OCC proposal undermines state efforts to safeguard consumers from predatory lenders

WASHINGTON, D.C. – A proposal by the workplace of this Comptroller regarding the Currency (OCC) will make it easier for predatory loan providers to evade state regulations interest that is limiting by partnering with nationwide banking institutions, according to customer Reports. In a page submitted to your OCC today, CR called in the federal regulator to protect customers from high-cost loans by rescinding the proposition.

“With countless Americans out of work and struggling to pay for their bills, the very last thing the OCC must be doing is making it simpler for shady loan providers to charge excessive interest prices,” said Antonio Carrejo, policy counsel for Consumer Reports. “Unfortunately, the OCC’s proposal would allow lenders that are predatory ‘rent-a-bank’ that is not at the mercy of state consumer security regulations and obtain away with peddling high-priced loans that trap borrowers with debt.”

Rent-a-bank financing schemes typically include partnerships between a nationwide bank and a non-bank lender advertising pay day loans, automobile name loans, or automobile installment loans. The lender originates the mortgage while the lender that is high-cost all the other areas of the transaction, including advertising, reviewing, approving and servicing the mortgage. The lender that is high-cost the mortgage from the bank and offers it with a small % for every loan offered.

By originating the mortgage having a nationwide bank, high-cost loan providers benefit from their partner bank’s authority under federal legislation to charge greater interest prices – although the lender authorized the mortgage ahead of the bank originated the mortgage. Read more