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Van Hollen, Senators Slam Regulators For ‘Rent-A-Bank’ Arrangement

Today, U.S. Senators Chris Van Hollen (D-MD), Sherrod Brown (D-OH), and four of the colleagues had written a page opposing a proposed rule by the workplace associated with Comptroller associated with Currency (OCC) therefore the Federal Deposit Insurance Corporation (FDIC) that may eviscerate state regulations that restrict the attention prices on loans and permit unregulated predatory financing throughout the country.

In a page to OCC Comptroller Joseph Otting and FDIC Chairman Jelena McWilliams, the Senators pressed straight back resistant to the proposed guidelines, which will gut state legislation by encouraging payday as well as other predatory lenders to utilize so-called “rent-a-bank” schemes to evade state guidelines capping the interest prices they could charge on loans. The banks nominally fund the loan, but the payday or non-bank lenders do all the work, arranging and collecting payments on the loans, and bearing all or nearly all of the economic risk in rent-a-bank arrangements. The page describes why these rent-a-bank schemes have reemerged in the past few years following the OCC and FDIC shut them straight straight down into the 2000s. (more…)