Washington, D.C. - July 22, 2020 - (The Ponder News) -- The Office of the Comptroller of the Currency (OCC) has proposed a rule that would determine when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party.
Banks’ lending relationships with third parties can facilitate access to affordable credit. However, the relationships have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill the innovation that results from these partnerships—all of which may restrict access to affordable credit.
The proposed rule would resolve this uncertainty by specifying that a bank makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan.
The deadline for comments on the rule is September 3, 2020.
Related Links
Federal Register Notice (PDF)
OCC Plan Would Destroy State Protections on Predatory Lending
Source: Americans for Financial Reform
July 20, 2020
“The OCC proposal is nothing more than a plan for unleashing predatory lenders to peddle dangerous financial products nationwide by eviscerating the power of state usury laws. Many states have interest rate caps that are very effective guardrails against predatory lending. They are highly popular among voters in diverse states, many of whom put the limits in place through ballot initiatives. This destructive rule would only serve the interest of high-cost lenders, who have been very active in lobbying this administration to enable them to expand abusive practices. The OCC has chosen to eliminate safeguards at a time when many communities are particularly vulnerable as they navigate the economic fallout caused by the COVID-19 pandemic. With other financial regulators, including the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation, joining together to enable predatory lending in their own ways, we need Congress to step in and impose a national rate cap to protect all Americans from the harm of the debt trap.”
Read more...
Banks’ lending relationships with third parties can facilitate access to affordable credit. However, the relationships have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill the innovation that results from these partnerships—all of which may restrict access to affordable credit.
The proposed rule would resolve this uncertainty by specifying that a bank makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan.
The deadline for comments on the rule is September 3, 2020.
Related Links
Federal Register Notice (PDF)
OCC Plan Would Destroy State Protections on Predatory Lending
Source: Americans for Financial Reform
July 20, 2020
“The OCC proposal is nothing more than a plan for unleashing predatory lenders to peddle dangerous financial products nationwide by eviscerating the power of state usury laws. Many states have interest rate caps that are very effective guardrails against predatory lending. They are highly popular among voters in diverse states, many of whom put the limits in place through ballot initiatives. This destructive rule would only serve the interest of high-cost lenders, who have been very active in lobbying this administration to enable them to expand abusive practices. The OCC has chosen to eliminate safeguards at a time when many communities are particularly vulnerable as they navigate the economic fallout caused by the COVID-19 pandemic. With other financial regulators, including the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation, joining together to enable predatory lending in their own ways, we need Congress to step in and impose a national rate cap to protect all Americans from the harm of the debt trap.”
Read more...
