[Congressional Record Volume 167, Number 110 (Thursday, June 24, 2021)]
[House]
[Pages H3099-H3110]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONGRESSIONAL DISAPPROVAL OF THE RULE SUBMITTED BY THE
OFFICE OF THE COMPTROLLER OF CURRENCY RELATING TO ``NATIONAL BANKS AND
FEDERAL SAVINGS ASSOCIATIONS AS LENDERS''
Ms. WATERS. Madam Speaker, pursuant to House Resolution 486, I call
up the joint resolution (S.J. Res. 15) providing for congressional
disapproval under chapter 8 of title 5, United States Code, of the rule
submitted by
[[Page H3100]]
the Office of the Comptroller of Currency relating to ``National Banks
and Federal Savings Associations as Lenders'', and ask for its
immediate consideration in the House.
The Clerk read the title of the joint resolution.
The SPEAKER pro tempore. Pursuant to House Resolution 486, the joint
resolution is considered read.
The text of the joint resolution is as follows:
S.J. Res. 15
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, That Congress
disapproves the rule submitted by the Office of the
Comptroller of Currency relating to ``National Banks and
Federal Savings Associations as Lenders'' (85 Fed. Reg. 68742
(October 30, 2020)), and such rule shall have no force or
effect.
The SPEAKER pro tempore. The joint resolution shall be debatable for
one hour, equally divided and controlled by the chair and ranking
minority member of the Committee on Financial Services or their
respective designee.
The gentlewoman from California (Ms. Waters) and the gentleman from
North Carolina (Mr. McHenry) each will control 30 minutes.
The Chair recognizes the gentlewoman from California.
General Leave
Ms. WATERS. Madam Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks on S.J. Res. 15 and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from California?
There was no objection.
Ms. WATERS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, I rise today in support of S.J. Res. 15, a resolution
to invalidate the Office of the Comptroller of the Currency's so-called
True Lender Rule under the Congressional Review Act.
This resolution would end a dangerous Trump-era rule that would allow
predatory lenders to evade State usury laws and target consumers with
high interest rate loans of 150 percent or higher through sham
partnerships with banks.
I would like to thank Representative Garcia from Illinois for
introducing the House companion to this measure and for his leadership
in fighting to protect consumers from predatory lending schemes.
My committee has held several hearings that have exposed the consumer
harm that results from these rent-a-bank schemes and explored how the
Trump administration's harmful rule erodes the consumer protections.
The OCC's rule undoes centuries of case law that ensured that nonbank
financial institutions were subject to State interest rate caps when
they partnered with banks, so long as they held the primary economic
interest in a consumer loan.
Trump's OCC allowed nonbanks to launder their loans through OCC-
chartered banks, as long as the bank is listed on the loan origination
documents, effectively allowing nonbanks to ignore State usury laws.
Simply put, before this Trump-era rule was finalized, if a nonbank in
California, which has an interest rate cap of, for example, 36 percent,
wanted to make a loan to a customer in California, the nonbank can't
charge more than 36 percent. OCC's True Lender Rule turns this
commonsense legal doctrine on its head.
What the Trump-era rule says is that this nonbank can now partner
with a national bank that is based in, for example, Utah, which doesn't
have an interest rate cap, to now legally charge virtually any interest
rate to the consumers in California.
This is true even if the bank in Utah has done nothing but put its
name on the loan paperwork and intends to immediately transfer the loan
to the nonbank in California. We have seen interest rates of more than
150 percent charged to consumers in this way.
The committee's work has shone a spotlight on heartbreaking stories
of the harm that this rule has caused to consumers and small business
owners. Let me give you a real-world example of a Black-owned small
business that was harmed by one of these rent-a-bank schemes authorized
by Trump's OCC.
A recent news report detailed the case of Carlos and Markisha
Swepson, who were the owners of Boulevard Bistro, a restaurant in
Harlem, New York. As they told NBC News, they took out several business
loans for $67,000 and were charged a whopping 268 percent APR.
For all intents and purposes, their lender was World Business
Lenders, a nonbank lender that has a partnership with Axos Bank. This
is a bank in New York State. Even though the loan was made by World
Business Lenders, because Axos Bank's name was on the loan documents,
the nonbank could bypass the New York usury limit of 25 percent APR.
Due to the pandemic, the Swepsons are now behind on their loan
payments. They are now facing foreclosure proceedings filed by World
Business Lenders on a home they own that acts as collateral for the
high interest rate loans. If not for Trump's rule, the Swepsons would
have only been charged a 25 percent interest rate and would probably
not be facing financial ruin.
If Congress lets this Trump-era rule stand, these kinds of predatory,
triple-digit interest rate loans will continue to be made through these
kinds of rent-a-bank schemes, and lenders will continue to take
advantage of small business owners and other consumers desperate to
stay afloat.
Additionally, let's not forget that during the last election,
Nebraska joined 45 States and the District of Columbia that have
already passed legislation to limit usury rates for small-dollar
installment loans.
The Trump-era True Lender Rule is a backdoor way for nonbanks to
charge triple-digit interest rates on loans at the expense of consumers
in States where voters turned out to pass interest rate cap laws.
No wonder some called this the ``fake lender'' rule.
For these reasons, I urge my colleagues to support this bill. And for
those who did not understand what we were talking about when we talked
about the True Lender Rule, I think I have laid it out in such a way
that you understand this is predatory. This is a rip-off. And for these
reasons, I urge my colleagues to support this bill.
Madam Speaker, I reserve the balance of my time.
Mr. McHENRY. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise in strong opposition to this resolution.
Earlier this week, President Biden met with financial regulators.
From the four-sentence recap released by the White House, we know one
of the topics they discussed was ``promoting financial inclusion and
responsibly increasing access to credit.''
I agree with that concept, and I think we should all agree with that
concept. Unfortunately, my Democrat colleagues here in the House and
the Senate don't seem to be on the same page with the Biden
administration. This resolution we are considering today would actually
make financial services more expensive and credit less available to
consumers and to small businesses and families across the country.
So why are my Democrat colleagues strong-arming this resolution
through Congress?
Well, the answer is pretty simple. It is politics. That is what it
is. Let's call this what it is. It is blue States and their leftwing,
so-called consumer protection advocates who want to, again, limit the
reach of national banks and partnerships under the guise of ``consumer
protection.''
Democrats are more interested in scoring political points with
leftwing activists than supporting the borrowers and small businesses
that this OCC True Lender Rule helps.
{time} 1330
We have witnessed Democrats work for decades to limit the scope of
national banks through one measure or another.
The National Bank Act was signed into law in 1864. We have national
banks. We have had national banks for 157 years in this country similar
to today. What they are striking at is opposition to what we have lived
with for over 157 years of well-regulated national banks doing business
across the country.
[[Page H3101]]
The left, my colleagues on the opposite side of the aisle, will
provide misleading statements about interest rates and spurious
arguments about State versus Federal regulation. They will argue
consumers are harmed and this so-called partisan rule that they are
driving invites bad banking practices.
Above all else, my colleagues across the aisle see this as an
opportunity to rebuke the last administration, simply because they
don't like the former President. I understand that. There is plenty of
debate about that. But we should not tinker with existing law that is
longstanding and predates this President or any other President. We
should be talking about the contents of that law.
