The Marquette decision created a regulatory arbitrage possibility that set off a regulatory race to the bottom. Congress should act to close this loophole. There is a reasonable debate to be had on usury regulations, but that is one that should be held in legislatures, not determined by the Supreme Court's interpretation of a hoary statute. A 1970s interpretation of an 1863 law should not be what determines 21st century consumer credit regulation. Congress should permit the states, the laboratories of democracy, to go further than S.257 if they wish in regulating high-interest-rate consumer credit. This essential consumer protection power should be restored to the states.
S.257 offers an important protection to consumers and responsible creditors, eliminates an incentive to game the bankruptcy system, and encourages responsible lending. These protections will help ensure fairer, safer, and sounder consumer credit. Now, more than ever, consumers and creditors need reforms that will create a fair and sustainable credit system. I urge the Congress to pass S.257.