Lawmakers introduce flurry of banking legislation ahead of winter recess

WASHINGTON — Lawmakers introduced a number of bipartisan bills this week targeting various parts of the banking industry, part of a last-minute crop of bills put forward ahead of the holiday recess. 

The bills include measures to subject Industrial Loan Companies to similar rules and consumer protections as traditional banks, capping credit card interest rates at 36% and restricting credit reporting agencies’ ability to sell mortgage applicants’ contact information. 

The legislation represents months of work by lawmakers, who typically try to introduce and win support for their bills in the working period between August and holiday recess. Introducing the bills before lawmakers return to their home districts gives the legislators fodder for public events back home and gives the bills a better chance for inclusion on must-pass pieces of legislation that have been teed up for when Congress returns in January. 

Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking Committee, along with Sens. John Kennedy, R-La., Bob Casey, D-Penn., and Chris Van Hollen, D-Md., have reintroduced a bill that would make companies that acquire an ILC be subject to the same supervision by the Federal Reserve as any other bank holding company. 

“Letting Big Tech and commercial companies operate banks without proper oversight will only open doors for predatory lending, invasions of consumer privacy, and broader financial instability,” Brown said in a statement. “To protect consumers’ pocketbooks and ensure a strong banking system for Main Street, we need to ensure all banking institutions play by the same rules.” 

That bill has bipartisan support from a range of lawmakers and trade associations, including banking groups and community advocates like Americans for Financial Reform and the National Community Reinvestment Coalition. 

“Any entity seeking the benefits of bank ownership must be held to the same rules that apply to banks to prevent unacceptable risks to consumers, taxpayers and the existing financial framework,” said Greg Baer, President and CEO of the Bank Policy Institute, in a statement. 

Sens. Jack Reed, D-R.I.,  and Bill Hagerty, R-Tenn., have likewise introduced legislation that would restrict the sale of “trigger leads,” that occur when credit reporting agencies sell consumers’ contact information when they apply for a residential mortgage. That bill also has support from banking industry groups. 

“A mortgage application should not be public information,” ICBA President and CEO Rebeca Romero Rainey said. “ICBA and the nation’s community banks thank Sens. Reed and Hagerty for introducing the Homebuyers Privacy Protection Act to restrict the sale of trigger leads and give consumers more control over their private financial information and shield them from unwanted solicitations.”

Reed also has a bill out that would set a 36% rate cap, a longstanding effort on the Hill that has nonetheless run into political gridlock and has yet to advance past being introduced. Reed tied this year’s bill to the military Lending Act, which has already set a 36% rate cap for those in the military and their families. 

Support and opposition on the bill is similar to previous iterations of the legislation. Consumer groups applauded the reintroduction of the bill, while some industry groups came out against it, saying that it would cut off access to credit for some consumers. 

“Despite the baseless claims of success from proponents, data from multiple studies affirms that the Military Lending Act has made access to credit significantly more difficult for servicemembers and their families,” said Online Lenders Alliance executive director Andrew Duke, in a statement. “The MLA’s loan restrictions mean many servicemembers experience increased financial hardship as they are denied access to potential credit options and often forced into bad outcomes.”