I would like to remind my friends as well that it was the Obama
administration who supported the risk-management principles underlying
the true lender rule. It was an effort to regulate, to ensure that
instead of having shadow banking provide these services, that you have
well-regulated consumer protection laws at the Federal level as a part
of this process.
So once again, we have the opportunity to come together to support
good, bipartisan policy, rather than doing what the Democrats would
rather do, which is appease the woke left.
So let's stop the political theatrics and talk about what the true
lender rule actually does, not what my Democrat colleagues claim it
does.
The rule specifies that when a bank makes a loan, the bank is the
true lender if, as of the date of origination, it is named as the
lender in the loan agreement or funds the loan. That loan would be
regulated by the entity making the loan, funding the loan, and the
regulation would fall upon them. So the consumers have Federal consumer
protection laws that would act on that loan. That is what it does.
My friends that created the Consumer Protection Bureau, I thought you
wanted that, and yet you are arguing against that with this rule today.
It is pretty straightforward; it is a pretty straightforward law. It
shouldn't be political.
This rule also clarifies that as the true lender of a loan, a bank
holds the responsibility of complying with Federal law. This eliminates
the greatest risk associated with abuse of rent-a-charter schemes,
which we agree are bad, and I think we could be doing something about
that rather than this spurious argument we have today.
In October of last year, the OCC finalized the true lender rule that
is being debated today. This was a second step in a decades-long
process to clarify the bank-third-party relationship when issuing a
loan. It has been longstanding practice, but there have been lawsuits,
a great deal of uncertainty about it, a lot of questions in particular
jurisdictions around the country on the nature of those partnerships,
and it clarifies those partnerships in a rules-based regime.
This legal clarity enables bank and fintech partnerships to provide
their customers with the financial products they want and need.
Consider this: According to the New York Federal Reserve, one in four
African-American-owned firms used fintechs to access PPP loans, one in
four. And they did so using this legal doctrine that enabled that to
happen in partnerships with national banks.
Technology helps create greater financial inclusion. So why are my
Democrat colleagues so afraid of technology, so afraid of innovation?
Per usual, my Democrat colleagues are willing to ignore facts in
favor of myths that back up their preferred narrative. That is
unfortunate, especially for something this important.
The left likes to say that banks can charge whatever interest rate
they want. That is simply not true. Federal law gives national banks
and Federal savings associations the same authority that State banks
have regarding exportation of interest rates.
Now, both Federal- and State-chartered banks must conform to
applicable interest rate limits in those States. States retain the
authority to set interest rates, which varies from State to State.
Here is another myth: Third-party bank partnerships will use this
rule to skirt State supervision and usury laws. Simply not true.
The truth is, banks primarily partner with third parties to reach
additional markets, benefiting from a particular expertise or
technology to improve their efficiency. Partnerships with third parties
do not change the bank's authority or expose interest rate
differentials.
And last, but not least, progressive activists cite the interest rate
as a real problem with the true lender rule. They are pushing a 36
percent best rate cap. They have even pushed it at the national level.
The math simply doesn't back up this falsehood.
The true lender rule was not some sinister plan by the previous
administration to trick borrowers. It was not. It simply was not the
case. This legal principle was established in 1864 with the National
Bank Act. It is being undermined by an attempt at politics rather than
sound policy, and what we should support is good, bipartisan policy
that provides clarity to banks and fintechs so they can better serve
our constituents and the consumers of America. That is it.
We have a well-regulated banking system. We do. It is not perfect. We
have States that have various laws that are operable in their States,
but we also have a national system here as well.
We have worked harmoniously, not perfectly, over the last 157 years
since we established the national banking system. But why undermine a
key principle of that national banking system by spurious arguments
that actually don't have to do with the true lender rule? They don't.
There are other elements that the left opposes that actually, on a
bipartisan basis, we oppose, but the true lender rule is not it.
It is a question of whether or not the bank that is providing you the
loan is, in fact, the true lender. That is it. It is not fancier than
that, people. That is what it is. That is what we are arguing about
today, and that is kind of the absurdity of this stuff that we are
debating right now, because it is that simple.
So let's promote financial inclusion the way that the President
outlined, which was promoting financial inclusion, making rates more
competitive and the cost of credit cheaper for individuals. Let's do
that. Let's oppose this resolution before us so we can have sound
principles, so we can drive that inclusion that is necessary and very
important.
Madam Speaker, I reserve the balance of my time.
Ms. WATERS. Madam Speaker, I yield 1 minute to the gentlewoman from
California (Ms. Pelosi), the Speaker of the House of Representatives.
Ms. PELOSI. Madam Speaker, I thank the gentlewoman for her leadership
in bringing this important legislation, more than one piece of
legislation, to the floor today.
As I rise to speak in support of reversing the anti-consumer fake
lender rule pushed through in the final weeks of the previous
administration, I just want to take a moment to put it in perspective.
Madam Speaker, in November, the people elected Democratic majorities
in the Congress that would be for the people, fighting for the public
interests, not the special interests.
To that end, they elected majorities that would reverse the damage
inflicted on their health and financial security by the last
administration.
That mission is why the House this week is passing legislation under
the Congressional Review Act to reverse three of the past President's
most egregious assaults on families' well-being.
The Congressional Review Act is one of Congress' most important tools
to reassert the power of the people's House to deliver for the people
and to reclaim our authority under the Constitution, upholding the
balance of powers that is the foundation of our American democracy.
With the gentlewoman's permission, I wish to speak to the anti-
consumer fake lender rule, but also speak to two other issues under the
Congressional Review Act this afternoon.
On the floor today is legislation, again, to reverse the anti-
consumer fake lender rule pushed through in the final weeks of the
previous administration.
This fake lender rule greenlights rent-a-bank schemes in which
predatory lenders evade bank interest rate limits to swindle vulnerable
consumers. This is done by putting a bank
[[Page H3102]]
name on loan paperwork and claiming that the bank, not the predatory
lender, issued the loan.
To take one example, in California, where the interest rate on a 2-
year $2,000 loan is capped at 25 percent, lenders can use rent-a-bank
partnerships to make loans with rates up to 225 percent.
This bipartisan resolution to end the fake lender rule is supported
by many: a bipartisan coalition of 25 State attorneys general; faith
leaders, including the National Latino Evangelical Coalition, the
National Association of Evangelicals, the National Baptist Convention
USA, hundreds of banking law and consumer finance regulation scholars,
and Americans across the country and across parties, urging us to
support this Congressional Review Act reversal of the anti-consumer
fake lender rule.
Also today, we are considering legislation to undo the antiworker,
pro-discrimination rule forced through in the final week of the past
administration.
The EEOC was established to protect working people from
discrimination and ensure that discrimination charges are resolved
fairly. But this rule would impose draconian new obligations that bias
the conciliation process against employees, toward employers; escalate
the potential for retaliation, because retaliation claims make up half
of EEOC's charges filed at the EEOC last year; siphon off scarce EEOC
resources and saddle the EEOC with wasteful collateral litigation,
prolonging harm to workers through delays; and contravene both the
Supreme Court precedent and Congressional intent.
This month, civil rights and workers' rights organizations wrote to
Congress in support of S.J. Res. 13, writing: ``The EEOC must be able
to conduct its work efficiently . . . to prevent and remedy workplace
discrimination.
``This mission is even more critical in the middle of a global
pandemic that continues to have severe economic repercussions for
women, people of color, and other marginalized communities.
