Consumers Spared in Relief Bill

Consumers who need access to credit during the coronavirus crisis and other emergencies faced a very close call last week when some in Congress tried to sneak a provision into the COVID-19 economic rescue package that would have limited options for consumer cash and credit at the worst possible time. Policymakers who understand the devastating impact so-called rate caps have on workers and families ensured the coronavirus rescue package did not include one.

While consumers were spared for the moment, as Congress considers additional initiatives to rescue the U.S. economy, it’s clear Speaker Nancy Pelosi and House progressives will not, to paraphrase Rahm Emanuel, let the global COVID-19 crisis go to waste.

Speaker Pelosi and her followers doubled down on legislative proposals full of billions of dollars of handouts and subsidies, despite intense criticism for their previous bloated, bailout-rich coronavirus “relief” packages, now known as #coronapork. Members of Congress, analysts, watchdog groups and many others sounded the alarm about giveaways to special interests and progressive pet projects such as the Green New Deal, the USPS, student debt forgiveness and financial “reform” wish list items that would hurt the very consumers their supporters claim they want to help.

I wrote last month about how the American public is being deceived into supporting leftist consumer lending policies under the guise of “military and veteran protections,” and true to form, House Financial Services Committee progressives tried unsuccessfully to sneak this pet financial services initiative into the COVID-19 response package. Senate Banking Democrats proposed a “Coronavirus Relief” 36% rate cap on all consumer loans, while the House version would cripple non-bank lenders by prohibiting them from collecting money from borrowers for months.

California has been one of the hardest-hit states in the nation with the coronavirus. Thousands of COVID-19 cases have been confirmed and dozens have tragically died. Unfortunately, for consumers in the Golden State, a new state rate-cap law went into effect earlier this year that will severely restrict their access to credit at one of the worst possible moments. With government-mandated stayat-home orders, a majority of employers are banned from opening their doors, and workers ready and able to work are banned from working.

There’s no question these orders will save lives – which is and should be our first priority. But what about the families facing economic hardships through no fault of their own? Due to the California legislature’s ill-advised, and now ill-timed, rate cap law, Californians have fewer options to get the credit they might need for rent, food, utilities and other essentials to weather the coronavirus storm.

California policymakers aren’t the only ones making bad decisions for their consumers. Virginia and Ohio have also passed or are close to passing rate cap laws that would make scarce credit access even scarcer in these states. Congress should not follow in their footsteps now or after American life and our economy recovers. Even before the coronavirus crisis, reports showed 40% of Americans did not have funds to cover a $400 emergency. Now the emergency is greater than any of us could have imagined, and consumers in some states have fewer options to meet the credit challenges it has created.

Make no mistake – it appears that we are headed for a recession or worse. Restricting access to credit will exacerbate the financial impact of an economic downturn for millions of American families. Now is not the time for back room deals and special interest giveaways. Now is the time for real solutions. Restrictions on access to credit would decimate the innovative non-bank financial institutions that are built on the notion of providing financial services to all Americans, regardless of socioeconomic status or credit history.

As Congress considers additional coronavirus relief packages, it is critical to resist any attempt by progressive liberals to write themselves and their donors a blank check for a of social and corporate reforms that have nothing whatsoever to do with America’s unfolding medical and economic crisis.

Now is the time for everyone, regardless of their political party, to exhibit leadership and restraint to resuscitate the economy, create jobs, and save lives.

Ray Haynes is a former California legislator and served as National Chairman of the American Legislative Exchange Council.