The US House has passed a resolution to repeal the Trump administration’s real lender rule through the Congressional Review Act.
The regulation allows lenders to circumvent state laws aimed at lowering interest rates on loans, opening up the possibility for these predatory non-bank lenders to charge higher rates. With the passage through the House, it is now up to President Joe Biden to be promulgated.
The passage of the House was applauded by American senses Chris Van Hollen (D-MD) and Sherrod Brown (D-OH), who first introduced the resolution to repeal the rule.
âFor four years, the Trump administration did everything it could to deprive Americans of their consumer protection. But today Congress has taken major steps to repair this damage. Removing Trump’s “Rent-A-Bank” rule will help prevent predatory lenders from scamming consumers and charging mortgage rates on deceptive terms. I have repeatedly promised to use all the tools at our disposal to reverse this trend, and today we are a big step forward in keeping that promise, âsaid Van Hollen.
For an overview of the rule, most states have rules to protect consumers from predatory lending rates. However, federally chartered banks are exempt under the National Bank Act. The True Lender Rule allows non-bank lenders to partner with these banks to circumvent state laws and charge higher annual percentage rates. In these so-called ârent-a-bankâ systems, the bank attaches its name to the transaction while the customer deals entirely with the non-bank lender, who guarantees, organizes and collects the loan payments.
However, the Congressional Review Act provides a mechanism for Congress to repeal the rules of federal agencies, which happened in this case.
“The OCC, when it allowed banks to evade state interest rate caps, betrayed working families and attacked states’ ability to protect their citizens from predatory lending,” said Brown. âToday, Congress showed the people we serve that we are on their side. I look forward to President Biden signing this bill and overturning this rule that has robbed so many workers and made predatory lenders rich. “
The repeal is supported by various stakeholders and consumer protection groups, including a bipartisan group of 25 state attorneys general, the Conference of State Bank Supervisors, the Faith for Just Lending Coalition, the Center for Responsible Lending , the National Consumer Law Center, the Consumer Federation of America. , the Military Officers Association of America, the Leadership Conference on Civil and Human Rights, the National Association of Consumer Advocates, the National Association of Federally-Insured Credit Unions, Appleseed Foundation, Consumer Action, National Community Reinvestment Coalition, UnidosUS, US PIRG, and the Woodstock Institute.
âPredatory lenders trap working class communities like mine in nefarious debt cycles. States like Illinois continue to pass laws to protect their residents from these debt traps, but the OCC’s True Lender rule gives bad actors a rubber stamp to undermine these laws, âthe representative said. JesÃºs GarcÃa, who sponsored the House bill.