The National Association of Federally-Insured Credit Unions (NAFCU) applauded Congress’s passage of a bill that would repeal the true lender rule, which was approved in the final days of the Trump administration.
The true lender rule allowed banks and federal savings and loan companies to provide their charter to online lenders, who in turn could charge higher interest rates. In effect, it allowed the non-bank lenders to evade state laws and regulations on interest rates.
Under the Congressional Review Act, legislators can vote to overrule new federal regulations with a joint resolution of disapproval within 60 legislative days after regulators have submitted the rule to Congress. The true lender rule took effect in December 2020. On May 11, the Senate voted to overturn it. The House then approved it last week.
The bill now goes to President Joe Biden’s desk to be signed into law.
“NAFCU applauds the House of Representatives for voting to overturn the OCC’s anti-consumer true lender rule,” NAFCU President and CEO Dan Berger said. “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. Not only would this rule have threatened the COVID-19 economic recovery, but it would have severely harmed American consumers.”
NAFCU officials have also called upon Congress to advance legislation to allow credit unions to add underserved areas to their fields of membership.