``The final rule will only deepen the barriers working people face
coming forward to report discrimination and obtain justice.''
This Congressional Review Act legislation passed the Senate.
Hopefully, it will pass the House today.
Finally, tomorrow we take up bipartisan legislation that paves the
way to restore the Obama-era protections against harmful methane
pollution, which the most recent past President rolled back.
Briefly, these safeguards are key protections for public health that
will also make a serious difference in combating the climate crisis.
Methane is responsible for at least one-quarter of the warming of the
planet. And it is 25 times more potent than carbon dioxide in trapping
heat in the atmosphere.
This resolution passed on a bipartisan basis in the Senate and in the
Energy and Commerce Committee. It builds on the commitment of the
President and the Democratic Congress to tackle the climate crisis.
As the administration has stated, addressing methane pollution is an
urgent and essential step.
Madam Speaker, with that, as Speaker, I am proud to be able to use
the Speaker's prerogative to speak beyond the item on the floor right
now.
I am proud to support these important actions to reverse the Trump
damage and to deliver results that make a difference in the lives of
hardworking American families.
I thank all of our leaders for this legislation for the people: Chair
Bobby Scott and Representative Suzanne Bonamici on the EEOC
resolution; Representative Chuy Garcia for his work on the true lender
resolution; Representative Diana DeGette and Chairman Frank Pallone,
and many others, on the methane resolution from the Energy and Commerce
Committee.
I urge strong votes for S.J. Res. 13, 14, and 15.
Coming back to the resolution on the floor right now, I thank the
distinguished chair of the Financial Services Committee for her
leadership in looking out always for the consumer, for competition, for
fairness, for the people.
{time} 1345
Mr. McHENRY. Madam Speaker, I yield 3 minutes to the gentleman from
Missouri (Mr. Luetkemeyer), who is the ranking member on the Consumer
Protection and Financial Institutions Subcommittee of the Financial
Services Committee, and also the ranking member on the Small Business
Committee.
Mr. LUETKEMEYER. Madam Speaker, I rise today to discuss S.J. Res. 15,
House Democrats' attempt to limit the ability of our Nation's banks to
serve consumers by overturning the true lender rule.
The true lender rule was finalized by the OCC in 2020, in an effort
to clarify who was the true lender in national bank third-party
relationships. By providing this clarity, these third-party entities
were able to provide financial services in partnership with financial
institutions with the protections of legal precedence.
Partnering with third parties like fintechs gives financial
institutions the ability to increase access to credit, especially for
low- and moderate-income consumers and small businesses.
Unfortunately, the bill before us is nothing more than a politically
motivated attempt by Democrats to make it more expensive and difficult
for banks to serve customers, and its passage will have long-term
consequences.
According to the Congressional Review Act, if this legislation is
passed, the OCC will not have the ability to issue a similar rule down
the road. This will leave bank-fintech partnerships in limbo with a
great deal of uncertainty regarding the loans they make and who is the
true lender in the relationship.
Democrats are constantly putting their disdain for America's banks
ahead of the needs of their constituents, and this bill is another
prime example of this unfortunate practice.
I firmly oppose this bill and its prevention of widespread financial
inclusion, especially for low- and moderate-income consumers.
Ms. WATERS. Madam Speaker, I yield 2 minutes to the gentleman from
Illinois (Mr. Garcia), who is also the sponsor of the House companion
to this legislation.
Mr. GARCIA of Illinois. Madam Speaker, I rise in strong support of
S.J. Res. 15, a resolution to repeal the OCC's so-called true lender
rule.
Earlier this year, my State, Illinois, passed a law that protects our
consumers from predatory, high-interest loans. Eighteen other States
have done the same.
I introduced the House version of this resolution because the true
lender rule undermines laws like ours, laws that keep working-class
people out of cycles of debt they can't pay back.
The rule is a rubber stamp for rent-a-bank schemes, where a lender
can dodge State law by having a bank's name on the loan paperwork. That
is all. No skin in the game, no investment in our communities; just a
name on the paperwork.
This rule doesn't encourage innovation. It encourages playing games.
This isn't a partisan issue. As a matter of fact, last year, 82 percent
of Nebraska voters joined States like Arkansas and South Dakota to
protect their communities from unpayable debt, and this rule from the
OCC provides bad actors with a new tool to ignore them.
So a broad coalition of over 400 organizations--rural, urban,
suburban--have come together in support of this measure, and they
include consumer advocates, labor advocates, veterans, credit unions,
and many other actors, including evangelical congregations.
Madam Speaker, I urge this body to pass this resolution and empower
working-class communities like mine that are targeted by predatory
lenders, and voters across the country who support consumer
protections.
Mr. McHENRY. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I would reference my colleagues the Federal Code, the
Federal Register, that actually has the contents of this rule.
Madam Speaker, I include in the Record the actual rule that we are
debating here, and I would highlight one piece in particular.
``The OCC agrees that rent-a-charter schemes have no place in the
Federal financial system but disagrees that this rule facilitates such
schemes. As noted above, instead, this proposal would help solve the
problem by (1) providing a clear and simple test for determining when a
bank makes a loan and (2) emphasizing the robust supervisory framework
that applies to any
[[Page H3103]]
loan made by a bank and to all third-party relationships to which banks
are a party. As noted above, if a bank fails to satisfy its obligations
under this supervisory framework, the OCC will use all the tools at its
disposal, including its enforcement authority.''
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 7
[Docket ID OCC-2020-0026]
RIN 1557-AE97
National Banks and Federal Savings Associations as Lenders
AGENCY: Office of the Comptroller of the Currency,
Treasury.
ACTION: Final rule.
SUMMARY: The Office of the Comptroller of the Currency
(OCC) is issuing this final rule to determine when a national
bank or Federal savings association (bank) makes a loan and
is the ``true lender,'' including in the context of a
partnership between a bank and a third party, such as a
marketplace lender. Under this rule, a bank makes a loan if,
as of the date of origination, it is named as the lender in
the loan agreement or funds the loan.
DATES: The final rule is effective on December 29, 2020.
SUPPLEMENTARY INFORMATION:
I. Background
Lending partnerships between national banks or Federal
savings associations (banks) and third parties play a
critical role in our financial system. These partnerships
expand access to credit and provide an avenue for banks to
remain competitive as the financial sector evolves. Through
these partnerships, banks often leverage technology developed
by innovative third parties that helps to reach a wider array
of customers. However, there is often uncertainty about how
to determine which entity is making the loans and, therefore,
the laws that apply to these loans. This uncertainty may
discourage banks from entering into lending partnerships,
which, in turn, may limit competition, restrict access to
affordable credit, and chill the innovation that can result
from these relationships. Through this rulemaking, the Office
of the Comptroller of the Currency (OCC) is providing the
legal certainty necessary for banks to partner confidently
with other market participants and meet the credit needs of
their customers.
However, the OCC understands that there is concern that its
rulemaking facilitates inappropriate `rent-a-charter' lending
schemes--arrangements in which a bank receives a fee to
`rent' its charter and unique legal status to a third party.
These schemes are designed to enable the third party to evade
state and local laws, including some state consumer
protection laws, and to allow the bank to disclaim any
compliance responsibility for the loans. These arrangements
have absolutely no place in the federal banking system and
are addressed by this rulemaking, which holds banks
accountable for all loans they make, including those made in
the context of marketplace lending partnerships or other loan
sale arrangements.
