I 

113TH CONGRESS 

2D SESSION H. R. 5130 

To amend the Truth in Lending Act to establish a national usury rate 

for consumer credit transactions. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 17, 2014 

Mr. CARTWRIGHT (for himself, Ms. CLARK of Massachusetts, Mr. CLAY, Mr. 

CLYBURN, Mr. CUMMINGS, Mr. DANNY K. DAVIS of Illinois, Mr. DOGGETT, Ms. EDWARDS, Mr. ELLISON, Mr. FATTAH, Ms. JACKSON LEE, 

Ms. EDDIE BERNICE JOHNSON of Texas, Mr. GEORGE MILLER of California, Ms. PINGREE of Maine, Mr. RANGEL, Ms. TSONGAS, Ms. 

MICHELLE LUJAN GRISHAM of New Mexico, and Mr. COHEN) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Truth in Lending Act to establish a national 

usury rate for consumer credit transactions. 

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 ‘‘Protecting Consumers 

5 from Unreasonable Credit Rates Act of 2014’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 


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1 (1) attempts have been made to prohibit usu2 rious interest rates in America since colonial times; 

3 (2) at the Federal level, in 2006, Congress en4 acted a Federal 36 percent annualized usury cap for 

5 servicemembers and their families for covered credit 

6 products, as defined by the Department of Defense, 

7 which curbed payday, car title, and tax refund lend8 ing around military bases; 

9 (3) notwithstanding such attempts to curb 

10 predatory lending, high-cost lending persists in all 

11 50 States due to loopholes in State laws, safe harbor 

12 laws for specific forms of credit, and the exportation 

13 of unregulated interest rates permitted by preemp14 tion; 

15 (4) due to the lack of a comprehensive Federal 

16 usury cap, consumers annually pay approximately 

17 $23,700,000,000 for high-cost overdraft loans, as 

18 much as $8,100,000,000 for storefront and online 

19 payday loans, and additional amounts in unreported 

20 revenues from bank direct deposit advance loans and 

21 high-cost online installment loans; 

22 (5) cash-strapped consumers pay on average 

23 400 percent annual interest for payday loans, 300 

24 percent annual interest for car title loans, up to 


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1 3,500 percent for bank overdraft loans, and triple2 digit rates for online installment loans; 

3 (6) a national maximum interest rate that in4 cludes all forms of fees and closes all loopholes is 

5 necessary to eliminate such predatory lending; and 

6 (7) alternatives to predatory lending that en7 courage small dollar loans with minimal or no fees, 

8 installment payment schedules, and affordable re9 payment periods should be encouraged. 

10 SEC. 3. NATIONAL MAXIMUM INTEREST RATE. 

11 Chapter 2 of the Truth in Lending Act (15 U.S.C. 

12 1631 et seq.) is amended— 

13 (1) by adding at the end the following: 

14 ‘‘SEC. 140B. MAXIMUM RATES OF INTEREST. 

15 ‘‘(a) IN GENERAL.—Notwithstanding any other pro16 vision of law, no creditor may make an extension of credit 

17 to a consumer with respect to which the fee and interest 

18 rate, as defined in subsection (b), exceeds 36 percent. 

19 ‘‘(b) FEE AND INTEREST RATE DEFINED.— 

20 ‘‘(1) IN GENERAL.—For purposes of this sec21 tion, the fee and interest rate includes all charges 

22 payable, directly or indirectly, incident to, ancillary 

23 to, or as a condition of the extension of credit, in24 cluding— 


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1 ‘‘(A) any payment compensating a creditor 

2 or prospective creditor for— 

3 ‘‘(i) an extension of credit or making 

4 available a line of credit, such as fees con5 nected with credit extension or availability 

6 such as numerical periodic rates, annual 

7 fees, cash advance fees, and membership 

8 fees; or 

9 ‘‘(ii) any fees for default or breach by 

10 a borrower of a condition upon which cred11 it was extended, such as late fees, creditor12 imposed not sufficient funds fees charged 

13 when a borrower tenders payment on a 

14 debt with a check drawn on insufficient 

15 funds, overdraft fees, and over limit fees; 

16 ‘‘(B) all fees which constitute a finance 

17 charge, as defined by rules of the Bureau in ac18 cordance with this title; 

19 ‘‘(C) credit insurance premiums, whether 

20 optional or required; and 

21 ‘‘(D) all charges and costs for ancillary 

22 products sold in connection with or incidental to 

23 the credit transaction. 

24 ‘‘(2) TOLERANCES.— 


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1 ‘‘(A) IN GENERAL.—With respect to a 

2 credit obligation that is payable in at least 3 

3 fully amortizing installments over at least 90 

4 days, the term ‘fee and interest rate’ does not 

5 include— 

6 ‘‘(i) application or participation fees 

7 that in total do not exceed the greater of 

8 $30 or, if there is a limit to the credit line, 

9 5 percent of the credit limit, up to $120, 

10 if— 

11 ‘‘(I) such fees are excludable 

12 from the finance charge pursuant to 

13 section 106 and regulations issued 

14 thereunder; 

15 ‘‘(II) such fees cover all credit 

16 extended or renewed by the creditor 

17 for 12 months; and 

18 ‘‘(III) the minimum amount of 

19 credit extended or available on a cred20 it line is equal to $300 or more; 

21 ‘‘(ii) a late fee charged as authorized 

22 by State law and by the agreement that 

23 does not exceed either $20 per late pay24 ment or $20 per month; or 


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1 ‘‘(iii) a creditor-imposed not sufficient 

2 funds fee charged when a borrower tenders 

3 payment on a debt with a check drawn on 

4 insufficient funds that does not exceed 

5 $15. 

