Veterans and Consumers Fair Credit Act
Bill: S.2508 | Sponsor: Sen. Reed, Jack (D-RI)
Policy area: Finance and Financial Sector

Summary:
Veterans and Consumers Fair Credit Act
This bill applies certain military consumer credit protections to all consumers. Specifically, the bill caps the interest rate on extensions of consumer credit at 36%.

To amend the Truth in Lending Act to extend the consumer credit 
     protections provided to members of the Armed Forces and their 
    dependents under title 10, United States Code, to all consumers.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans and Consumers Fair Credit 
Act''.

SEC. 2. LIMITATIONS ON CONSUMER CREDIT AND MAXIMUM RATES OF INTEREST.

    (a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C. 
1631 et seq.) is amended by adding at the end the following:
``Sec. 140B. Limitations on consumer credit and maximum rates of 
              interest
    ``(a) Application of the Military Lending Act.--
            ``(1) In general.--Except as provided in paragraph (2), 
        section 987(b) of title 10, United States Code (commonly 
        referred to as the `Military Lending Act'), shall apply to a 
        creditor who extends consumer credit to a consumer to the same 
        extent as such section applies to a creditor who extends 
        consumer credit to a covered member or a dependent with respect 
        to a covered member (as those terms are defined in such section 
        987).
            ``(2) Exceptions.--Paragraph (1) shall not apply to--
                    ``(A) a residential mortgage;
                    ``(B) a loan procured in the course of purchasing a 
                car when that loan is offered for the express purpose 
                of financing the purchase and is secured by the car; or
                    ``(C) a loan made by a Federal credit union, as 
                that term is defined in section 101 of the Federal 
                Credit Union Act (12 U.S.C. 1752), subject to the usury 
                limit provided under section 107(5)(A) of the Federal 
                Credit Union Act (12 U.S.C. 1757(5)(A)), as implemented 
                by the National Credit Union Administration Board.
    ``(b) No Exemptions Permitted.--The exemption authority of the 
Bureau under section 105(f) shall not apply with respect to this 
section.
    ``(c) Calculation of the Annual Percentage Rate for Open-End 
Credit.--
            ``(1) In general.--For purposes of this section, the annual 
        percentage rate applicable to an open-end credit plan shall be 
        calculated under section 107(a)(2), subject to adjustments to 
        the amount considered a finance charge, as provided in the 
        rules issued by the Secretary of Defense on July 22, 2015, to 
        carry out section 987 of title 10, United States Code.
            ``(2) Exception to finance charge calculation.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                for consumer credit extended in a credit card account 
                under an open-end (not home-secured) consumer credit 
                plan, a bona fide fee other than a periodic rate is not 
                a charge required to be included within the finance 
                charge for purposes of this section if the fee is 
                assessed in compliance with section 127(n).
                    ``(B) Limitation.--Subparagraph (A) shall not apply 
                to--
                            ``(i) any credit insurance premium or fee, 
                        including any charge for single premium credit 
                        insurance, any fee for a debt cancellation 
                        contract, or any fee for a debt suspension 
                        agreement; or
                            ``(ii) any fee for a credit-related 
                        ancillary product sold in connection with the 
                        credit card account under an open-end (not 
                        home-secured) consumer credit plan.
    ``(d) Relation to State Law.--Nothing in this section may be 
construed to preempt any provision of State law that provides greater 
protection to consumers than is provided under this section.
    ``(e) Penalties and Remedies.--Section 987(f) of title 10, United 
States Code, shall apply to a creditor who extends consumer credit to a 
consumer in violation of this section to the same extent as such 
section 987(f) applies to a creditor who extends consumer credit to a 
covered member or a dependent with respect to a covered member (as 
those terms are defined in such section 987).
    ``(f) Preservation of State Enforcement.--
            ``(1) State attorneys general.--Not later than 3 years 
        after the date on which a violation of this section occurs, the 
        attorney general of a State (or an equivalent official) may 
        bring a civil action in the name of that State--
                    ``(A) in any district court of the United States 
                that is located in that State or in a State court that 
                is located in that State and that has jurisdiction over 
                the defendant; and
                    ``(B) to--
                            ``(i) enforce provisions of this section or 
                        rules issued under this section; and
                            ``(ii) secure remedies under provisions of 
                        this section or remedies otherwise provided 
                        under other law.
            ``(2) State regulators.--Not later than 3 years after the 
        date on which a violation of this section occurs, a State 
        regulator may bring a civil action or initiate another 
        appropriate proceeding to--
                    ``(A) enforce the provisions of this section or 
                regulations issued under this section with respect to 
                any entity that is, or is required to be, State-
                chartered, incorporated, licensed, or otherwise 
                authorized to do business under State law; and
                    ``(B) secure remedies under provisions of this 
                section or remedies otherwise provided under other 
                provisions of law with respect to an entity described 
                in subparagraph (A).
            ``(3) Notice requirement; additional regulations.--
        Subsections (b), (c), and (d) of section 1042 of the Consumer 
        Financial Protection Act of 2010 (12 U.S.C. 5552), shall apply 
        to a civil action or other appropriate proceeding brought or 
        initiated under paragraph (1) or (2) to the same extent as 
        those subsections apply to actions and other administrative and 
        regulatory proceedings described in subsection (a) of such 
        section 1042.
    ``(g) Regulations.--
            ``(1) In general.--Notwithstanding section 1027(o) of the 
        Consumer Financial Protection Act (12 U.S.C. 5517(o)), not 
        later than 1 year after the date of enactment of this section, 
        the Bureau, in consultation with the Secretary of Defense, 
        shall--
                    ``(A) issue rules carrying out this section; and
                    ``(B) notify Congress and the public, including on 
                the website of the Bureau, regarding the issuance of 
                the rules required under subparagraph (A).
            ``(2) Consistency.--The rules issued by the Bureau under 
        paragraph (1)--
                    ``(A) shall be consistent with rules issued by the 
                Secretary of Defense to carry out section 987 of title 
                10, United States Code; and
                    ``(B) may not provide lesser protection to 
                consumers than the protection afforded covered members, 
                as that term is defined in section 987 of title 10, 
                United States Code, in applicable provisions in the 
                rules issued by the Secretary of Defense on July 22, 
                2015, to carry out such section 987.''.
    (b) Clerical Amendment.--The table of contents for chapter 2 of the 
Truth in Lending Act is amended by adding at the end the following:

``140B. Limitations on consumer credit and maximum rates of 
                            interest.''.
    (c) Applicability.--The amendments made by subsection (a) shall 
apply to an extension of credit made after the earlier of--
            (1) the date on which the rules issued by the Bureau of 
        Consumer Financial Protection under subsection (g) of section 
        140B of the Truth in Lending Act, as added by subsection (a) of 
        this section, require compliance; and
            (2) the date that is 18 months after the date of enactment 
        of this Act.
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