On July 22, 2020, the OCC published a notice of proposed
rulemaking (proposal or NPR) to determine when a bank makes a
loan. Under the proposal, a bank made a loan if, as of the
date of origination, it (1) was named as the lender in the
loan agreement or (2) funded the loan.
As the proposal explained, federal law authorizes banks to
enter into contracts, to make loans, and to subsequently
transfer these loans and assign the loan contracts. The
statutory framework, however, does not specifically address
which entity makes a loan when the loan is originated as part
of a lending partnership involving a bank and a third party,
nor has the OCC taken regulatory action to resolve this
ambiguity. In the absence of regulatory action, a growing
body of case law has introduced divergent standards for
resolving this issue, as discussed below. As a result of this
legal uncertainty, stakeholders cannot reliably determine the
applicability of key laws, including the law governing the
permissible interest that may be charged on the loan.
This final rule establishes a clear test for determining
when a bank makes a loan, by interpreting the statutes that
grant banks their authority to lend. Specifically, the final
rule provides that a bank makes a loan when it, as of the
date of origination, (1) is named as the lender in the loan
agreement or (2) funds the loan.
II. Overview of Comments
The OCC received approximately 4,000 comments on the
proposal, the vast majority of which were from individuals
using a version of one of three short form letters to express
opposition to the proposal. Other commenters included banks,
nonbank lenders, industry trade associations, community
groups, academics, state government representatives, and
members of Congress.
Commenters supporting the proposal stated that the judicial
true lender doctrine has led to divergent standards and
uncertainty concerning the legitimacy of lending partnerships
between banks and third parties. They also stated that, by
removing the uncertainty, the OCC would help ensure that
banks have the confidence to enter into these lending
relationships, which provide affordable credit to consumers
on more favorable terms than the alternatives, such as pawn
shops or payday lenders, to which underserved communities
often turn. Supporting commenters also observed that the
proposal would enhance a bank's safety and soundness by
facilitating its ability to sell loans. These commenters also
noted that the proposal (1) makes clear that the OCC will
hold banks accountable for products with unfair, deceptive,
abusive, or misleading features that are offered as part of a
relationship and (2) is consistent with the OCC's statutory
mission to ensure that banks provide fair access to financial
services.
Commenters opposing the proposal stated that it would
facilitate so-called rent-a-charter schemes, which would
result in increased predatory lending and disproportionately
impact marginalized communities. Other opposing commenters
stated that the proposal is an attempt by the OCC to
improperly regulate nonbank lenders, a role they consider to
be reserved exclusively to the states. Opposing commenters
also asserted that the OCC did not have sufficient legal
authority to issue the proposal and that the proposal
violated the Administrative Procedure Act (APA) and 12 U.S.C.
25b.
Both supporting and opposing commenters recommended
changes. These recommendations included (1) adopting a test
that requires the true lender to have a predominant economic
interest in the loan; (2) providing additional ``safe
harbor'' requirements to enhance consumer protections (e.g.,
interest rate caps); (3) clarifying that certain traditional
bank lending activities do not fall under the funding prong
of the rule (e.g., indirect auto lending and mortgage
warehouse lending); (4) providing additional details on how
the OCC would supervise these relationships; and (5) stating
that the rule will not displace certain federal consumer
protection laws and regulations.
The comments are addressed in greater detail below.
III. Analysis
As noted in the prior section, commenters raised a variety
of issues for the OCC's consideration. These are discussed
below.
A. OCC's Authority To Issue the Rule
Some commenters argued the OCC lacks the legal authority to
issue the rule because it would contravene the unambiguous
meaning of 12 U.S.C. 85. These commenters believe that
section 85 incorporates the common law of usury as of 1864,
which they view as requiring courts to look to the substance
rather than the form of a transaction. In a similar vein,
commenters argued that section 85 incorporates all usury laws
of a state, including its true lender jurisprudence. One
commenter also argued that the proposal contradicts judicial
and administrative precedent interpreting sections 85 and 86.
The OCC disagrees. The rule interprets statutes that
authorize banks to lend--12 U.S.C. 24, 371, and 1464(c)--and
clarifies how to determine when a bank exercises this lending
authority. The OCC has clear authority to reasonably
interpret these statutes, which do not specifically address
when a bank makes a loan.
Banks do not obtain their lending authority from section 85
or 12 U.S.C. 1463(g). Nor are these statutes the authority
the OCC is relying on to issue this rule. The proposal
referenced sections 85 and 1463(g) in the regulatory text to
ensure that interested parties understand the consequences of
its interpretation of sections 24, 371, and 1464(c),
including that this rulemaking operates together with the
OCC's recently finalized `Madden-fix' rulemaking. When a bank
makes a loan pursuant to the test established in this
regulation, the bank may subsequently sell, assign, or
otherwise transfer the loan without affecting the permissible
interest term, which is determined by reference to state law.
Other commenters questioned the OCC's authority on
different grounds. Some asserted the OCC lacks authority to
(1) exempt nonbanks from compliance with state law or (2)
preempt state laws that determine whether a loan is made by a
nonbank lender. One commenter also asserted that the proposal
is an attempt by the OCC to interpret state law. A commenter
further argued that the OCC's statutory interpretation is not
reasonable, including because the proposal (1) would allow
nonbanks to enjoy the benefits of federal preemption without
submitting to any regulatory oversight and (2) violates the
presumption against preemption, especially in an area of
historical state police powers like consumer protection.
This rulemaking does not assert authority over nonbanks,
preempt state laws applicable to nonbank lenders, or
interpret state law. It interprets federal banking law and
has no direct applicability to any nonbank entity or
activity. Rather, in identifying the true lender, the rule
pinpoints key elements of the statutory, regulatory, and
supervisory framework applicable to the loan in question. As
noted in the proposal, if a nonbank partner is the true
lender, the relevant state (and not OCC) would regulate the
lending activity, and the OCC would assess the bank's third-
party risk management in connection with the relationship
itself.
Furthermore, because commenters expressed concern that this
rule would undermine state usury caps, it is also important
to emphasize that sections 85 and 1463(g) provide a choice of
law framework for determining which state's law applies to
bank loans and, in this way, incorporate, rather than
eliminate, state law. These statutes require that a bank
refer to, and comply with, the usury cap established by the
laws of the state where the bank is located. Thus,
disparities between the usury caps applicable to
[[Page H3104]]
particular bank loans result primarily from differences in
the state laws that impose these caps, not from an
interpretation that section 85 or 1463(g) preempt state law.
A commenter also asserted that the OCC's interpretation is
not reasonable because it (1) does not solve the problem it
claims to remedy, arguing that the proposal itself is unclear
and requires banks to undertake a fact-specific analysis and
(2) departs from federal cases holding that state true lender
law applies to lending relationships between banks and
nonbanks.
The OCC believes that this rule provides a simple, bright-
line test to determine when a bank has made a loan and,
therefore, is the true lender in a lending relationship. The
only required factual analysis is whether the bank is named
as the lender or funds the loan. The OCC has evaluated
various standards established by courts and has determined
that a clear, predictable, and easily administrable test is
preferable. This test will provide legal certainty, and the
OCC's robust supervisory framework effectively targets
predatory lending, achieving the same goal as a more complex
true lender test.
