Sen. Bernie Sanders (I-Vt.) is teaming up with Rep. Alexandria Ocasio-Cortez (D-N.Y.) on a plan to cut the fees that Americans pay on their credit card bills.
Sanders’ proposal, which he and Ocasio-Cortez unveiled on Thursday, is the Vermont senator’s answer to an economic concern that has also been highlighted by Sen. Elizabeth Warren (D-Mass.), who is challenging Sanders in her own bid for the Democratic presidential nomination. Warren has lent her support to another plan to restrict credit card interest rates.
Tackling high rates may also be a way for 2020 contenders to differentiate themselves from former Vice President Joe Biden, who is leading in the polls. Warren last month took a jab at Biden for being "on the side of the credit card companies" in bankruptcy legislation he supported as a Delaware senator.
The lawmakers want to set a nationwide 15 percent cap on the rate of interest that consumers can be charged for credit card debt and other loans. They called current rates — which they say can run as high as 30 percent — "extortion and loan sharking."
They also want to allow the U.S. Postal Service to compete with banks by offering financial services to consumers such as checking and savings accounts, low-interest loans and check cashing, a move that would put the giant agency in competition with the nation’s banks.
Warren, whose political rise was built on her push to protect consumers from Wall Street abuses, has also supported restrictions on credit card interest rates.
The progressive icon is co-sponsoring a bill introduced by Sen. Sheldon Whitehouse (D-R.I.) that would require credit card companies to abide by interest rate caps set by states where their customers reside.
Warren has also called for the Postal Service to expand its offerings of financial products. Sen. Kirsten Gillibrand (D-N.Y.) has offered her own "postal banking" bill.
The banking industry will fight the interest rate caps and potential competition from the Postal Service.
Consumer Bankers Association President and CEO Richard Hunt said, "arbitrary, one-size-fits-all caps would make all loans ranging from home mortgages to auto loans to college loans harder for Americans with lower credit scores or non-traditional sources of income to receive."
American Bankers Association spokesperson Jeff Sigmund said: “Today consumers benefit from a highly competitive and vibrant credit market. It would be a mistake for the government to artificially limit those choices. This specific proposal will only harm consumers by restricting access to credit for those who need it the most and driving them toward less regulated, more costly alternatives.”