Ohio consumers need Congress to repeal “rent-a-bank” rule
Posted March 26, 2021 in Press Releases
Yesterday, United States Senators Sherrod Brown (D-OH), Chris Van Hollen (D-MD), and U.S. Rep. Chuy Garcia (D-IL) announced their intention to introduce a Congressional Review Act to repeal the so-called True Lender Rule. The Office of the Comptroller of the Currency regulation allows payday lenders to evade state interest rate caps and prey on vulnerable Ohio borrowers.
“We all deserve to be able to provide a better future for ourselves and our family — no exceptions. But for over 20 years, many Ohioans have been prevented from doing just that because of excessive and exploitative predatory lending,” said Kalitha Williams, project director of Policy Matters Ohio. “Congress must overturn this rule to safeguard hard-fought consumer protections that protect Americans’ pocketbooks and peace of mind.”
Ohio, like most states, has laws in place to protect consumers from excessive interest rates. However, federally insured, state-chartered banks are not subject to state usury laws. The Comptroller rule, which went into effect last December, allows lenders to engage in “rent-a-bank” schemes by using banks to launder their loans and charging borrowers predatory interest rates.
Policy Matters Ohio joined a broad coalition of more than 325 organizations representing all 50 states and the District of Columbia calling on Congress to overturn the “fake lender” rule, which threatens to “unleash predatory lending in all 50 states.” According to national polling, two-thirds of voters (66%) are concerned about the ability of high-cost lenders to arrange loans through banks at rates higher than the state laws allowed.