Exploiting people through high interest rates is wrong.
In a world of Wall Street excess, this simple idea now sounds foreign.
But for millennia it was basic justice.
“You shall not lend usury to your brother,” says Deuteronomy 23:19.
The Western world has taken this principle to heart.
Since the Roman Empire, nations implemented usury laws that severely limited interest rates on loans.
To give just one example, colonial Massachusetts capped interest rates at 6% for decades.
The times have changed. Our leaders have forgotten why these laws existed in the first place.
They forgot the wisdom of Abraham Lincoln and Theodore Roosevelt – that while workers and capital both have their rights, one should not be privileged over the other.
Instead, they went all out and turned our financial system over to big business.
Now we are reaping a bitter harvest. Interest rates on credit cards are at record levels.
Annual percentages have skyrocketed, with some as high as 36%.
The average is 24.45%; In comparison, the average a decade ago was less than 12%.
The total amount of credit card debt is more than $1 trillion – the highest amount in history.
Delinquency rates are at their highest level in a decade.
Compounding the problem is that President Joe Biden’s inflationary policies have pushed consumer prices into the stratosphere.
This started a vicious circle.
And as costs rise, Americans are forced to use their credit cards to cover basic needs like rent and groceries.
In an unsuccessful attempt to address the problem, the Federal Reserve has been raising interest rates higher and higher.
The banks passed these costs on to consumers.
American households have lost out: not only are they paying more for basic necessities, but they are now also paying to clean up the Biden administration’s financial mess.
This burden hits hardest the nearly 50% of Americans who carry credit card balances, many of whom struggle to make ends meet.
Such high interest rates make it impossible for working people to catch up.
And at the same time, the largest multinational banks are making record profits.
Of course, individual financial responsibility is important. But life happens.
Just this year, Tyson Foods announced it would close chicken plants in small-town Missouri, causing 2,000 people to lose their jobs.
These workers and their families still have to live.
If they end up carrying a credit card balance, why are they fair game for corporate looting?
As a nation, we can do better.
Let’s start by capping credit card APRs at 18%.
By historical standards, this is quite high.
However, it is the same APR cap that applies to credit cards issued by federally qualified credit unions.
We already have federal laws that cap fees on a subset of credit cards, so we’re simply expanding that framework to cover the sector.
Of course, major banks will try to get around these caps by introducing new fees. These should also be restricted.
It’s a good thing when Republicans talk about helping working people.
But it’s more important for us to get the work done.
Supporting America’s workers and families means addressing the everyday problems they face – not handing out handouts to corporations or foreign governments and hoping the benefits eventually wear off.
Old slogans about the magic of the market are no longer enough.
In fact, passing a law capping interest rates is a first step toward a better future—a future rooted in our own traditions.
American workers and families deserve it.
Congress can pass laws that make a real difference.
Republicans should take the lead.
Josh Hawley represents Missouri in the U.S. Senate.