In recent years, consumer credit protection has waned due to a series of harsh attacks that completely dismantle or dramatically reduce financial safeguards in the market. But the new victories for consumers thanks to the growing support of ordinary citizens, academics and bicameral lawmakers represent an important step towards fair financial rules.
The June 30 signing of President Joe Biden ended the inappropriate rule of backing predatory lending rather than American consumers.
âThese are so-called bank rental programs,â he said. President Joe Biden At the signing ceremony on June 30. âAnd they allow lenders to profit from the use of veterans, the elderly and other unprotected borrowers – trapping them in a cycle of debt, and the latest administration caused it. Yes, but we don’t. “
Days before June 24, a bipartisan 218-208 vote in the United States House of Representatives sent major changes to the financial rules to the president’s desk. Just a few weeks ago, the Senate passed the same bill in a bipartisan vote. The vote aimed to eliminate recently passed regulations using the power of the Parliamentary Testing Act. The goal in this case was to publish the Office of the Comptroller of the Currency’s (OCC) “fake lender” rule later in the Trump administration.
As the seat of government of the country, Capitol Hill is a place where many interests vie for attention and influence. Low budget but principle-based public service organizations can often be disadvantaged by the benefits of deep pockets.
This is why it is important to recognize and celebrate by overcoming the accumulated obstacles and making a difference, which will bring real benefits to ordinary people and small businesses. Especially for African Americans and other communities of color, a solid step towards ending the billion dollar financial abuse is particularly noteworthy. Historically, we have been struck by predatory greed before.
“By eliminating this harmful OCC rule, we can prevent more people from being exposed to high interest loans and borrowers from getting into debt and despair,” said the director of the Responsible Lending Center (CRL) of the federal campaign. Said. Glaciera Aponte-Dias.. âBy breaking the rules, we can curb the expansion of predatory lending to blacks, Latinos and low-income people, many of whom are suffering from a recession. This measure puts the state within the state. Residents can be protected by enforcing the law on interest rates. “
As noted earlier in this column, the OCC’s âreal lenderâ rules have given the green light to predatory lenders. Effectively invalidates a set of state laws in almost every state enacted in late December 2020 to prevent fraudulent payments, car ownership, and installment loans with explosive interest rates above 100% Using the name and the bank’s charter, the bank will be advised to dodge the state interest rate law by claiming that the bank is exempt from the state interest rate law.
Consumer advocates have called the rule a âbogus lenderâ because the real lenders are predatory non-bank lenders, not banks.
The response to the challenges of successful consumers continued rapidly. One of the first public comments was made in the form of a joint statement by two top US senators.
âBreaking Trump’s bank borrowing rule helps prevent predatory lenders from robbing consumers and charging loan sharks on deceptive terms,â he said. Maryland Senator Chris Van Hollen, He is a member of the US Senate committee on banking, housing and urban issues and co-sponsored the resolution.
“When the OCC allowed banks to bypass state interest rate caps, it betrayed working families and attacked the state’s ability to protect its citizens from predatory loans,” he said. -he adds. Senator Sherrod Brown Ohio, Commission Chairman, “Parliament has shown those we serve that we are on their side.”
For Maxine Waters, chairman of the California state legislature and the House Financial Services Commission, the resolution eliminates the country’s financial waste.
âThe Trump-era ‘real lender’ rule is a backdoor for non-banks to charge triple-digit interest rates on loans at the expense of state consumers who passed the law. the cap on interest rates. “. Waters.. “It’s no wonder some people call this the ‘bogus lender’ rule. “
The amount of financial damage caused by reckless rules is documented by the National Consumer Law Center (NCLC), a member of various abolition coalitions.
According to the NCLC, Predatory small business lenders Using false lender rules Defend an annual rate (APR) of 268% on a total loan of $ 67,000 to the owners of a black restaurant in New York with a criminal usury rate of 25%, guaranteed by New Jersey real estate with a legal limit of 30%. that the nominal participation of the Nevada-based banks justified their astronomical rate. There is no interest rate limit on Nevada loans.
In another example, online lender OppLoans (also known as OppFi) has an APR loan of 160%. 26 states Prohibits loans at 3-digit interest rates. I also have this lender Citing the false rules of OCC creditors To protect the loan Disabled veteran In California, the loan attrition rate is 24%. OppLoans is also bypassing state tariffs backed by the majority of voters in Arizona, Montana, Nebraska and South Dakota. Even in states where the legislature has set rate caps, lender’s bogus rules would have essentially negated their rate cap protection.
For consumer advocates, as well as civil rights, faith and veterans community partners, revoking bogus lender rules is a step toward a national loan rate cap of 36% or less.
A few years ago, the bipartisan enactment of the Military Loans Act offered men and women in uniform double-digit rate cap protection. It is time for all of the United States to receive the same financial protection.
Charlene Crowell is Senior Fellow of Responsible Lending Centers. She can join [emailÂ protected]..
President Biden signs bipartisan bill to curb predatory lending – Los Angeles Sentinel | Los Angeles Sentry President Biden signs bipartisan bill to curb predatory lending – Los Angeles Sentinel | Los Angeles Sentry