Today, the Office of the Comptroller of the Currency issued a proposed rule to overturns the “true lender” rule that courts have used since the early 1800s to prevent evasions of state usury laws. The deadline to submit comments on the OCC’s proposal is September 3, 2020.
In a statement, the National Consumer Law Center warned that the proposal would turn state usury laws into a "dead letter" and eviscerate power that states have had since the time of the American Revolution to protect people from high interest rates and predatory lending.
At least 45 states and the District of Columbia have interest rate caps on installment loans. Under the proposal, NCLC explained, "a payday lender or other nonbank lender could ignore state interest rate limits as long as either a bank ‘[i]s named as the lender in the loan agreement,’ or the bank ‘[f]unds the loan’ — that is, the payday lender launders the loan through the bank. This proposal would allow payday lenders to resume the rent-a-bank schemes that were shut down by bank regulators in the mid-2000s, and would embolden today’s high-cost predatory rent-a-bank lending by online installment lenders.
“The proposed rule would purport to overturn the ‘true lender’ doctrine, which allows courts to prevent evasions of usury laws by looking beyond the technical form or fine print of a loan transaction to examine which party has the predominant economic interest in the loan. The true lender doctrine has long been used to prevent payday lenders and other high-cost lenders from laundering their loans through banks, which are not subject to state interest rate caps.
The OCC proposal is here. The NCLC statement is here.
The truth is that Usury was crime even before Christ, long before states included prohibitions, not merely by latter day statutes but by their Constitutions, which Republicans have caused to be amended routinely under their big lies of frivolous lawsuits and freedom of choice to be preyed upon by loan sharks, so long as they are ‘bank[st]ers’. They simultaneously coerce savers to become obsessive speculators in worthless stocks, rather than require banks to pay fair interest on our deposits, which are foreclosed by their cartel called the Fed, which is as federal as Fed Ex.. This is Plutocracy worse than a family dynasty, since in those days, the people knew where the king lived. Today, we are beset with a million new kings, who cannot make an honest living as a lawyer [oxymoron] so they become politicians, known as Republicans and beer drinking and hell raising judges, who promised a whirlwind. It is here now, worse than the stone age of survival of the biggest. Now, it is the biggest campaign contributions, unlimited by corporate bosses, with the dividends that should have gone to shareholders. At bottom, the platitudes of personal responsibility was always a big lie, and as for choice, that only applies when deciding to murder with a badge. What is most outrageous is when they hold a bible none of them every read, but for old testament promises of whirlwinds.
American consumers are already being preyed upon with the current laws. This would open the floodgates for unconscionable behavior by payday lenders and banks that lack morals or ethics. The Federal lending rate has been reasonably stable and low for a significant amount of time and will be in the foreseeable future. This new OCC proposal should be opposed by attorneys who are experts in consumer lending and all Americans who want our nation want to stop agressive predatory lenders and open up access to reasonable credit for goods and services. This kind of proposal doesn’t make America a better or less hostile nation to do business or raise a family, instead it leaves the door open for unsavory lenders to harm consumers unnecessarily.