Several commenters also asserted that the proposal
contravenes 12 U.S.C. 1, which charges the OCC with ensuring
that banks treat customers fairly. One commenter also argued
that the proposal is inconsistent with the Community
Reinvestment Act (CRA) because it encourages predatory
lending. As the OCC explained in the proposal, the rule's
purpose is to provide legal certainty to expand access to
credit, a goal that is entirely consistent with the agency's
statutory charge to ensure fair treatment of customers and
banks' statutory obligation to serve the convenience and
needs of their communities.
B. 12 U.S.C. 25b
Several commenters asserted that the agency should have
complied with 12 U.S.C. 25b, which applies when the OCC
issues a regulation or order that preempts a state consumer
financial law. Some of these commenters argued that the
proposal fails to meet the preemption standard articulated in
Barnett Bank of Marion County, N.A. v. Nelson, Florida
Insurance Commissioner, et al. (Barnett), as incorporated
into section 25b. Commenters also argued that (1) section
25b(f) does not exempt the OCC's proposal from the
requirements of section 25b because the rule is not limited
to banks charging interest and (2) the proposal undermines or
contravenes section 25b(h) because it extends preemptive
treatment to subsidiaries, affiliates, and agents of banks.
The OCC disagrees: The requirements of section 25b are
inapplicable to this rulemaking. Section 25b applies when the
Comptroller determines, on a case-by-case basis, that a state
consumer financial law is preempted pursuant to the standard
for conflict preemption established by the Supreme Court in
Barnett, i.e., when the Comptroller makes a preemption
determination. This rulemaking does not preempt a state
consumer financial law but rather interprets a bank's federal
authority to lend. Furthermore, commenters arguing that
section 25b(f) (which addresses section 85) does not exempt
this rulemaking from the procedures in section 25b and that
sections 25b(b)(2), (e), and (h)(2) (which address bank
subsidiaries, affiliates, and agents) preclude the agency
from issuing this rule are mistaken; this rulemaking is not
an interpretation of section 85, nor does it address the
applicability of state law to bank subsidiaries, affiliates,
or agents.
C. Administrative Procedure Act
Several commenters asserted that, for various reasons, the
proposal is arbitrary and capricious and, therefore, in
violation of the APA. Some commenters argued that the
proposal lacks an evidentiary basis, either entirely or with
respect to certain assertions, such as the existence of legal
uncertainty. The OCC disagrees. The APA's arbitrary and
capricious standard requires an agency to make rational and
informed decisions based on the information before it.
Furthermore, the standard does not require the OCC to develop
or cite empirical or other data to support its rule or wait
for problems to materialize before acting. Instead, the OCC
may rely on its expertise to address the problems that may
arise.
The OCC has decided to issue this rule to resolve the
effects of legal uncertainty on banks and their third-party
relationships. In this case, the OCC's views are informed by
courts' divergent true lender tests and the resulting lack of
predictability faced by stakeholders. While the OCC
understands its rule may not resolve all legal uncertainty
for every loan, this is not a prerequisite for the agency to
take this narrowly tailored action. Taking these
considerations into account, the OCC has made a rational and
informed decision to issue this rule.
Commenters also argued that the OCC's actions violate the
APA because the agency has not given notice of its intention
to reverse an existing policy or provided the factual, legal,
and policy reasons for doing so. Specifically, these
commenters referenced the OCC's longstanding policy
prohibiting banks from entering into rent-a-charter schemes.
This rulemaking does not reverse the OCC's position. The
OCC's longstanding and unwavering opposition to predatory
lending, including but not limited to predatory lending as
part of a third-party relationship, remains intact and
strong. In fact, this rulemaking would solve the rent-a-
charter issues raised and ensure that banks do not
participate in those arrangements. As noted in the proposal,
the OCC's statutes and regulations, enforceable guidelines,
guidance, and enforcement authority provide robust and
effective safeguards against predatory lending when a bank
exercises its lending authority. This rule does not alter
this framework but rather reinforces its importance by
clarifying that it applies to every loan a bank makes and by
providing a simple test to identify precisely when a bank has
made a loan. If a bank fails to satisfy its compliance
obligations, the OCC will not hesitate to use its enforcement
authority consistent with its longstanding policy and
practice.
Furthermore, the final rule does not change the OCC's
expectation that all banks establish and maintain prudent
credit underwriting practices and comply with applicable law,
even when they partner with third parties. These expectations
were in place before the OCC issued its proposal and will
remain in place after the final rule takes effect. For these
reasons, the final rule does not represent a change in OCC
policy.
D. Comments on the Proposed Regulatory Text
As noted previously, the OCC's proposed regulatory text set
out a test for determining when a bank has made a loan for
purposes of 12 U.S.C. 24, 85, 371, 1463(g), and 1464(c).
Under this test, a bank made a loan if, as of the date of
origination, it was named as the lender in the loan agreement
or funded the loan.
Some commenters supported the rule without change, stating
that the proposal provided the clarity needed to determine
which entity is the true lender in a lending relationship.
Other commenters supported the proposal as a general matter
but suggested specific changes, including clarifying that the
funding prong does not include certain lending or financing
arrangements such as warehouse lending, indirect auto lending
(through bank purchases of retail installment contracts
(RICs)), loan syndication, and other structured finance.
These commenters are correct that the funding prong of the
proposal generally does not include these types of
arrangements: They do not involve a bank funding a loan at
the time of origination. For example, when a bank purchases a
RIC from an auto dealer, as is often the case with indirect
auto lending, the bank does not ``fund'' the loan. When a
bank provides a warehouse loan to a third party that
subsequently draws on that warehouse loan to lend to other
borrowers, the bank is not funding the loans to these other
borrowers. In contrast, and as noted in the proposal, the
bank is the true lender in a table funding arrangement when
the bank funds the loan at origination.
Another commenter recommended that the OCC consider the
``safe harbor'' established in the recent settlement between
the Colorado Attorney General and several financial
institutions and fintech lenders. While we are aware of this
settlement, the OCC believes that our approach achieves the
goal of legal certainty while providing the necessary
safeguards.
One commenter requested that the OCC expressly state in the
final rule that the rulemaking is not intended to displace or
alter other regulatory regimes, including those that address
consumer protection. Another commenter requested that the OCC
clarify how account information in true lender arrangements
should be reported to consumer reporting agencies under the
Fair Credit Reporting Act. As the preamble to the proposal
noted, the OCC's rule does not affect the application of any
federal consumer financial laws, including, but not limited
to, the meaning of the terms (1) ``creditor'' in the Truth in
Lending Act (15 U.S.C. 1601 et seq.) and Regulation Z (12 CFR
part 1026) and (2) ``lender'' in Regulation X (12 CFR part
1024), which implements the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2601 et seq.). Similarly, the OCC's
rule does not affect the applicability of the Home Mortgage
Disclosure Act (12 U.S.C. 2801 et seq.), the Equal Credit
Opportunity Act (15 U.S.C. 1691 et seq.), the Fair Credit
Reporting Act (15 U.S.C. 1681 et seq.), or their implementing
regulations (Regulation C (12 CFR part 1003), Regulation B
(12 CFR part 1002), and Regulation V (12 CFR part 1022)),
respectively. The OCC recommends that commenters direct
questions regarding these statutes and regulations to the
Consumer Financial Protection Bureau.
