Public Favors 36% Cap On Consumer Loans, Survey Finds

U.S. House and Senate Weighing Such a Cap

WASHINGTON, March 30 /PRNewswire-USNewswire/ -- A CRL survey published today
finds high levels of support for an annual interest rate cap on consumer loans
of no higher than 36 percent. Three out of four Americans with an opinion
think that Congress should cap interest rates at some level, and 72 percent
think that level should be no higher than 36 percent.

Such a cap has been introduced in both the U.S. Senate and House as one
strategy for helping to restore the health of our economy and financial
systems. Senator Dick Durbin, (D-IL) introduced S500 in late February and
Representative Jackie Speier (D-CA) followed suit in the House last week,
introducing H.R. 1608.

The Center for Responsible Lending supports a 36 percent cap on annual
interest rates as a measure that would contribute to economic recovery efforts
by ending high-interest credit schemes that trap working families in debt. The
cap is the only reform that has been effective in stopping payday lenders from
trapping their customers in long-term debt at annual rates of 400 percent.

"A 36 percent cap on annual interest for consumer credit is a quick,
common-sense way to restore protections that have been severely compromised in
the consumer credit market," said CRL president Michael Calhoun. "It would
cost taxpayers nothing and plug a $5 billion hole in the wallets of working
families."

In the CRL survey, most respondents, 82 percent, voted in last year's
presidential election. Only 25 percent thought there should be no cap on
interest rates at all.

Congress passed a 36 percent cap in 2006 to protect active members of the
military after the Pentagon testified that payday loans were affecting
military readiness. Ohio, Arkansas, New Hampshire, and Arizona are among
states that recently revoked exemptions from usury caps their lawmakers had
given payday lenders. State lawmakers reimposed the usury cap after seeing
firsthand the harm payday lending inflicts on borrowers, who typically can't
escape quickly from such high-cost debt. But 35 states have yet to pass
reforms that stop such practices.

The federal measure would give all citizens an equal measure of protection
from what can only be described as legal loan-sharking, but also would allow
state lawmakers to set even stronger protections if they deemed it necessary.
Arkansas limits interest to 17 percent within its state constitution, New York
makes interest above 25 percent a criminal offense, and Ohio passed a 28
percent cap last year, which was affirmed by voters in a ballot measure in
November. A federal cap would not alter these state protections.

Payday loans are marketed as an advance on a borrower's next paycheck, but the
terms of these small loans are designed to keep borrowers paying high interest
payments over long periods of time without paying off the loan or even paying
down the principal.

"Recent research links predatory products like payday lending to bankruptcy,
closed bank accounts, credit card delinquency and a long list of other
financial hardships," Calhoun said. "There is really no excuse for failing to
stop these abuses now, for the sake of working families across the nation, and
for the sake of our economic stability. We see where lax consumer protections
led us in the mortgage market. We should learn from that hard-taught lesson."

For more details on the survey please visit:
http://www.responsiblelending.org/issues/payday/reports/interest-rate-survey.html.

About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research and
policy organization dedicated to protecting homeownership and family wealth by
working to eliminate abusive financial practices. CRL is affiliated with
Self-Help, one of the nation's largest community development financial
institutions.

SOURCE Center for Responsible Lending

Kathleen Day, +1-202-349-1871, kathleen.day@responsiblelending.org, or
Charlene Crowell, +1-919-313-8523, Charlene.crowell@responsiblelending.org,
both of Center for Responsible Lending