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Capping Consumer Lending Rates During Coronavirus Crisis Hurts Consumers

The opinions expressed by columnists are their own and do not necessarily represent the views of
AP Photo/John Locher

Now is not the time for the government to change the law in a way that will hurt consumers.

At a time when people are in need of cash and loans to help make ends meet, liberal Senators are trying to change policy in a way that will cut off access to lending. Congress is in the process of giving away free money to every distressed corporation and American worker in the pending stimulus plan, yet some are trying to change law in a way that will cut off access to cash for Americans most in need.


Two liberal Senators are trying to use the pending massive coronavirus stimulus bill to change policy in a way that will hurt those in need of loans. Senators Sherrod Brown (D-OH) and Chris Van Hollen (D-MD) announced an effort to impose a temporary cap to consumer lending rates at 36% during the outbreak. Senator Brown said of the legislation, “during this time of crisis, American consumers and small business owners need support” and “should not be preyed upon by unscrupulous lenders and loan sharks seeking to capitalize on those most in need.”  The fact of the matter is that cutting off small dollar short-term loans to people most in need might lead to a person in distress not being able to fix a car, pay rent, or buy groceries for a week.

The federal government is working on a plan estimated to cost about $1.8 trillion to provide help toe corporations, small business and individuals. Politico reports, “Republicans are also pushing for $250 billion in direct cash payments to workers. Under the original GOP proposal, individuals and families would receive $1,200 and $2,400 in direct cash payments, depending on their income level.”  Those cash payments may take time to get to those in need, therefore it makes sense to leave the short-term loan opportunities in place.

These Senators are trying to use the coronavirus stimulus to change a policy that they have been unable to change during normal circumstances. This legislation was not drafted up to fight the coronavirus. The original legislation was introduced late last year, but the Senators changed a few words in that legislation to apply it to the coronavirus emergency. These Senators are making believe they are trying to address a problem created by the coronavirus, when in actuality they are trying to wedge in a policy change to this legislation.


A quote widely attributed to Rahm Emanuel, former Chief of Staff to President Bill Clinton once said, “you never let a serious crisis go to waste.” In other words, when there is an opportunity to hijack legislation to put in a pet project, do it, because you could not do it under normal circumstances.  This is not a time for Members of Congress to load up this massive bill with pet issues that they can’t pass when there is no crisis.

This is the most important time for consumers to have access to loan authorities.  Our citizenry does not have the privilege of the banks to show up at the Federal Reserve and ask for no interest loans – they live in the real world.  A real world where they may need emergency access to credit and they have to pay a higher rate for that access. The alternative is no access to credit and the people the most in need not getting any help.   We all know that the anticipated checks from the federal government will take time and consumers might need a band aid loan awaiting that cash.

In typical fashion, liberals claim to want to help the little guy, yet they are passing legislation that will hurt the very people they claim they are helping. The coronavirus crisis is not the time for a change to law that these progressives can’t get during normal times. Congress should stand firm and only add provisions to the coronavirus stimulus plan that relate to the virus’ economic impact.


Beau Rothschild is the founder of Rothschild Policy and Politics, former congressional chief of staff, and former outreach director for the Committee on House Administration.

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