6 ‘‘(B) ADJUSTMENTS FOR INFLATION.— 

7 The Bureau may adjust the amounts of the tol8 erances established under this paragraph for in9 flation over time, consistent with the primary 

10 goals of protecting consumers and ensuring 

11 that the 36 percent fee and interest rate limita12 tion is not circumvented. 

13 ‘‘(c) CALCULATIONS.— 

14 ‘‘(1) OPEN END CREDIT PLANS.—For an open 

15 end credit plan— 

16 ‘‘(A) the fee and interest rate shall be cal17 culated each month, based upon the sum of all 

18 fees and finance charges described in subsection 

19 (b) charged by the creditor during the pre20 ceding 1-year period, divided by the average 

21 daily balance; and 

22 ‘‘(B) if the credit account has been open 

23 less than 1 year, the fee and interest rate shall 

24 be calculated based upon the total of all fees 

25 and finance charges described in subsection 


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1 (b)(1) charged by the creditor since the plan 

2 was opened, divided by the average daily bal3 ance, and multiplied by the quotient of 12 di4 vided by the number of full months that the 

5 credit plan has been in existence. 

6 ‘‘(2) OTHER CREDIT PLANS.—For purposes of 

7 this section, in calculating the fee and interest rate, 

8 the Bureau shall require the method of calculation 

9 of annual percentage rate specified in section 

10 107(a)(1), except that the amount referred to in 

11 that section 107(a)(1) as the ‘finance charge’ shall 

12 include all fees, charges, and payments described in 

13 subsection (b)(1) of this section. 

14 ‘‘(3) ADJUSTMENTS AUTHORIZED.—The Bu15 reau may make adjustments to the calculations in 

16 paragraphs (1) and (2), but the primary goals of 

17 such adjustment shall be to protect consumers and 

18 to ensure that the 36 percent fee and interest rate 

19 limitation is not circumvented. 

20 ‘‘(d) DEFINITION OF CREDITOR.—As used in this 

21 section, the term ‘creditor’ has the same meaning as in 

22 section 702(e) of the Equal Credit Opportunity Act (15 

23 U.S.C. 1691a(e)). 

24 ‘‘(e) NO EXEMPTIONS PERMITTED.—The exemption 

25 authority of the Bureau under section 105 shall not apply 


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1 to the rates established under this section or the disclosure 

2 requirements under section 127(b)(6). 

3 ‘‘(f) DISCLOSURE OF FEE AND INTEREST RATE FOR

4 CREDIT OTHER THAN OPEN END CREDIT PLANS.—In 

5 addition to the disclosure requirements under section 

6 127(b)(6), the Bureau may prescribe regulations requiring 

7 disclosure of the fee and interest rate established under 

8 this section. 

9 ‘‘(g) RELATION TO STATE LAW.—Nothing in this 

10 section may be construed to preempt any provision of 

11 State law that provides greater protection to consumers 

12 than is provided in this section. 

13 ‘‘(h) CIVIL LIABILITY AND ENFORCEMENT.—In addi14 tion to remedies available to the consumer under section 

15 130(a), any payment compensating a creditor or prospec16 tive creditor, to the extent that such payment is a trans17 action made in violation of this section, shall be null and 

18 void, and not enforceable by any party in any court or 

19 alternative dispute resolution forum, and the creditor or 

20 any subsequent holder of the obligation shall promptly re21 turn to the consumer any principal, interest, charges, and 

22 fees, and any security interest associated with such trans23 action. Notwithstanding any statute of limitations or 

24 repose, a violation of this section may be raised as a matVerDate Mar 15 2010 02:17 Jul 22, 2014 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H5130.IH H5130

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1 ter of defense by recoupment or setoff to an action to col2 lect such debt or repossess related security at any time. 

3 ‘‘(i) VIOLATIONS.—Any person that violates this sec4 tion, or seeks to enforce an agreement made in violation 

5 of this section, shall be subject to, for each such violation, 

6 1 year in prison and a fine in an amount equal to the 

7 greater of— 

8 ‘‘(1) 3 times the amount of the total accrued 

9 debt associated with the subject transaction; or 

10 ‘‘(2) $50,000. 

11 ‘‘(j) STATE ATTORNEYS GENERAL.—An action to en12 force this section may be brought by the appropriate State 

13 attorney general in any United States district court or any 

14 other court of competent jurisdiction within 3 years from 

15 the date of the violation, and such attorney general may 

16 obtain injunctive relief.’’; and 

17 (2) in the table of contents for such chapter, by 

18 adding after the item relating to section 140A the 

19 following new item: 

‘‘140B. Maximum rates of interest.’’. 

20 SEC. 4. DISCLOSURE OF FEE AND INTEREST RATE FOR 

21 OPEN END CREDIT PLANS. 

22 Section 127(b)(6) of the Truth in Lending Act (15 

23 U.S.C. 1637(b)(6)) is amended by striking ‘‘the total fi24 nance charge expressed’’ and all that follows through the 

25 end of the paragraph and inserting ‘‘the fee and interest 


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1 rate, displayed as ‘FAIR’, established under section 

2 140B.’’. 

Æ 


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