U.S. Sen. Dick Durbin (D-Ill.) is trying to put a stop to high-interest consumer loans. The so-called payday loans carry fees equivalent to interest rates of 300 percent or more. Durbin wants interest limited.
“I’ve introduced legislation to cap the interest rate at 36 percent. If you can’t make a living with 36 percent annual interest rate, maybe you ought to take up some other profession,” he said.
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Durbin doubts his bill will become law, but he says he is working through the regulatory channels of the Federal Reserve, the FDIC, the Comptroller of the Currency and the Consumer Financial Protection Bureau, because large banks are involved in issuing these loans, which he says trap borrowers, typically low-income borrowers, in an endless cycle of debt.
Thirty-six percent is the maximum interest rate already on the books for loans to military families.