced by adverse 

4 trends in liquidity, capital, earnings, and 

5 growth. 

6 ‘‘(B) TREATMENT OF CREDIT UNIONS.— 

7 The limitation in paragraph (1) shall not apply 

8 with respect to any extension of credit by an in9 sured credit union, as that term is defined in 

10 section 101 of the Federal Credit Union Act 

11 (12 U.S.C. 1752). 

12 ‘‘(3) PENALTIES FOR CHARGING HIGHER

13 RATES.— 

14 ‘‘(A) VIOLATION.—The taking, receiving, 

15 reserving, or charging of an annual percentage 

16 rate or fee greater than that permitted by para17 graph (1), when knowingly done, shall be 

18 deemed a violation of this title, and a forfeiture 

19 of the entire interest which the note, bill, or 

20 other evidence of the obligation carries with it, 

21 or which has been agreed to be paid thereon. 

22 ‘‘(B) REFUND OF INTEREST AMOUNTS.—If 

23 an annual percentage rate or fee greater than 

24 that permitted under paragraph (1) has been 

25 paid, the person by whom it has been paid, or 


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1 the legal representative thereof, may, by bring2 ing an action not later than 2 years after the 

3 date on which the usurious collection was last 

4 made, recover back from the lender in an action 

5 in the nature of an action of debt, the entire 

6 amount of interest, finance charges, or fees 

7 paid. 

8 ‘‘(4) CIVIL LIABILITY.—Any creditor who vio9 lates this subsection shall be subject to the provi10 sions of section 130.’’. 

11 SEC. 3. CIVIL LIABILITY CONFORMING AMENDMENT. 

12 Section 130(a) of the Truth in Lending Act (15 

13 U.S.C. 1640(a)) is amended by inserting ‘‘section 107(f),’’ 

14 before ‘‘this chapter’’. 

Æ 


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