I 
111TH CONGRESS 
1ST SESSION H. R. 1608 
To amend the Truth in Lending Act to establish a national usury rate 
for consumer credit transactions, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 19, 2009 
Ms. SPEIER (for herself and Mr. DELAHUNT) 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, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Protecting Consumers 
from Unreasonable Credit Rates Act of 2009’’. 
SEC. 2. FINDINGS. 
The Congress finds as follows: 
(1) Attempts have been made to prohibit usu-
rious interest rates in America since colonial times. 
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(2) At the State level, 15 States and the Dis-
trict of Columbia have enacted broadly applicable 
usury laws that protect borrowers from high-cost 
payday loans and many other forms of credit, while 
34 States and the District of Columbia have limited 
annual interest rates to 36 percent or less for 1 or 
more types of consumer credit. 
(3) At the Federal level, in 2006, the Congress 
enacted a Federal 36 percent annualized usury cap 
for service members and their families for covered 
credit products, as defined by the Department of 
Defense, which curbed payday, car title, and tax re-
fund lending around military bases. 
(4) Notwithstanding such attempts to curb 
predatory lending, high-cost lending persists in all 
50 States due to loopholes in State laws, safe harbor 
laws for specific forms of credit, and the exportation 
of unregulated interest rates permitted by preemp-
tion. 
(5) Due to the lack of a comprehensive Federal 
usury cap, consumers annually pay approximately 
$17,500,000,000 for high-cost overdraft loans, as 
much as $8,600,000,000 for storefront and online 
payday loans, and nearly $900,000,000 for tax re-
fund anticipation loans. 
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(6) Cash-strapped consumers pay on average 
400 percent annual interest for payday loans, 300 
percent annual interest for car title loans, up to 
3,500 percent for bank overdraft loans, 50 to 500 
percent annual interest for loans secured by ex-
pected tax refunds, and higher than 50 percent an-
nual percentage interest for credit cards that charge 
junk fees. 
(7) A national maximum interest rate that in-
cludes all forms of fees and closes all loopholes is 
necessary to eliminate such predatory lending. 
(8) Alternatives to predatory lending that en-
courage small dollar loans with minimal or no fees, 
installment payment schedules, and affordable re-
payment periods should be encouraged. 
SEC. 3. NATIONAL MAXIMUM INTEREST RATE. 
(a) IN GENERAL.—Chapter 2 of the Truth in Lend-
ing Act (15 U.S.C. 1631 et seq.) is amended by adding 
at the end the following new section: 
‘‘SEC. 140A. MAXIMUM RATES OF INTEREST. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, no creditor may extend of credit to a con-
sumer for which the fee and interest rate, as defined in 
subsection (b), exceeds 36 percent. 
‘‘(b) FEE AND INTEREST RATE DEFINED.— 
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‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘fee and interest rate’ includes all 
charges payable, directly or indirectly, incident to, 
ancillary to, or as a condition of the extension of 
credit, including— 
‘‘(A) any payment compensating a creditor 
or prospective creditor for— 
‘‘(i) an extension of credit or making 
available a line of credit, such as fees con-
nected with credit extension or availability 
such as numerical periodic rates, annual 
fees, cash advance fees, and membership 
fees; or 
‘‘(ii) any fees for default or breach by 
a borrower of a condition upon which cred-
it was extended, such as late fees, creditor- 
imposed not sufficient funds fees charged 
when a borrower tenders payment on a 
debt with a check drawn on insufficient 
funds, overdraft fees, and over limit fees; 
‘‘(B) all fees which constitute a finance 
charge, as defined by rules of the Board in ac-
cordance with this title; 
‘‘(C) credit insurance premiums, whether 
optional or required; and 
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‘‘(D) all charges and costs for ancillary 
products sold in connection with or incidental to 
the credit transaction. 
‘‘(2) TOLERANCES.— 
‘‘(A) IN
GENERAL.—With respect to a 
credit obligation that is payable in at least 3 
fully amortizing installments over at least 90 
days, the term ‘fee and interest rate’ does not 
include— 
‘‘(i) application or participation fees 
that in total do not exceed the greater of 
$30 or, if there is a limit to the credit line, 
5 percent of the credit limit, up to $120, 
if— 
‘‘(I) such fees are excludable 
from the finance charge pursuant to 
section 106 and regulations issued 
under such section; 
‘‘(II) such fees cover all credit 
extended or renewed by the creditor 
for 12 months; and 
‘‘(III) the minimum amount of 
credit extended or available on a cred-
it line is equal to $300 or more; 
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‘‘(ii) a late fee charged as authorized 
by State law and by the agreement that 
does not exceed either $20 per late pay-
ment or $20 per month; or 
‘‘(iii) a creditor-imposed not sufficient 
funds fee charged when a borrower tenders 
payment on a debt with a check drawn on 
insufficient funds that does not exceed 
$15. 
