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For Immediate Release

Media Contacts:

David Paulson, 410-576-6357

AG Gansler Urges Congress to Protect Consumers from Payday Lending Abuses
Proposal could preempt state laws, reduce oversight and undermine safeguards

Baltimore, MD ( Oct. 5, 2012) - Attorney General Douglas F. Gansler, joined today by 40 other attorneys general, urged Congress to oppose a bill preempting states' authority to protect consumers who are victimized by predatory high-cost, short-term lending practices. H.R. 6139, known as the "Consumer Credit Access, Innovation, and Modernization Act" preempts state licensing laws for nonbank financial services providers, including payday lenders, installment lenders, car-title lenders, prepaid-card issuers, check cashers and others.

"This bill protects payday predators, among other lenders, not the credit consumers of Maryland," said Attorney General Gansler. "The consumers who are victimized by these devious lending practices are often those who can least afford it."

Maryland is among the many states that have established their own framework of regulations to protect consumers from the risks associated with nonbank credit service providers. Maryland law puts caps on interest rates for small loans so that payday lenders cannot charge exorbitant interest rates and, therefore, they do not operate in Maryland. The proposed federal legislation would allow payday lenders to obtain a federal charter and sidestep these limits, allowing them to charge interest rates that exceed the Maryland caps.

Attorney General Gansler and other state officials warned House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell about the negative effects of H.R. 6139.

The bill would allow lenders to extend credit to consumers if there is a reasonable basis for believing the consumers can repay the loans, but without putting specific standards in place. The legislation also exempts loans with terms of one year or less from the disclosure requirements of the Truth in Lending Act and substitutes a cost metric. By preempting state laws, the proposed legislation would impede state efforts to immediately and directly protect consumers from harm.

This bill was assigned to the House Committee on Financial Services which will consider the legislation and determine whether to send it to the full House or Senate.

Also signing onto the letter were attorneys general from Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Vermont, Washington, West Virginia, Wisconsin and Wyoming.

To read the letter signed by Attorney General Gansler and 40 other attorneys general visit:


Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372
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