The Office of the Comptroller of the Currency’s so-called “rent-a-bank” rule that allowed banks and savings and loans to provide their charter to online lenders with annual interest rates exceeding 100% is dead.
President Biden officially killed the rule Wednesday by signing a resolution repealing it. The House approved that resolution last week; the Senate had passed it earlier.
Credit union trade groups and congressional Democrats applauded Biden’s action, contending that the rule, issued during the Trump Administration, allowed predatory lenders to partner with banks to make loans that they otherwise would have been prohibited from making.
“Banks will no longer be allowed to blur regulatory lines in partnership with high-cost online lenders to charge consumers interest rates of over 100 percent, evade consumer protection laws and usury caps, and promote predatory payday lending schemes,” National Association of Federally-Insured Credit Unions President/CEO B. Dan Berger said.
“Removal of the ‘true lender’ rule is a victory for credit unions, as this rule could have been exploited by any number of actors looking to avoid state laws designed to protect consumers,” said Credit Union National Association President/CEO Jim Nussle.
Democratic Sen. Chris Van Hollen of Maryland also said he was pleased that Biden signed the resolution. “Americans deserve consumer protections that work for them – not for special interests and predatory payday lenders,” he said.
Banking trade groups had called on Congress and Biden to reject the resolution and then allow the OCC to improve the rule. Enactment of the resolution to kill the rule restricts the ability of the OCC to issue a revised rule.