WASHINGTON, D.C. – On Wednesday, February 5, at approximately 10 a.m. ET, the Center for Responsible Lending (CRL) Director of Federal Campaigns, Graciela Aponte-Diaz, and National Consumer Law Center (NCLC) Associate Director Lauren Saunders, will testify before the full House Financial Services Committee for a hearing entitled: Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps.
CRL and other consumer and civil rights organizations have underscored their concerns about rent-a-bank schemes to the Office of the Comptroller and Currency (OCC) and Federal Deposit Insurance Corporation (FDIC)—warning the agencies that this loan laundering scheme enables predatory loans of 100% APR or higher in states that prohibit high-cost loans. In addition to unsecured consumer installment loans, it appears the scheme is also enabling triple-digit interest mortgages and small-business loans.
In the 1990s-mid 2000s, predatory lenders partnered with banks to evade state interest rate caps. In response, federal bank regulators -- the FDIC, Federal Reserve Board, and OCC -- cracked down on this practice. Now, under the Trump Administration, this scheme is reemerging and going unchecked. The FDIC and OCC have even issued proposed rules that could bless this practice, allowing predatory lenders to issue loans of more than 100% APR in states that have interest rate caps of much less, often around 36%.
Washington, D.C. – Wednesday, Feb. 5
Who: Graciela Aponte-Diaz, Director of Federal Campaigns, CRL Lauren Saunders, Associate Director, NCLC
Members of the House Financial Services Committee
What: Hearing titled Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps
When: Wednesday, February 5, at approximately 10 a.m. ET
Where: 2128 Rayburn House Office Building, Washington, DC 20515 or via live stream.
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