Some commenters stated that the two prongs in the
proposal's test would produce contradictory and absurd
results. For example, several commenters noted that, under
the proposal, two banks could be the true lender (e.g., at
origination, one bank is named as the lender on the loan
agreement and another bank funds the loan). In response to
this comment, we have amended the regulatory text to provide
that where one bank is named as the lender in the loan
agreement and another bank funds the loan, the bank named as
the lender in the loan agreement makes the loan. This
approach will provide additional clarity and allow
stakeholders, including borrowers, to easily identify the
bank that makes the loan. Otherwise, the OCC adopts the
regulatory text as proposed.
E. Rent-a-Charter Concerns; Supervisory Expectations
The OCC received multiple comments expressing concern that
the proposal would facilitate rent-a-charter relationships
and
[[Page H3105]]
thereby enable nonbank lenders to engage in predatory or
otherwise abusive lending practices. These commenters noted
that nonbanks are generally not subject to the type of
prudential supervision that applies to banks and that usury
caps are the most effective method to curb predatory lending
by nonbanks. They argued that the OCC's rule would
effectively nullify these caps and facilitate the expansion
of predatory lending.
As explained above, in a rent-a-charter arrangement, a
lender receives a fee to rent out its charter and unique
legal status to originate loans on behalf of a third party,
enabling the third party to evade state and local laws, such
as usury caps and other consumer protection laws. At the same
time, the lender disclaims any responsibility for these
loans. As a result of these arrangements, consumers can find
themselves in debt to an unscrupulous nonbank lender that is
subject to very little or no prudential supervision on a loan
at an interest rate grossly in excess of the state usury cap.
The OCC agrees that rent-a-charter schemes have no place in
the federal financial system but disagrees that this rule
facilitates such schemes. As noted above, instead, this
proposal would help solve the problem by (1) providing a
clear and simple test for determining when a bank makes a
loan and (2) emphasizing the robust supervisory framework
that applies to any loan made by a bank and to all third-
party relationships to which banks are a party. As noted
above, if a bank fails to satisfy its obligations under this
supervisory framework, the OCC will use all the tools at its
disposal, including its enforcement authority.
Although the proposal discussed this supervisory framework
in detail, it bears repeating because of its importance to
this rulemaking. Every bank is responsible for establishing
and maintaining prudent credit underwriting practices that:
(1) Are commensurate with the types of loans the bank will
make and consider the terms and conditions under which they
will be made; (2) consider the nature of the markets in which
the loans will be made; (3) provide for consideration, prior
to credit commitment, of the borrower's overall financial
condition and resources, the financial responsibility of any
guarantor, the nature and value of any underlying collateral,
and the borrower's character and willingness to repay as
agreed; (4) establish a system of independent, ongoing credit
review and appropriate communication to management and to the
board of directors; (5) take adequate account of
concentration of credit risk; and (6) are appropriate to the
size of the institution and the nature and scope of its
activities. Moreover, every bank is expected to have loan
documentation practices that: (1) Enable the institution to
make an informed lending decision and assess risk, as
necessary, on an ongoing basis; (2) identify the purpose of a
loan and the source of repayment and assess the ability of
the borrower to repay the indebtedness in a timely manner;
(3) ensure that any claim against a borrower is legally
enforceable; (4) demonstrate appropriate administration and
monitoring of a loan; and (5) take account of the size and
complexity of a loan. Every bank should also have appropriate
internal controls and information systems to assess and
manage the risks associated with its lending activities,
including those that provide for monitoring adherence to
established policies and compliance with applicable laws and
regulations, as well as internal audit systems.
In addition, a bank's lending must comply with all
applicable laws and regulations, including federal consumer
protection laws. For example, section 5 of the Federal Trade
Commission Act (FTC Act) provides that ``unfair or deceptive
acts or practices in or affecting commerce'' are unlawful.
The Dodd-Frank Wall Street Reform and Consumer Protection Act
also prohibits unfair, deceptive, or ``abusive'' acts or
practices. The OCC has taken a number of public enforcement
actions against banks for violating section 5 of the FTC Act
and will continue to exercise its enforcement authority to
address unlawful actions.
Banks also are subject to federal fair lending laws and may
not engage in unlawful discrimination, such as ``steering'' a
borrower to a higher cost loan on the basis of the borrower's
race, national origin, age, or gender. If a bank engages in
any unlawful discriminatory practices, the OCC will take
appropriate action under the federal fair lending laws.
Further, under the CRA regulations, CRA-related lending
practices that violate federal fair lending laws, the FTC
Act, or Home Ownership and Equity Protection Act, or that
evidence other discriminatory or illegal credit practices,
can adversely affect a bank's CRA performance rating.
The OCC has also taken significant steps to eliminate
predatory, unfair, or deceptive practices in the federal
banking system, recognizing that ``[s]uch practices are
inconsistent with important national objectives, including
the goals of fair access to credit, community development,
and stable homeownership by the broadest spectrum of
America.'' To address these concerns, the OCC requires banks
engaged in lending to take into account the borrower's
ability to repay the loan according to its terms. In the
OCC's experience, ``a departure from fundamental principles
of loan underwriting generally forms the basis of abusive
lending: Lending without a determination that a borrower can
reasonably be expected to repay the loan from resources other
than the collateral securing the loan, and relying instead on
the foreclosure value of the borrower's collateral to recover
principal, interest, and fees.''
Additionally, the OCC has cautioned banks about lending
activities that may be considered predatory, unfair, or
deceptive, noting that many such lending practices are
unlawful under existing federal laws and regulations or
otherwise present significant safety, soundness, or other
risks. These practices include those that target prospective
borrowers who cannot afford credit on the terms being
offered, provide inadequate disclosures of the true costs and
risks of transactions, involve loans with high fees and
frequent renewals, or constitute loan ``flipping'' (frequent
re-financings that result in little or no economic benefit to
the borrower that are undertaken with the primary or sole
objective of generating additional fees). Policies and
procedures should also be designed to ensure clear and
transparent disclosure of the terms of the loan, including
relative costs, risks, and benefits of the loan transaction,
which helps to mitigate the risk that a transaction could be
unfair or deceptive. The NPR also highlighted specific
questions that the OCC evaluates as part of its robust
supervision of banks' lending relationships.
In addition to this framework targeted at banks' lending
activities, the OCC has issued comprehensive guidance on
third-party risk management. These standards apply to any
relationship between a bank and a third party, including
lending relationships, regardless of which entity is the true
lender. Pursuant to this guidance, the OCC expects banks to
institute appropriate safeguards to manage the risks
associated with their third-party relationships.
Under the final rule, this robust supervisory framework
will continue to apply to banks that are the true lender in a
lending relationship with a third party. Rather than allowing
banks to enter into rent-a-charter schemes, the final rule
will ensure that banks understand that the OCC will continue
to hold banks accountable for their lending activities.
IV. Regulatory Analyses
Paperwork Reduction Act. In accordance with the
requirements of the Paperwork Reduction Act of 1995 (PRA), 44
U.S.C. 3501 et seq., the OCC may not conduct or sponsor, and
respondents are not required to respond to, an information
collection unless it displays a currently valid Office of
Management and Budget (OMB) control number. The OCC has
reviewed the final rule and determined that it will not
introduce any new or revise any existing collection of
information pursuant to the PRA. Therefore, no submission
will be made to OMB for review.
