The U.S. Senate passed a resolution Tuesday to repeal the Trump administration’s True Lender Rule through the Congressional Review Act.
The True Lender Rule, adopted by the Office of the Comptroller of Currency (OCC) in the final months of the Trump administration, allows non-banks lenders to use partnerships with chartered banks to get around state laws and charge higher annual percentage rates. Some lawmakers called them “rent-a-bank” schemes. So, while the bank’s name is on the transaction, the customer deals entirely with the non-bank lender, who underwrites, arranges, and collects payments on the loan.
The Congressional Review Act offers a way for Congress to repeal federal agency rules through a joint resolution.
“This is a big win for the American people. While the Trump Administration aimed to dismantle consumer protections, today’s action to strike down the ‘Rent-A-Bank’ rule will help prevent predatory lenders from ripping off consumers by charging loan-shark rates under deceptive terms. I urge my House colleagues to take up this legislation quickly. After the previous Administration rushed through this rule, I vowed to use every tool at our disposal to reverse it, and I will not stop fighting until we get this over the finish line,” Sen. Chris Van Hollen (D-MD), who offered the repeal resolution, said.
Sen. Sherrod Brown (D-OH) and Senate Majority Leader Chuck Schumer (D-NY) also championed the passage of the resolution.
“For years, under both Democratic and Republican administrations, federal regulators cracked down on abusive ‘rent-a-bank’ schemes in which payday lenders funnel their high-interest, predatory loans through national banks to evade state interest rate caps. The OCC’s rule completely reversed that policy, betraying hard-working American families and attacking states’ ability to protect their citizens from predatory loans. I’m heartened that my Senate colleagues have joined us in overturning this harmful rule and urge the House to follow suit,” Brown said.
The legislation is supported by a group of 25 State Attorneys Generals, the Conference of State Bank Supervisors, the Faith for Just Lending Coalition, Center for Responsible Lending, National Consumer Law Center, Consumer Federation of America, the Military Officers Association of America, the Leadership Conference on Civil and Human Rights, the National Association of Consumer Advocates, and the National Association of Federally-Insured Credit Unions, among others.
“Today the Senate is standing up for working families and small businesses all across the country by repealing the Trump Administration’s so-called ‘True Lender Rule,’ a Scrooge-like decision that has had devastating consequences, particularly in the middle of a pandemic and economic crisis,” Schumer said. “By reversing this rule, the Senate is protecting millions of hard-working Americans who have fallen victim to predatory lenders promising quick cash or credit, only to be trapped with crippling interest rates that can erase a person’s life savings or even claim their homes.”
It now advances to the House for a vote.