Letter to Congress from 325 groups urging repeal of OCC's "True Lender" Rule

"Fake" lender rule would facilitate predatory payday lending
Last updated: 3/26/2021

U.S. PIRG and all state PIRGs join 300+ consumer, faith and civil rights groups in letter to Congress urging repeal of the recent "True Lender" rule promulgated as a midnight regulation by the acting Comptroller of the Currency (OCC). The rule will overturn 200 years of case law and allow national banks to partner with fintechs and other non-banks to unleash predatory payday lending nationwide. Fully 45 states have rate caps on some installment loans. Eighteen states and the District of Columbia have caps that effectively ban predatory payday loans with 36% APR usury ceilings, protecting 110 million consumers. 

Excerpt from the letter downloadable from this page:

"The final rule, enacted by the OCC in October 2020, overturns 200 years of caselaw endorsed by the Supreme Court that allows courts to look beyond contrivances to prevent usury evasions. The rule replaces the longstanding “true lender” anti-evasion doctrine with a “fake lender” rule that allows lenders charging rates of 179% or higher to evade state and voter-approved interest rate caps merely by putting a bank’s name on the paperwork – just as payday lenders were doing in the early 2000s. The rule has already been challenged by eight Attorneys General.

Interest rate caps are the simplest and most effective way to protect consumers from predatory lenders. States have had the power to enact these caps since the American Revolution. At least 45 states and the District of Columbia (DC) have rate caps on at least some installment loans, depending on the size of the loan. While many states permit short-term payday loans, 17 states and DC—representing about a third of the U.S. population—enforce interest rates of 36% or less that keep all high-cost loans out of their state.

American voters strongly support state rate caps on a bipartisan basis. In November 2020, 83% of voters in Nebraska enacted a rate cap ballot initiative to place a 36% interest rate cap on payday loans. Nebraska thus joins states like Arizona, Colorado, Montana, and South Dakota where strong bipartisan votes in recent years illustrate the public’s overwhelming support for these usury laws. According to recent polling, 70% of voters across party lines support a 36% rate cap, and during the coronavirus pandemic, 81% of Americans support prohibiting high-interest loans."


Resource file download

PDF icon Letter To Congress

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