STOP RENT-A-BANK SCHEMES
SUPPORT THE CRA CHALLENGE TO THE OCC “FAKE LENDER” RULE

A broad, robust and bipartisan consensus among state attorneys general, banking regulators, credit unions, academic scholars, state legislators, faith leaders, and a wide array of policy advocates support this CRA challenge. Learn more here.

ON MAY 11TH, THE U.S. SENATE RESPONDED TO OVER 4,001 LETTERS WE SENT AND PASSED SJ RES 15 TO OVERTURN THE TRUMP-ERA “FAKE LENDER” RULE. THE BILL PASSED WITH GOP SUPPORT AND PICKED UP AN ENDORSEMENT FROM THE WHITE HOUSE.
Now, we are urging you to contact your congressional representatives and tell them to vote yes on HJ Res 35, the Congressional Review Act challenge that will repeal this terrible rule. You can send them a letter using our tool below (House version coming soon). Here you can find contact info for your states’ representatives. We are also sending a letter asking Congress to overturn the “fake lender” rule through a Congressional Review Act challenge with broad support from all 50 states and the District of Columbia. If you haven’t signed on yet, the window is closing — sign on now!

 

WHAT IS RENT-A-BANK?: In the 1990s-mid 2000s, predatory lenders partnered with banks to evade state interest rate caps. In response, federal bank regulators — the FDIC, Federal Reserve Board, and OCC – cracked down on this practice. Now, under the Trump Administration, this scheme is reemerging and going unchecked. The FDIC and OCC have even issued proposed rules that could bless this subterfuge, allowing predatory lenders to issue loans of more than 100% APR in states that have interest rates caps of much less, often around 36%.

Non-bank lenders such as Elevate, OppLoans, Enova, LoanMart, and World Business Lenders currently lend at outrageous rates in states where those rates are illegal under state law, through the use of rent-a-bank schemes with banks regulated by the FDIC or OCC. Neither regulator appears to have done anything to shut down these abuses.

TRUMP-ERA REGULATORS CHANGE THE RULES: Last Summer, the banking regulators, FDIC and OCC, proposed their own rules that would allow banks to “share” their charters to online lenders for installment loans. Since banks are not governed by state regulations, this rule would embolden these entities to charge triple-digit interest rates by evading state interest rate laws – the same laws that citizens have supported to keep predatory lending out of their state.

CONGRESS STEPS IN: Fortunately, Senators Chris Van Hollen and Sherrod Brown and Representative “Chuy” García introduced a resolution on March 25th, 2021 to overturn the OCC “fake lender” rule via Congressional Review Act. The Senate passed their version of the CRA on May 11th with bipartisan support and an endorsement from the White House. If passed in the House, this resolution would remove the OCC rule to facilitate rent-a-bank schemes: allowing out-of-state lenders to launder their high-cost loans through bank partnerships, hence the “fake lender” moniker.

CONTACT CONGRESS: We are urging you to call your congressional representatives and tell them to vote yes on HJ Res 35, the Congressional Review Act that will repeal this terrible rule. Here you can find contact info for your states’ representatives.

SIGN OUR LETTER: We are sending a letter asking Congress to overturn the true lender rule through a Congressional Review Act. If you haven’t signed on yet, the window is closing — sign on now! We have over 370 organizations and hope to get more signatures. We want to show lawmakers on Capitol Hill that a broad and robust coalition of consumer advocates support common-sense rules that protect consumers and not allow predatory lenders to extract wealth from vulnerable communities.

Helpful Resources

If you have any questions or concerns, please feel free to reach out to any of the representatives from the Stop the Debt Trap coalition.

Take Action

Call Congress and tell them to pass an interest rate cap for all consumers in America!

#StopTheDebtTrap

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