Regulatory Flexibility Act. The Regulatory Flexibility Act
(RFA), 5 U.S.C. 601 et seq., requires an agency, in
connection with a final rule, to prepare a Final Regulatory
Flexibility Analysis describing the impact of the rule on
small entities (defined by the Small Business Administration
(SBA) for purposes of the RFA to include commercial banks and
savings institutions with total assets of $600 million or
less and trust companies with total assets of $41.5 million
or less) or to certify that the final rule would not have a
significant economic impact on a substantial number of small
entities.
The OCC currently supervises approximately 745 small
entities. The OCC expects that all of these small entities
would be impacted by the rule. While this final rule could
affect how banks structure their current or future third-
party relationships as well as the amount of loans originated
by banks, the OCC believes the costs associated with any
administrative changes in bank lending policies and
procedures would be de minimis. Banks already have systems,
policies, and procedures in place for issuing loans when
third parties are involved. It takes significantly less time
to amend existing policies than to create them, and the OCC
does not expect any needed adjustments will involve an
extraordinary demand on a bank's human resources. In
addition, any costs would likely be absorbed as ongoing
administrative expenses. Therefore, the OCC certifies that
this rule will not have a significant economic impact on a
substantial number of small entities. Accordingly, a Final
Regulatory Flexibility Analysis is not required.
Unfunded Mandates Reform Act. Consistent with the Unfunded
Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1532, the OCC
considers whether a final rule includes a federal mandate
that may result in the expenditure by state, local, and
tribal governments, in the aggregate, or by the private
sector, of $100 million adjusted for inflation (currently
$157 million) in any one year. The final rule does not impose
new mandates. Therefore, the OCC concludes that
implementation of the final rule would not result in an
expenditure of $157 million or more annually by state, local,
and tribal governments, or by the private sector.
Riegle Community Development and Regulatory Improvement
Act. Pursuant to section 302(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994 (RCDRIA),
12 U.S.C. 4802(a), in determining the effective date and
administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other
requirements on insured depository institutions, the OCC must
consider, consistent with principles of safety and soundness
and the public interest, any administrative burdens that such
regulations would place on depository institutions, including
[[Page H3106]]
small depository institutions, and customers of depository
institutions, as well as the benefits of such regulations. In
addition, section 302(b) of RCDRIA, 12 U.S.C. 4802(b),
requires new regulations and amendments to regulations that
impose additional reporting, disclosures, or other new
requirements on insured depository institutions generally to
take effect on the first day of a calendar quarter that
begins on or after the date on which the regulations are
published in final form. This final rule imposes no
additional reporting, disclosure, or other requirements on
insured depository institutions, and therefore, section 302
is not applicable to this rule.
Congressional Review Act. For purposes of the Congressional
Review Act (CRA), 5 U.S.C. 801 et seq., the Office of
Information and Regulatory Affairs (OIRA) of the OMB
determines whether a final rule is a ``major rule,'' as that
term is defined at 5 U.S.C. 804(2). OIRA has determined that
this final rule is not a major rule. As required by the CRA,
the OCC will submit the final rule and other appropriate
reports to Congress and the Government Accountability Office
for review.
Administrative Procedure Act. The APA, 5 U.S.C. 551 et
seq., generally requires that a final rule be published in
the Federal Register not less than 30 days before its
effective date. This final rule will be effective 60 days
after publication in the Federal Register, which meets the
APA's effective date requirement.
List of Subjects in 12 CFR Part 7
Computer technology, Credit, Derivatives, Federal savings
associations, Insurance, Investments, Metals, National banks,
Reporting and recordkeeping requirements, Securities,
Security bonds.
Office of the Comptroller of the Currency
For the reasons set out in the preamble, the OCC amends 12
CFR part 7 as follows.
PART 7--ACTIVITIES AND OPERATIONS
1. The authority citation for part 7 continues to read as
follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71, 71a, 92, 92a,
93, 93a, 95(b)(1), 371, 371d, 481, 484, 1463, 1464, 1465,
1818, 1828(m) and 5412(b)(2)(B).
2. Add Sec. 7.1031 to read as follows:
Sec. 7.1031 National banks and Federal savings associations
as lenders.
(a) For purposes of this section, bank means a national
bank or a Federal savings association.
(b) For purposes of sections 5136 and 5197 of the Revised
Statutes (12 U.S.C. 24 and 12 U.S.C. 85), section 24 of the
Federal Reserve Act (12 U.S.C. 371), and sections 4(g) and
5(c) of the Home Owners' Loan Act (12 U.S.C. 1463(g) and 12
U.S.C. 1464(c)), a bank makes a loan when the bank, as of the
date of origination:
(1) Is named as the lender in the loan agreement; or
(2) Funds the loan.
(c) If, as of the date of origination, one bank is named as
the lender in the loan agreement for a loan and another bank
funds that loan, the bank that is named as the lender in the
loan agreement makes the loan.
Brian P. Brooks,
Acting Comptroller of the Currency.
[FR Doc. 2020-24134 Filed 10-29-20; 8:45 am]
BILLING CODE 4810-33-P
Mr. McHENRY. Madam Speaker, additionally, I would highlight for you
that the outline here and the arguments by my colleagues on the other
side of the aisle really strikes at the nature of national banking.
So just repeal the National Banking Act rather than trying to
undermine it by taking away the legal principle by which a bank can
make a loan. That is what this rule does, and that is the absurdity of
this debate. That is why I oppose this attempt on the floor today.
Madam Speaker, I yield 2 minutes to the gentleman from Georgia (Mr.
Loudermilk), my colleague and friend.
Mr. LOUDERMILK. Madam Speaker, I thank my friend and colleague from
North Carolina for managing the opposition to this.
Look, it is simple. The reason we are here today is to debate the
Democrats' latest episode in their anti-financial technology agenda,
but also their rush to undo any policy of the previous administration,
whether it was good or bad.
Now, here are the facts: More than 30 percent of adults are unbanked
or underbanked, 40 percent do not have enough savings to cover a $400
emergency expense, 42 percent have a subprime credit score and are
rejected for bank loans at a rate four times higher than those with
prime credit.
Now, fintech has been instrumental in expanding access to credit for
consumers who have little or no credit history. Online lending has
grown to $90 billion a year.
So what do consumers typically use these loans to pay for?
Funerals, weddings, car repairs, and home improvement.
Fintech is particularly important for minorities. In fact, fintechs
were the top PPP lenders to Black-owned businesses and Hispanic-owned
businesses during the pandemic.
But there is an issue that has caused difficulty when banks and
fintech companies partner to make loans, and that is the question of
which entity is considered the true lender. Until recently, this
question was attempted to be settled in a series of confusing and
conflicting lawsuits. The courts are divided on it. But, last year, the
OCC finalized a rule to provide much-needed certainty. It is no
surprise that the organizations calling for the rule to be overturned
are the so-called consumer groups that, for the most part, are funded
by trial lawyers.
The Democrats are attempting to overturn this rule because some
imaginary lenders could rent a bank charter to engage in predatory
lending, but as the ranking member has just stated, that is clearly
prohibited in the existing rule. This resolution is devastating to
minority consumers and businesses, those with subprime credit, and the
unbanked.
Instead of giving those people options, this resolution would direct
them to payday lenders, or in States like Georgia where payday lending
is illegal, they will have no access to credit.
Madam Speaker, I urge opposition to this disastrous resolution.
Ms. WATERS. Madam Speaker, I yield 2 minutes to the distinguished
gentlewoman from Michigan (Ms. Tlaib).
