Rising Consumer Sentiment Calls for an End to Predatory Loans Targeting Black and Colored People – Atlanta, GA

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The Office of the Comptroller of the Currency (OCC), known as the “true creditor” rule, has given the green light to predatory creditors. This effectively repeals a number of laws in nearly every state that have been passed to end improper payments, car ownership, and installment loans with explosive interest rates above 100%. .. (Photo: iStockphoto / NNPA)

Last October, in the midst of the COVID-19 pandemic and its secondary recession, major federal financial regulators announced a “bank lease” scheme in which predatory lenders partner with banks to bypass state interest rate restrictions. The rule is to congratulate.

The Office of the Comptroller of the Currency (OCC), known as the “true creditor” rule, has given the green light to predatory creditors. This effectively repeals a number of laws in nearly every state that have been passed to end improper payments, car ownership, and installment loans with explosive interest rates above 100%. I will.

Rev. Frederick Haynes

The rule, which takes effect at the end of December 2020, promotes a scheme in which payday lenders and high-paid installment loans use their name and bylaws to pay bank fees, bypassing state interest rate laws.

Ironically, OCC’s mission is to ensure that national banks and federal savings and loan associations provide fair access to financial services, treat their customers fairly, and comply with applicable laws and regulations. .. However, this OCC regulation helps predatory lenders bypass state laws and directly harm consumers, violating the agency’s mission.

To more accurately explain how the bank’s charter was used to sell predatory lending, consumer advocates argue that the actual lender is the predatory non-bank lender, not the bank. The change is called a “bogus creditor”.

OCC’s inadequate regulation has also triggered a flood of consumer advocacy from various spheres of influence but united in opposition.

For example, 138 academics in 44 states and the District of Columbia have filed protests against Rent-A-Bank and are law professors at leading institutions such as Cornell, Columbia, Georgetown, Harvard, Howard, Notre Dame, and the Northwest. Included. “If this rule is not lifted, it will bring disaster to countless Americans trying to recover from this unprecedented medical and economic disaster,” the professors wrote in a letter dated April 20.

The next day, April 21, a bipartisan group of 25 state attorneys general also called for corrective action.

“During an unprecedented recession caused by COVID-19 and escalating, the OCC is seeking to increase the availability of exploited loans that trap borrowers in an endless debt cycle,” the attorney general wrote. I. “We are created to use the powers under the Parliamentary Trials Act to invalidate these OCC Credit Institution Rules, protect the rights of sovereign states and the power of independent judiciaries, and operate. We urge you to protect your citizens from the bank leasing system. After all, it is about important consumer protection. “

The Parliamentary Examinations Act (CRA) allows both the House of Representatives and the Senate to overturn rules by a simple majority vote before asking the president to sign. In late March, Illinois spokesman Jesus “Chewie” Garcia and Maryland Senator Chris Van Hollen presented a joint resolution under the CRA to disapprove parliament. They each await a bottom vote, which is expected to take place in mid to late May, to meet the legal deadline for action within the 60 legislative days allotted.

Other organizations actively working to eliminate regulations include the State Council of Banking Supervision, National Association of Cooperative Banks, Cooperative Baptist Fellowships, National Baptist Convention, USA, Inc., National Federation of Credit Unions, Successful Veteran Education, etc.

Consumer advocacy advocacy to end the “phony creditor” rule culminated on April 28 when the US Senate Banking, Housing and Urban Affairs Committee called hearings. The opening statement by its chairman, Senator Sherrod Brown, set the tone and purpose of the forum.

“Like what we do, it brings us back to one question. Which side are you on? ”Said Senator Brown.“ By bypassing the law and finding new ways to hunt down workers and their families, we can support online payday loans that boast of their creativity or families, small businesses, and more. ” “You can also support the state attorney general and the Council of State trying to protect themselves and the state from predatory lending.”

The testimony at the hearing highlighted concerns and decisions by Congress.

Pastor Frederick K. Haynes III, Principal Pastor of Friendship-West Baptist Church in Dallas, believes that honest and fair financial practice respects human dignity, as well as a community of 12,000 members. He also represented his faith in Union Just Lending.

“For decades, banks have used cards to refuse to lend to a community of color, but now they are using cards to act as loan sharks for the same community,” Haynes said. Done. “The rule that the OCC gives predatory lenders the ability to charge more than 200-400% per annum is certainly obscene, even in states that have struggled to thwart this predator with a 36% interest rate ceiling. I will put this into my sinful and demonic faith community.

“Finally, please show us your strong and active support for the Parliamentary Examinations Act, which supersedes the current OCC lending rules. Remember the wisdom of Thomas Piketty, who warns that he will no longer be.

Lisa Stifler, director of public policy at the Center for Responsible Lending (CRL), reviewed 10 years of consumer advocacy and discussed which lenders would benefit from the rules and their actions.

“It’s already clear how the OCC rules work, as OCC-regulated banks provide some of the most predatory lending on the market,” Stiffler said. “Stride Bank has been supporting pilot CURO payday loans for over a year at rates up to $ 5,000 and an annual rate of 179% (pa). This overpriced loan is available in almost every state. It is illegal. However, OCC rules encourage predatory lenders to bypass state laws by paying banks to document their name. “

“Another OCC regulated bank, Axos Bank, lends its name and charter to predatory small business lenders, World Business Lenders (WBL),” Stifler continues. “WBL loans range from tens of thousands of dollars to hundreds of thousands of dollars and have high interest rates of 268 percent. These loans, often secured by the borrower’s private home, are for small businesses. Because of this, the owner loses his home. “

North Carolina Attorney General Joshtein shares the state’s experience with Rent Abank before warning senators that the country is destined to fall if timely action is not taken. done.

“The OCC, through its deputy controller, not only violated the rules of fictitious creditors a week before the 2020 elections, but also did it illegally,” Stein said. “The OCC has substantially exceeded its statutory authority in issuing the rules. The OCC claims to interpret some of the three federal banking laws, all of which endorse the bank lease system. Does not entitle OCC to foresee the true credit principles of state law. “

“If this rule is not lifted, it provides jailbreak cards to predatory lenders who violate state law that limits interest rates and consumer credit commissions,” Stein concludes.

Perhaps the most summary of the day was from Chairman Brown.

“Some of the issues that are put before this committee are complex and there are unpleasant nuances that divide people and that are taken into account,” said the Ohio senator. “This is not one of them. It’s simple. Instead of encouraging predatory lenders, let’s stop. ”

Charlene Crowell is a senior fellow at the Center for Responsible Lending. Charlene.crowell@responsiblelending.org..

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