WASHINGTON–The number of people expressing opposition to the OCC’s “True Lender” rule continues to expand, the newest being a bipartisan group of 25 attorneys general (AGs) who sent a letter today to congressional leadership urging it to “use the Congressional Review Act (CRA) to rescind the rule.”
Doing so, the AGs said, would “safeguard states’ fundamental sovereign rights to protect their citizens from financial abuse.”
The bipartisan letter included the AG in Arkansas, where voters approved a 17% interest rate cap on payday and installment loans in 2010, as well as AGs from Nebraska, South Dakota and Colorado, where voters overwhelmingly supported a 36% interest rate cap. The Nebraska vote last November was the most recent, with 83% of the voters approving the rate limit, noted the National Consumer Law Center.
“Yet in all of these states, voter-approved rate caps are being evaded by high-cost lenders laundering their loans through a few rogue banks, which are not subject to state rate caps. The true lender rule (more accurately, “fake lender” rule) protects those evasions,” the NCLC said.
Rule Being ‘Exploited’
The AGs’ letter states, “A growing number of states continue to pass state usury interest-rate caps on high-cost small-dollar loans in an effort to protect their consumers from predatory financial products. The OCC’s Rule would be exploited by lenders seeking to circumvent these state interest-rate caps and invite, indeed welcome, predatory consumer-lending partnerships between banks and lightly regulated non-depository lenders. We urge you to use the Congressional Review Act, 5 U.S.C. §§ 801-808 (“CRA”), to rescind the OCC’s True Lender Rule and safeguard states’ fundamental sovereign rights to protect their citizens from financial abuse.”
Senator Sends Letter
In another sign of what the NCLC said is bipartisan support for repealing the rule, Maine State Senator Richard A. Bennett sent a letter to U.S. Senator Susan Collins (R-ME) urging her support for the resolution to invalidate the OCC rule. Bennett, a former chair of the state Republican Party, has sponsored a bill to prevent rent-a-bank evasions in Maine, which was unanimously approved by a committee in March.