Federal credit unions could be subject to additional caps on credit card interest rates if a group of Democratic senators gets its way.
Those rates are currently capped at 18% by the NCUA and could be subject to state caps if Congress passes a bill that mandates that federally chartered financial institutions be bound by lending laws of any state in which they have customers.
Currently, card issuers are only subject to the interest rate laws of the state in which they are incorporated. The new bill would reverse a 1978 U.S. Supreme Court decision.
“It’s time to stop Wall Street banks and their credit card subsidiaries from taking advantage of struggling families in Rhode Island and across the nation,” said Sen. Sheldon Whitehouse (D-R.I.) the measure’s main sponsor. “This legislation would restore historic, long-standing states’ rights to protect consumers from improperly high interest rates.’’
The bill has seven cosponsors.