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OCC Finalizes Rule That Threatens to Bring Payday Lenders Back into North Carolina

October 27, 2020
Payday and Other Small Dollar Loans
Payday Loans
Policy & Legislation

FOR IMMEDIATE RELEASE
October 27, 2020

Durham, NC — Despite widespread opposition from advocates and state officials, the OCC issued a final rule today that would allow the banks they regulate to participate in “rent-a-bank” partnerships with predatory lenders, encouraging the return of 400% interest debt traps to North Carolina.

After closing down illegally operating payday and car title lending in North Carolina in 2006, North Carolina saves some $457 million annually in fees that would otherwise be drained from those families with the fewest resources.

Thirty-one North Carolina organizations joined a comment to the Office of the Comptroller of the Currency (OCC) in September that called for withdrawal of the OCC’s proposed so-called “true lender” rule. The groups, which include faith organizations, credit unions, and nonprofits that provide services and advocacy for low-income families, older people and people with disabilities, lay out how the rule would harm the communities they serve. It would let predatory lenders pay banks a fee to pose as the “true lender" in their dealings so that the predatory lenders can ignore North Carolina’s hard-won interest rate cap on payday loans.

Center for Responsible Lending (CRL) Director of North Carolina Policy Rochelle Sparko issued the following statement:

Our state saw the destruction predatory lenders caused and chased them out of our borders in 2006. It would be a great shame to see them come back, set up shop in our shopping centers, and put their wealth-stripping machines back into service, especially in the communities of color where they locate most frequently and where families are devastated by the COVID-19 pandemic and its economic consequences.

The OCC has shown complete disregard for working families in this nation and our state, putting them at greater risk of a predatory lending practice that is known to drive people into financial straits. Our North Carolina leaders must do everything they can to prevent this toxic product from re-entering our state.

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Press Contact: carol.parish@responsiblelending.org