Advocates applaud rollback of pro-predator lending rule
House must act soon to end evasion of state laws
Advocates applaud rollback of True Lender rule
Washington DC – In a 52-47 vote tonight, the US Senate voted to overturn a Trump administration rule that would allow predatory lenders to evade state interest rate laws by listing the name of a bank on paperwork.
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SJ Res. 15, a resolution under the Congressional Review Act (CRA), was introduced by Senators Chris Van Hollen (D-MD) and Sherrod Brown (D-OH). Representative “Chuy” García presented a parallel resolution, HJ Res. 35, in the United States House of Representatives. Now that the Senate has approved the resolution, the House has until the end of this legislative session to vote on it.
Lawyers applauded the Senate’s vote against the Office of the Comptroller of the Currency’s so-called “real lender” rule and urged the House to act quickly to prevent a massive expansion of predatory lending in all 50 states. In a bipartisan vote, Republican Senators Cynthia Lummis (R-WY), Susan Collins (R-ME), Marco Rubio (R-FL) joined Democrats to protect small businesses, veterans and consumers across the country devastated by the false rule of the lender.
“This bipartisan vote to rescind the OCC’s approval of bank leasing plans reflects widespread voter support to curb predatory lenders,” said Linda Jun, America’s Senior Policy Advisor on Financial Reform. “The Senate agreed that lenders charging triple-digit interest rates should not be allowed to trap vulnerable people in debt with loans that violate state laws. The House must now act quickly to join the Senate and prevent any other bank rental system from taking hold in the 45 states that cap or otherwise regulate interest rates.
The importance of repealing the rule
“The bipartisan vote in the Senate shows how important it is to repeal the OCC’s bogus lender rule now, because it is doing active harm right now, by defending a predatory business model that destroys small businesses, homes and lives, ”said Lauren Saunders, Associate Director of the National Consumer Law Center. “Congress must act because it could easily be two years or more before the rule can be repealed through regulation, and small businesses and families devastated by COVID, especially in black and brown communities, can’t wait.
“Veterans are harmed by evasive and predatory bank loans, which is why groups like the Military Officers Association of America, Blue Star Families and Veterans for Education Success are supporting the overturn of the bogus lender rule. Today’s Senate vote shows predatory lending is not a partisan issue, as military and veteran service organizations (OSM / OSV) have been saying for years, ”said Mike Saunders, director of military and consumer policy for Veterans for Education Success.
“Today’s Senate vote to overturn the bogus lender rule shows bipartisan disapproval of the harmful bank lease model that is used by predatory payday and installment lenders to make interest rate loans triple digits that are illegal nationwide, “said Rachel Gittleman, Financial Services Outreach Manager at the Consumer Federation of America. “Now the United States House of Representatives must act to protect consumers, especially small business owners, still reeling from the fallout from the COVID-19 pandemic.”
“The US Senate, on a bipartisan basis, voted to curb the spread of predatory lending. The Chamber should do the same without delay and regulators should crack down on these bank rental schemes, ”said Graciela Aponte-Diaz, Director of Federal Campaigns at the Center for Responsible Lending.
Predatory small business lenders are using the fake lender rule today to defend an APR rate of 268% on loans totaling $ 67,000 to a restaurateur in New York, where the criminal usury rate is 25%, secured by property in New Jersey, where the legal limit is 30 %. OppLoans (aka OppFi), an online lender offering 160% APR loans in 26 states which prohibit loans at triple digits, cited OCC’s bogus lender rule in defense of his loan to a disabled veteran in California, where the legal loan rate is 24%. OppLoans is evading state rate cap laws backed by a large majority of voters in Arizona, Montana, Nebraska and South Dakota.
A large, bipartisan representative sample of experts and officials called on Congress to repeal the bogus lender rule. They include a bipartisan group of 25 attorneys general, worried that this would effectively void their usury laws. The Conference of State Bank Supervisors, the National Association of Consumer Credit Administrators, the National Association of Federally Insured Credit Unions and many other groups are also supporting Congress in overturning the rule.