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The legislation calls for a 15 percent cap on credit card interest rates, with the ability of states to establish lower limits if they wish.
“A 15 percent cap on interest rates, it’s one of those things that might sound radical today, but we had these laws in half of the states in America up until the 1970s,” Ocasio-Cortez told reporters on Capitol Hill.
In a video message with Sanders, she said the idea actually isn’t radical since the United States had similar policies in place in the past.
Those caps were eliminated in the late 1970s.
The bill is called the Loan Shark Prevention Act, and is something Sanders has been promoting for years. It would penalize lenders for violations.
Sanders and Ocasio-Cortez said that, even after Wall Street was bailed out during the financial crisis, they are back to taking advantage of “working people” and gambling off of the economy.
Today, big banks can charge “extortion level interest rates to the poor,” Ocasio-Cortez said. Sanders added that Americans will pay $122 billion in interest in credit card interest this year.
According to data from Creditcards.com, as cited by The Washington Post, the median interest rate was 21.36 percent last week – compared with 12.62 percent 10 years ago.
“That means Americans are paying even more than that [21 percent],” Sanders noted, adding that banks borrow money from the Federal Reserve at a rate of 2.5 percent.
As part of the bill, Sanders and Ocasio-Cortez are also proposing postal banking – which would allow post offices to provide basic banking services, so that people do not have to turn to payday lenders.