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House banking chair aims to cap personal loan rates
Proposes limit of 10% above prime rate
BY KEN OLIVER-MENDEZ
September 27, 2001
House Banking Committee Chairman Roberto Rivera (PDP-Carolina/Trujillo Alto) has set his sights on reigning in what he sees as exorbitant interest rates charged by many non-depository financial institutions for small personal loans.
"Ive been troubled by the exorbitant rates for small loans in the $600 to $5000 range for many years," said Rivera, who prior to entering the Legislature worked in the banking industry.
"These loans are the ones that the poorest people in our society look for, and the poor end up suffering the most as a result of it," added the Popular Democratic Party representative.
Rivera says that the present deregulation of this segment of the personal loan market has failed to stimulate competitive rates.
"We just completed a study of this segment and found that 63% of these small personal loans carry with them interest rates of 30% and higher," said Rivera.
With the support of Banking Committee minority leader Jose Chico, Rivera has introduced House bill 1288, which would cap interest rates for small personal loans at 10% above the prime rate. The bill is expected to provoke strong opposition from the islands non-depository small loans finance companies. As of press time, industry leaders were preparing to hold a press conference today to announce their position.
So far, in addition to widespread support Rivera says the measure enjoys among House colleagues, the bill has received the endorsement of the Department of Consumer Affairs and the Office of the Ombudsman. Additional hearings on the legislation will include participation by representatives of finance companies and the Commissioner of Financial Institutions.
This Caribbean Business article appears courtesy of Casiano Communications.