Attorney General Martha Coakley joined 40 attorneys general around the country to urge Congress to oppose a bill that would take away states’ authority to crack down on abusive payday lenders.
In a letter, the attorneys general warned about what they called the potential negative effects of the Consumer Credit Access, Innovation and Modernization Act, which is designed to establish federal standards for nonbank lenders.
“This proposal would eliminate crucial protections for consumers in Massachusetts and limit our authority to enforce state laws that govern certain financial services companies,” Coakley said. “I urge Congress to reject this bill and let the states continue to protect consumers from abusive and predatory practices by short term lenders.”
Payday lenders advance short-term loans, typically with high interest rates, on the agreement that they are repaid when the borrower receives his or her next paycheck.
Coakley said the bill, which is before a House subcommittee, would give payday lenders and others the ability to obtain a federal charter and thus sidestep more stringent state laws. Groups representing the lenders have testified that they meet a need for the millions of Americans who do not have bank accounts and who need lending services.