Consumer Reports urges OCC to rescind proposal that could encourage “rent-a-bank” lending schemes

OCC proposal undermines state efforts to safeguard consumers from predatory lenders

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

“With countless Americans out of work and struggling to cover their bills, the very last thing the OCC must certanly be doing is making it simpler for shady loan providers to charge excessive interest rates,” 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 laws and regulations to get away with peddling high-priced loans that trap borrowers with debt.”

Rent-a-bank financing schemes typically include partnerships from a national bank and a non-bank lender advertising pay day loans, automobile name loans, or automobile installment loans. The lender originates the mortgage additionally the lender that is high-cost all the components of the deal, including advertising, reviewing, approving and servicing the mortgage. The high-cost loan provider buys the loan through the bank and offers it with a small % for every loan offered.

By originating the mortgage by having a national bank, high-cost loan providers make the most of their partner bank’s authority under federal legislation to charge higher interest prices – although the loan provider authorized the mortgage prior to the bank originated the mortgage.

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