A committee of the Maryland House of Delegates today approved controversial banking legislation that would grant significant relief to lending institutions by raising their allowable interest rates on most credit purchases from 18 percent to 24 percent.
The bill, which Gov. Harry Hughes supports, was approved by the House Economic Matters Committee 13 to 7. It now goes to the full House, where opponents of banking deregulation are threatening a bitter fight. They insist that consumer protections are lacking in the bill, despite assurances from the governor that necessary protections are included.
"This bill goes far enough with consumer protections," said Del. Frederick C. Rummage (D-Prince George's), a key participant in the legislative push for banking deregulation.
The House committee also approved several amendments to the bill, including one that would abolish a three-day "cooling off" period for borrowers. Some consumer advocates favored the three-day period to give borrowers an opportunity to reassess their loan contracts and to have a chance to back out of the loans upon reconsideration.
The bill also would prohibit banks from charging interest on overdue credit card payments.
Maximum interest rates now vary from 12 to 33 percent and depend on the the kind of loans or purchases made. The current system of computing interest would be replaced with the single across-the-board rate.