Released: June 11, 2021

The rule allowing predatory loans from fake lenders must go

Source: Lauren Saunders NCLC, The Hill Opinion

The OCC’s so-called true lender rule allows nonbank lenders to disguise their loans as bank loans — exempt from state rate caps and able to charge sky-high interest rates without limit — merely by finding a rogue bank to list as the lender. Payday lenders first tried these “rent-a-bank schemes” two decades ago. But courts, relying on centuries of anti-evasion law, looked at the facts and followed the money to find the “true lender” that was running and profiting from the loan program.

The rule is doing active harm to small businesses, veterans and consumers who are facing 200 percent APR loans that are illegal in nearly every state.

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