The proposal, introduced Thursday, also calls for the U.S. Postal Service to provide basic banking services as a way to provide new, affordable competition to traditional banks.
“There is no reason a person should pay more than 15 percent interest in the United States,” Ocasio-Cortez tweeted. “It’s a debt trap for working people and it has to end." The two Congressmembers said in a joint-summary of the bill: "If we are going to create a financial system that works for all Americans, we have got to stop financial institutions from ripping off Americans by charging sky-high interest rates and outrageous fees."
Sanders is running for the Democratic Party's nomination for president, and Ocasio-Cortez has become one of the party's most high-profile, progressive members in Congress since winning her seat in 2018.
The bill would place significant restrictions on short-term loans, such as payday loans that can reach as high as 667 percent annually in some cases. The average interest rate on credit cards is currently 21.36 percent, according to an industry survey by CreditCards.com—the highest level since the site began tracking rates in 2007.
The proposed measure would allow the Federal Reserve to permit higher borrowing rates of up to 18 months if necessary to help keep institutions afloat during a transition.
The measure marks the first time that Ocasio-Cortez has helped author a bill taking aim at the country's financial industry. The freshman Democrat from New York sits on the House Financial Services Committee.
The bill is unlikely to become law with conservative Republicans controlling the Senate and White House. The financial industry is expected to lobby hard against the proposal. However, the progressive bill may set a high bar among the over 20 Democratic Party candidates vying for campaign support in a crowded 2020 presidential nominating field.
Several Democrats have already been sending out anti-Wall Street messages that resonates with voters. Presidential campaigner and current senator from California, Kamala Harris, has pushed for policies that would curb the banking industry and protect struggling borrowers.
Senator Elizabeth Warren, who is also seeking the Democratic nomination, came out strong against the Wall Street during the post-2008 financial collapse in the U.S. and helped create the Consumer Financial Protection Bureau.