Parliament on Thursday overturned a series of bills passed on the last day of Trump’s administration, allowing lenders to bypass state interest rate laws before payday.
The House of Representatives cast 218-208 votes to overturn the Office of the Comptroller’s rules on payday loans, with one Republican voting for the Democratic Party.
Thursday’s vote to abolish the OCC’s “true creditors rules” was the first time a Democrat in parliament successfully overturned regulation using the Parliamentary Trials Act.
The law was passed in the mid-1990s, giving Congress the power to overturn federal agency rules and regulations by a simple majority in the House of Representatives and Senate. Its mandate is limited to a specific period of time after the agency has finalized the regulation, usually around 60 legislative days.
On May 11, the Senate voted 52-47 to overturn the OCC rules. The bill is now being sent to President Joe Biden, who is expected to sign it.
The Democratic Party has sought to halt payday loans, which critics have labeled as a “bank lending” system, by overturning the Trump administration’s late 2020 rules.
Payday lenders are government regulated, but payday lenders partner with banks with national banking statutes to create large installment loans. National banks are not located in any state and are not subject to the usury laws of individual states.
“Government interest rate caps were the easiest way to stop predatory lending, and OCC rules could have avoided them entirely,” said the deputy director of the National Consumer Advocacy Center, a consumer advocacy group. One said Lauren Sanders.
This is not the first time that “bank rent” has become a problem. Federal regulators curbed this practice in the 1990s, but it is gaining traction again with the rise of fintech companies specializing in online banking and online-only financial services.
An example of how this practice works can be found at Elevate, a Texas-based fintech company that offers high-value installment loans such as payday loans. Elevate offers loans in several states, including Arizona. Arizona caps interest rates on payday loans to 36%. Elevate uses banks in Utah and Kentucky to disburse these loans, so Elevate can get up to 149% in Arizona. In other states, Elevate has a 299% annual loan.
Biden’s Office of Comptroller said in a statement that it “respects” Congress overturning their rulings.
“We want to reaffirm the long-standing position of government agencies that predatory lending does not exist in the Federal Reserve,” said Michael J. Sue of the Office of the Comptroller in a statement.
Thursday’s vote marked the first Democratic vote, but former President Donald Trump and the Republican-controlled parliament used the Parliamentary Oversight Act when he took office in 2017, and it was passed during the waning of the Obama administration. Canceled 15 rules and regulations.
Prior to Trump, the law had only been applied once, when Republicans in Congress decided to overturn a series of ergonomic rules adopted on the last day of the Clinton administration in 2001.
On Thursday, the House of Representatives also used the law to repeal a series of rules approved by Trump’s Equal Employment Opportunity Commission on discrimination in employment. The voting was 219-210.
The house is expected to use it again on Friday to reverse Trump-era rules that allowed oil and gas companies to produce more methane while drilling.
Both bills were passed by the Senate.
Congress lifts Trump-era payday lenders rules – NBC10 Philadelphia
Link to source Congress Removes Trump-era Payday Creditors Rules – NBC10 Philadelphia