Your Money

Bankers Worry About Predatory Lending Law

  • Playlist
  • Download
  • Embed
    <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

A new law designed to protect military families from predatory lenders is facing criticism. The measure was signed into law last week. But some mainstream bankers are concerned the law will affect them unfairly.


On Fridays, we focus on your money.

Today, cracking down on payday loans. A new law designed to protect military families from predatory lenders is under fire. Some bankers want Congress to reconsider the measure, which was signed into law last week.

NPR's Scott Horsley reports.

SCOTT HORSLEY: The new law caps the interest rate that payday lenders and others can charge military families at 36 percent. Military leaders press for the crackdown. Mike Calhoun, who heads the Center For Responsible Lending, says payday loans with interest rates of 400 percent or more, have become a growing concern for the nation's fighting forces.

Mr. MIKE CALHOUN (Head, The Center For Responsible Lending): The base commanders found that many families were getting trapped in payday loans, and that was supposed to burden for the families, and a distraction for the soldiers in carrying out their duties, service members who are actually losing their security clearance because of having these debt problems.

HORSLEY: One big payday lender, Advance America, has already stopped making loans to the military. And an industry trade group warns lenders can't afford to make small loans if interest is capped at 36 percent. Calhoun is not too worried.

Mr. CALHOUN: Even high priced credit cards have interest rates well below 36 percent. So there will still be plenty of credit available.

HORSLEY: Some mainstream banks are concerned the new law could affect them, if late fees were to be treated as interest for example. Calhoun argues, those concerns can be addressed through rule making, and says there's no need to reopen debate in Congress.

Scott Horsley, NPR News, San Diego.

Copyright © 2006 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR’s programming is the audio.



Please keep your community civil. All comments must follow the Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

NPR thanks our sponsors

Become an NPR sponsor

Support comes from