“There is no reason a person should pay more than 15% interest in the United States,” Ocasio-Cortez, D-N.Y., said in a tweet confirming the proposal. “It’s common sense — in fact, we had these Usury laws until the 70s.”
The draft bill would set a 15 percent cap on credit card interest rates, with some allowance for exceptions in case of higher interest rates on deposits and elsewhere within the banking system. The two lawmakers explained their bill in a live video presentation Thursday afternoon.
“These predatory loans and high interest rates impact rural communities, they impact urban communities like those that I represent,” Ocasio-Cortez said. “In poorer and lower-income urban communities, there are way fewer banks per capita.”
“What happens when everyday banks start to charge higher and higher rates?” she said. “Essentially, your credit card becomes a payday loan.”
It’s being billed as the first major legislative effort by the freshman Democrat from New York City, paired with Sanders, the 2020 White House Hopeful and independent senator from Vermont — neither of whom have shied away from the “socialist” moniker.
“I have a radical idea: Maybe Congress should stand up for ordinary people,” Sanders said in an interview with the Washington Post ahead of the formal announcement. In that interview, he conceded the plan is not likely to gain traction with the current configuration of the Senate, where there is a Republican majority.
In a joint statement, the two liberal lawmakers called executives of credit card card banks ‘loan sharks’ for the interest rates that can be charged on credit cards, well in excess of 15-percent.
“Today’s modern-day loan sharks are no longer lurking on street corners, threatening violence to collect their payments,” the two lawmakers said in a fact sheet. “Today’s loan sharks wear expensive suits and work on Wall Street, where they make hundreds of millions of dollars in total compensation by charging sky-high fees and usurious interest rates, and head financial institutions like JP Morgan Chase, Citigroup, Bank of America, and American Express.”
Sanders also spoke about the next steps beyond this proposal, including renewing his call for banking access through the postal service.
“An additional crisis, but part of this whole situation, is that many poor people don’t have access to banking services because the big banks are not worried about somebody who, you know, makes 10 bucks an hour,” Sanders said during the video announcement.