A new bill introduced on Wednesday aims to change the way interest rates on loans are determined when they are transferred or sold in order to increase access to financial markets for low- and middle-income people.
Rep. Patrick McHenry, vice chairman of the House Financial Services Committee, and Rep. Gregory Meeks introduced the Protecting Consumers’ Access to Credit Act of 2017 in the House on July 19.
The bill would amend the Revised Statutes, the Home Owners’ Loan Act, the Federal Credit Union Act and the Federal Deposit Insurance Act to specify that the maximum interest rate set on loans when they are originated “shall remain valid with respect to such rate regardless of whether the loan is subsequently sold, assigned or otherwise transferred to a third party, and may be enforced by such third party notwithstanding any state law to the contrary.’’
McHenry introduced a nearly identical bill in 2016 that called for the above revision to be made to the Revised Statutes and the Federal Deposit Insurance Act only.
The Supreme Court refused to hear a case in 2016 about whether the National Bank Act, which preempts state laws regarding interest rates, maintains that preemption when loans are sold or transferred. In that case, a debt collector was sued for charging interest rates above the cap allowed by the debtor’s state. The U.S. Court of Appeals for the Second Circuit reversed an earlier decision and found that the debt collector’s were not pre-empted by the National Bank Act.