Polo Rocha | American Banker

Some states, particularly Utah, have relatively loose limits on the interest rates that banks chartered within their borders can charge. Those banks sometimes work with high-cost lenders to offer loans with rates above what Colorado and other stricter states would otherwise allow — an arrangement that consumers advocate deride as the "rent-a-bank" model.

That approach is "saddling working families with high-cost debt," said Ellen Harnick, director of state policy at the Center for Responsible Lending. Other states should follow Colorado's lead and prevent their residents from being charged high rates that are allowed elsewhere, she said.

"These lending arrangements are proliferating, and they're very expensive to shut down one by one," Harnick said, pointing to the substantial legal costs that states incur when they fight those lenders in court. 

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