‘‘(B) ADJUSTMENTS
FOR
INFLATION.— 
The Board may adjust the amounts of the tol-
erances established under this paragraph for in-
flation over time, consistent with the primary 
goals of protecting consumers and ensuring 
that the 25 percent fee and interest rate limita-
tion is not circumvented. 
‘‘(c) CALCULATIONS.— 
‘‘(1) OPEN END CREDIT PLANS.—For an open 
end consumer credit plan— 
‘‘(A) the fee and interest rate shall be cal-
culated each month, based upon the sum of all 
fees and finance charges described in subsection 
(b) charged by the creditor during the pre-
ceding 1-year period, divided by the average 
daily balance; and 
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‘‘(B) if the credit account has been open 
less than 1 year, the fee and interest rate shall 
be calculated based upon the total of all fees 
and finance charges described in subsection 
(b)(1) charged by the creditor since the plan 
was opened, divided by the average daily bal-
ance, and multiplied by the quotient of 12 di-
vided by the number of full months that the 
credit plan has been in existence. 
‘‘(2) OTHER CREDIT PLANS.—For purposes of 
this section, in calculating the fee and interest rate, 
the Board shall require the method of calculation of 
annual 
percentage 
rate 
specified 
in 
section 
107(a)(1), except that the amount referred to in 
that section 107(a)(1) as the ‘finance charge’ shall 
include all fees, charges, and payments described in 
subsection (b)(1). 
‘‘(3) ADJUSTMENTS AUTHORIZED.—The Board 
may make adjustments to the calculations in para-
graphs (1) and (2), but the primary goals of such 
adjustment shall be to protect consumers and to en-
sure that the 25 percent fee and interest rate limita-
tion is not circumvented. 
‘‘(d) DEFINITION OF CREDITOR.—As used in this 
section, the term ‘creditor’ has the same meaning as in 
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section 702(e) of the Equal Credit Opportunity Act and 
the definition in section 103 shall not apply. 
‘‘(e) NO EXEMPTIONS PERMITTED.—The exemption 
authority of the Board under section 105 shall not apply 
to the rates established under this section or the disclosure 
requirements under section 127(b)(6). 
‘‘(f) DISCLOSURE OF FEE AND INTEREST RATE FOR 
CREDIT OTHER THAN OPEN END CREDIT PLANS.—In 
addition to the disclosure requirements under section 
127(b)(6), the Board may prescribe regulations requiring 
disclosure of the fee and interest rate established under 
this section in addition to or instead of annual percentage 
rate disclosures otherwise required under this title. 
‘‘(g) RELATION TO STATE LAW.—No of this section 
may be construed as preempting any provision of State 
law that provides greater protection to consumers than is 
provided in this section. 
‘‘(h) CIVIL LIABILITY AND ENFORCEMENT.— 
‘‘(1) IN
GENERAL.—In addition to remedies 
available to the consumer under section 130(a)— 
‘‘(A) any payment compensating a creditor 
or prospective creditor, to the extent that such 
payment is a transaction made in violation of 
this section, shall be null and void, and not en-
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forceable by any party in any court or alter-
native dispute resolution forum; and 
‘‘(B) the creditor or any subsequent holder 
of the obligation shall promptly return to the 
consumer any principal, interest, charges, and 
fees, and any security interest associated with 
such transaction. 
‘‘(2) DEFENSE
TO
ACTION.—Notwithstanding 
any statute of limitations or repose, a violation of 
this section may be raised as a matter of defense by 
recoupment or setoff to an action to collect any debt 
resulting from a transaction made in violation of 
this section or to repossess related security at any 
time. 
‘‘(i) VIOLATIONS.—Any person that violates this sec-
tion, or seeks to enforce an agreement made in violation 
of this section, shall be subject to, for each such violation, 
1 year in prison, or a fine in an amount equal to the great-
er of— 
‘‘(1) 3 times the amount of the total accrued 
debt associated with the subject transaction; or 
‘‘(2) $50,000, 
or both. 
‘‘(j) STATE ATTORNEYS GENERAL.—An action to en-
force this section may be brought by the appropriate State 
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attorney general in any United States district court or any 
other court of competent jurisdiction within 3 years from 
the date of the violation, and such attorney general may 
obtain injunctive relief.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 2 of the Truth in Lending Act is amended 
by inserting after the item relating to section 140 the fol-
lowing new item: 
‘‘140A. Maximum rates of interest.’’. 
SEC. 4. DISCLOSURE OF FEE AND INTEREST RATE FOR 
OPEN END CREDIT PLANS. 
Section 127(b)(6) of the Truth in Lending Act (15 
U.S.C. 1637(b)(6)) is amended by striking ‘‘the total fi-
nance charge expressed’’ and all that follows through the 
end of the paragraph and inserting ‘‘the fee and interest 
rate, displayed as ‘FAIR’, established in accordance with 
section 140A.’’. 
Æ 
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