House Passes Van Hollen, Brown Legislation to Strike Down Trump-era “Rent-A-Bank” Rule, Sending It to the President’s Desk

Today, U.S. Senator Chris Van Hollen (D-Md.), a member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and Committee Chairman Sherrod Brown (D-Ohio) applauded the bipartisan House passage of their resolution to repeal the Trump Administration’s so-called True Lender Rule through the use of the Congressional Review Act. This regulation, finalized in the last months of the prior Administration, allows predatory lenders to skirt state laws meant to curb interest rates on loans and opens the doors for these lenders to prey on vulnerable consumers. The legislation now heads to the President’s desk for signature.

“For four years the Trump Administration did all they could to strip Americans of their consumer protections. But today Congress took major action to reverse that damage. Striking down the Trump ‘Rent-A-Bank’ rule will help prevent predatory lenders from ripping off consumers and charging loan-shark rates under deceptive terms. I have repeatedly vowed to use every tool at our disposal to reverse this, and today we’re one big step closer to delivering on that promise,” said Senator Van Hollen.

“The OCC, when it allowed banks to evade state interest rate caps, betrayed hard-working families and attacked states’ ability to protect their citizens from predatory loans,” said Senator Brown, Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs. “Today, Congress showed the people we serve that we’re on their side. I look forward to President Biden signing this bill and overturning this rule that fleeced so many workers and enriched predatory lenders.”

The legislation is supported by a wide array of stakeholder and consumer protection groups including: a bipartisan group of 25 State Attorneys Generals, the Conference of State Bank Supervisors, the Faith for Just Lending Coalition, Center for Responsible Lending, National Consumer Law Center (on behalf of its low-income clients), Consumer Federation of America, the Military Officers Association of America, the Leadership Conference on Civil and Human Rights, the National Association of Consumer Advocates, the National Association of Federally-Insured Credit Unions, Appleseed Foundation, Consumer Action, National Community Reinvestment Coalition, UnidosUS, U.S. PIRG, and the Woodstock Institute.

The legislation is led by Congressman Jesús “Chuy” García in the House and was cosponsored in the Senate by Senator Jack Reed (D-RI), Senator Elizabeth Warren (D-MA), Senator Catherine Cortez Masto (D-NV), Senator Tina Smith (D-MN), Senator Dianne Feinstein (D-CA), Senator Richard Durbin (D-IL), Senator Sheldon Whitehouse (D-RI), and Senator Jeff Merkley (D-OR).

Background

Most states and the District of Columbia have rules in place to protect consumers from predatory loan rates but banks chartered under federal law are exempt through the National Bank Act. The Office of the Comptroller of the Currency (OCC) rule allows non-bank lenders to use superficial and deceptive partnerships with these banks to skirt state laws and charge outrageous annual percentage rates that have gone as high as 179%. In these “rent-a-bank” schemes, the bank attaches its name to the transaction while the customer deals entirely with the non-bank lender, who markets, underwrites, arranges, and collects payments on the loan.

The Congressional Review Act offers a mechanism for Congress to repeal federal agency rules. Agencies submit their rules to Congress, and it can pass a joint resolution of disapproval to overturn the action under an expedited procedure. Today’s resolution overturns the OCC’s so-called True Lender Rule and ensure that consumers are protected from predatory “rent-a-bank” schemes.