The House on Thursday passed a resolution that would kill the Office of the Comptroller of the Currency’s so-called “rent-a-bank” rule that allows banks and savings and loans to provide their charter to online lenders with annual interest rates exceeding 100%.
The House passed the resolution, 218-208. The Senate already has passed the resolution; it now goes to President Biden who is expected to sign it. If he signs it, the OCC would be prohibited from issuing a similar rule in the future.
Credit union trade groups have endorsed the repeal of the rule, while banking groups have opposed repeal.
During debate on the House floor, Speaker Nancy Pelosi, D-CA., called the rule “anti-consumer,” and said it allows financial institutions to “swindle vulnerable consumers.”
However, Rep. Patrick McHenry of North Carolina, the ranking Republican on the House Financial Services Committee, said repeal of the rule will make credit more expensive for consumers and small businesses. He accused Democrats of “strong-arming” the repeal through Congress.
B. Dan Berger, President/CEO of the National Association of Federally-Insured Credit Unions, praised the House action and called on Biden to sign the resolution. “This rule has allowed banks 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 payday lending schemes,” he said. “Not only would this rule have threatened the COVID-19 economic recovery, but it would have severely harmed American consumers.”
Consumer advocates also praised the House action. “Congress’s vote to repeal the OCC fake lender rule is critical because predatory rent-a-bank schemes are destroying small businesses, homes and lives,” said Lauren Saunders, associate director of the National Consumer Law Center.