Widespread alarm at high-cost non-bank lenders funneling loans through banks to charge interest rates higher than state laws allow for non-bank lenders

Concern over this deceptive practice was high across the political spectrum with concern expressed by 71% of Democrats, 64% of Republicans, and 63% of independents.

WASHINGTON, D.C. – Voters across the country and political spectrum are concerned that some high-cost non-bank lenders arrange loans through banks at rates higher than state laws allow, according to a new poll commissioned by the Center for Responsible Lending (CRL) and conducted by independent polling firm Morning Consult.

Approximately 10,000 registered voters took part in the survey, which has a margin of error of +/-1%. The same poll also showed overwhelming, bipartisan support among voters for a 36% interest rate cap on payday and installment loans. Key findings from the poll are summarized below.

“This type of loan laundering scheme puts people into debt traps and erodes the public’s confidence in the banking system,” said CRL Researcher Charla Rios. “This survey underscores the need for the FDIC and OCC to step up and protect consumers from unscrupulous lending practices and for states to crack down on bad actors who skirt state laws. Congress should also eliminate the worst of these loans by passing H.R. 5050, the Veterans and Consumers Fair Credit Act, which would establish a strong federal rate cap and doesn’t preempt states with lower rate caps.”

Last week, CRL Director of Federal Campaigns Graciela Aponte-Diaz testified 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. In her testimony, Aponte-Diaz underscored the need for the Office of the Comptroller and Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) to act on behalf of consumers and stop loan laundering schemes that enable 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.

Additionally, CRL and other consumer and civil rights organizations submitted comment letters to the OCC and FDIC strongly opposing the agencies’ proposal to green light triple-digit rent-a-bank schemes.

Non-bank lenders such as Elevate, OppLoans, Enova, LoanMart, and World Business Lenders currently lend at outrageous rates in states where those rates are illegal under state law, through the use of rent-a-bank schemes with banks regulated by the FDIC or OCC. Neither regulator appears to have done anything to shut down these abuses.

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 subterfuge.

Key takeaways from poll on rent-a-bank

Two-thirds of voters (66%) are concerned about the ability of high-cost lenders to arrange loans through banks at rates higher than the state laws allow.

  • Concern over this practice was high across the political spectrum with concern expressed by 71% of Democrats, 64% of Republicans, and 63% of independents.
  • Approximately one in three Republicans, independents and Democrats say they are “very concerned” about this practice.
  • Across all 50 states and the District of Columbia, a majority (60-69%) of the population is concerned about high-cost lenders evading state laws.

Seventy percent of voters support an annual interest rate cap of no more than 36% annual interest for consumer installment loans.

  • This proposal sees wide support across party lines with support at 72% among Democrats, 70% among Republicans, and 65% among independents.
  • Forty-one percent of registered voters “strongly support” a rate cap of no more than 36% for consumer installment loans.
  • Voters support a 36% interest rate cap for consumer installment loans, with a 60%-72% total support across all 50 states and the District of Columbia.



Press Contact: ricardo.quinto@responsiblelending.org