House votes to overturn OCC's harmful 'true lender' rule
The House Thursday approved a resolution to overturn the Office of the Comptroller of the Currency's (OCC) true lender rule using the Congressional Review Act (CRA).
Under the CRA, legislators can vote to overrule new federal regulations with a joint resolution of disapproval within 60 legislative days after regulators have submitted the rule to Congress. The true lender rule took effect in December 2020. On May 11, the Senate voted to overturn the OCC's true lender rule.
"NAFCU applauds the House of Representatives for voting to overturn the OCC’s anti-consumer true lender rule," said NAFCU President and CEO Dan Berger. "This rule has allowed banks to blur regulatory lines in partnership with high-cost online lenders to charge consumers interest rates of over 100 percent, evade consumer protection laws and usury caps, and promote payday lending schemes. Not only would this rule have threatened the COVID-19 economic recovery, but it would have severely harmed American consumers.
"NAFCU urges President Biden to quickly sign this measure and for Congress to advance legislation promoting better opportunities for those that need financial services, such as allowing community-based, not-for-profit credit unions to add underserved areas to their fields of membership."
Ahead of the House vote, NAFCU Vice President of Legislative Affairs Brad Thaler reiterated the association's concerns with the OCC's rule, arguing that it promotes predatory lending practices.
The true lender rule allowed banks and federal savings and loan companies to provide their charter to online lenders so they can deliver high-cost loans with annual rates over 100 percent, evading state consumer protections and usury caps and promoting predatory payday lending. Several states filed suits against the OCC to try to overturn the rule.
NAFCU raised its concerns about the rule – specifically noting Americans are struggling financially amid the coronavirus pandemic and the predatory rule would only harm them further – and also reiterated concerns with fintech companies taking advantage of chartering options and loopholes to evade proper oversight in the financial system.
NAFCU will continue to advocate for effective financial regulation that provides a level playing field for credit unions and proper consumer protections.
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