Additionally, there needs to be a return to implementing usury ceilings
applicable to credit card interest rates that average a near across-the-board rate of twenty percent and above.
Similarly, usury ceilings
were not binding until the middle of the 1960s.
Under the bill, "rent-to-own can only be treated as a lease, not a purchase, and therefore any state laws dealing with credit sales, purchases over time, truth in lending, usury ceilings
, or disclosure of interest rates would be preempted.
A main sticking point with payday loan alternatives, he noted, is CUs' 18% APR usury ceiling
By the late 1960s, loan sharking had arisen to fill the gap in consumer credit--so much so that Paul Samuelson testified before the Massachusetts legislature to eliminate usury ceilings
and reduce loan sharks.
Critics say the technical distinction is designed to avoid state and federal credit laws such as the Truth in Lending Act that might subject the transactions to usury ceilings
and disclosures to consumers about such key items as the annual percentage rate of interest (APR).