U.S. SBC Hearing On Predatory Rent-A-Bank Lending 

Washington, DC – The “fake lender” rule by the national bank regulator (the Office of the Comptroller of the Currency or OCC) effective last December protects these predatory lending “rent-a-bank” schemes. The rule prevents courts from looking beyond the fine print to uncover who is running and profiting off the loan program and is the “true lender,” as courts did for challenges to payday loan rent-a-bank schemes in the 2000s.

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Overturning The Rent-A-Bank Schemes

Congress has only a few days left to approve a resolution under the Congressional Review Act to overturn the fake lender rule and restore states’ right to protect their residents. A bipartisan group of state attorneys general supports overturning the rule.

What: Since the American Revolution, states have limited interest rates to stop predatory lending; currently 45 states and D.C. have interest rate caps on at least some installment loans, depending on the size, to protect their residents. But banks are exempt from state rate caps, and high-cost predatory lenders are starting to launder their loans through banks to evade state usury laws. Predatory lenders are making loans approaching 200% APR in states where that rate is illegal.

Where: Watch live webcast of hearing at https://www.banking.senate.gov/

When:  Wednesday, April 28, 2021 at 10:00 AM ET

Witnesses:

• Josh Stein, Attorney General, North Carolina
• Lisa Stifler, Director of State Policy, Center for Responsible Lending
• Dr. Frederick D. Haynes, III, Senior Pastor, Friendship-West Baptist Church, Dallas, Texas
• Brian Brooks, Former Acting Comptroller of the Currency
• Dr. Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia Business School

Related Materials

• Fact sheet:  Overturn the OCC’s “Fake Lender” Predatory Lending Rule
• Bipartisan letter from 25 state Attorneys General urging Congress to rescind the OCC True Lender rule using the Congressional Review Act, April 21, 2021
• Letter from 138 academics, including professors of banking law and consumer financial regulation, supporting S.J. Res. 15 and H.J. Res. 35, and disapproving of the OCC “True Lender” rule, April 20, 2021
• Letter from 375 nonprofit organizations
• Fact Sheet: Correcting the Record: The OCC’s “Fake Lender” Rule Expands Harmful, Predatory Lending, April 2021
• Rent-a-Bank loan watch list