In the 1980s, the rent-to-own industry convinced more than 45 state legislatures to adopt its preferred safe-harbor legislation--treating week-to-week contracts as renewable leases, not as purchases over time--thus exempting the business from state small-loan usury ceilings
, retail installment sales acts, and other credit sale laws.
The Italian central bank would need to set the usury ceiling
far higher--at 300 percent over the past quarter's average--to make the market move.
Metropolitan has yet to raise any of its rates above the state's usury ceiling
, Bridges said.
NCUA Director of Public and Congressional Affairs John McKechnie said the agency didn't attempt to address state-chartered credit unions that have federal insurance because the usury ceiling
only applies to federal credit unions.
Market rates tend to be below the stare's usury ceiling
of the federal discount rate plus 5 percent."
A main sticking point with payday loan alternatives, he noted, is CUs' 18% APR usury ceiling
. Additionally, credit unions should offer the product without trapping the member into the exact same cycle the payday lenders do, he said.
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.
This article will examine whether deregulated usury ceilings
and the credit card industry's consequent rise have played a symbiotic role in undermining American citizens' financial health.