Ms. TLAIB. Madam Speaker, we know it is expensive to be poor in our
country; that we live in a country with a system that continues to put
profit before our people, and it must stop.
In my home State of Michigan, communities that are more than a
quarter Black and Latino have 50 percent more payday lenders than
anywhere else in the State. These lenders target our communities, the
most financially vulnerable communities. Payday lenders in Michigan are
62 percent more common in low-income Census tracts compared to
statewide average.
That is what folks mean when they say that we need to abolish
structural racism in our country.
You cannot justify loans of 100 percent APR or higher as providing
access to credit when they trap borrowers in destructive cycles of debt
and ruin their credit. World Business Lenders offered loans of upwards
of 268 percent of APR, despite the fact that its rent-a-bank partner
was regulated by the OCC. They found a way around the rules, and that
is unacceptable.
OCC's rules leave States like our State of Michigan no ability to
enforce their own State rate caps, giving predatory lenders free rein
to exploit our neighbors with outrageous APRs.
Repealing the true lender rule is the first step toward protecting
borrowers from predatory lenders, and I am proud to support it.
Mr. McHENRY. Madam Speaker, I yield 1\1/2\ minutes to the gentleman
from Utah (Mr. Moore), a great new Member of the Congress.
Mr. MOORE of Utah. Madam Speaker, I rise today to speak in opposition
to the CRA before us.
Innovation in our financial industry lifts Americans across all
levels of the socioeconomic spectrum. A great example of this has been
the emergence of the fintech industry, which has helped more Americans
access secure, affordable credit.
Unfortunately, government regulation has stymied innovation as
regulatory uncertainties have imposed artificial barriers to our
creativity. Recent court rulings have only exacerbated this uncertainty
by creating confusion about who the true lender of a loan is when a
bank works with a third party.
In 2020, the Office of the Comptroller sought to clarify this
uncertainty by finalizing the true lender rule. This rule allowed our
local community and regional banks to provide expanded access to
banking services and lower the cost of banking to consumers across the
Nation. It is that simple.
Commonsense reforms that help banks and the fintech industry do
business, in turn, make life easier for families, individuals, and
businesses. Unfortunately, my Democrat colleagues are seeking to roll
this rule back.
Nullifying the rule will decrease credit accessibility for
underserved communities, hurt community banks' ability to utilize new
technologies, and dissuade innovation in the financial services sector.
[[Page H3107]]
Madam Speaker, I oppose S.J. Res. 15, and I encourage my colleagues
to vote ``no.''
Ms. WATERS. Madam Speaker, I yield 2 minutes to the gentleman from
Texas (Mr. Green), who is also the chair of the Subcommittee on
Oversight and Investigations.
Mr. GREEN of Texas. And still I rise, Madam Speaker. Again, I thank
the chairwoman for the time and the opportunity.
I would say to all, I recall the debate around the yield spread
premium, wherein a loan originator could say to a person, ``Here is a
loan, you are lucky to get it for 10 percent'' when the person
qualified for a loan at 5 percent.
We eliminated the dastardly yield spread premium and the harm that it
caused. We have a similar circumstance with the rent-a-bank scheme that
steals the American Dream, such that people who qualify for better
loans will likely get higher loans because they don't always understand
the scheme.
So I rise today, and I thank Mr. Garcia for what he has done to bring
this bill to fruition. I thank the Chairwoman, and I absolutely support
the legislation.
Mr. McHENRY. Madam Speaker, I yield 3 minutes to the gentleman from
Kentucky (Mr. Barr), who is the ranking member on the Subcommittee on
National Security, International Development, and Monetary Policy of
the Financial Services Committee. He is also a member of the Foreign
Affairs Committee.
{time} 1400
Mr. BARR. Madam Speaker, I rise today also in opposition to S.J.
Resolution 15, the Congressional Review Act repeal of the Office of the
Comptroller of the Currency's true lender rule.
The United States has the most vibrant and innovative financial
system in the world. Recent advancements in technology have fostered
products and partnerships that expand access to credit to large swaths
of the population that previously couldn't access basic financial
services.
Many of these innovations faced challenges from regulatory red tape
or confusing and often conflicting rules. The OCC's true lender rule
gave needed clarity to banks and their partners, fixing the disastrous
Madden rule.
The OCC's true lender rule gave that clarity, but unfortunately, the
effort in the House today threatens to undermine the progress that we
have made and compromise underbanked individuals' and small businesses'
access to financial services.
I spoke with a local Kentucky bank that partners with a nonbank
fintech lender to provide credit to consumers, including many
underbanked populations. They told me that absent the true lender rule,
they will once again be buried in compliance costs to keep track of the
patchwork of cases that dictate the rules of the road.
Rather than embrace innovation to deliver cost savings to their
customers, many of whom have trouble accessing traditional financial
services to begin with, the bank will need to retain thousand-dollar-
an-hour New York lawyers just to keep everything straight. And guess
what? Those costs get passed on to the consumer through higher prices
or reduced product availability.
This is yet another example of the Democrats sacrificing good policy
for the sake of political points, all under the guise of consumer
protection.
Contrary to some of the rhetoric from my colleagues on the other side
of the aisle, a vote for this CRA will actually harm the very people
they purport to be helping.
Madam Speaker, one final point. I include in the Record an April 14,
2021, letter to the chair of the Financial Services Committee from the
former OCC Acting Comptroller Blake Paulson.
Office of the Comptroller
of the Currency,
Washington, DC, April 14, 2021.
Hon. Maxine Waters,
Chairwoman, Committee on Financial Services, House of
Representatives, Washington, DC.
Hon. Patrick McHenry,
Ranking Member, Committee on Financial Services, House of
Representatives, Washington, DC.
Dear Chairwoman Waters and Ranking Member McHenry: On March
26, 2021, H.J. Res. 35 was introduced, providing for
Congressional disapproval under the Congressional Review Act
of the Office of the Comptroller of the Currency's (OCC)
final rule, entitled ``National Banks and Federal Savings
Associations as Lenders,'' commonly referred to as the ``True
Lender'' rule. As you and other members consider the
resolution, I want you to be aware of the rule's intended
effect and the adverse impact of overturning the rule.
On October 27, 2020, the OCC issued its final true lender
rule to provide legal and regulatory certainty to national
banks' and federal savings associations' (banks) lending,
including loans made in partnerships with third parties. The
OCC's rule specifies that a bank makes a loan and is
considered to be the true lender of the loan if, as of the
date of origination, it (1) is named as the lender in the
loan agreement or (2) funds the loan. The rule clarifies that
as the true lender of a loan, the bank retains the compliance
obligations associated with making the loan, even if the loan
is later sold, thus negating concerns regarding harmful rent-
a-charter arrangements. Our rulemaking prevents potential
arrangements in which a bank receives a fee to ``rent'' its
charter and unique legal status to a third party with the
intent of evading state and local laws, while disclaiming any
compliance responsibility for the loan. These schemes have
absolutely no place in the federal banking system, and this
rule helps address them.
The rule makes clear banks' responsibility and
accountability for the loans they make and facilitates the
OCC's supervision of this core banking activity. Disapproval
of the rule would return bank lending relationships to the
previous state of legal and regulatory uncertainty, which, as
nearly 50 preeminent economic and finance scholars explained
in January 2021, adversely affects the function of secondary
markets and restricts the availability of credit.
Legal and regulatory certainty facilitates access to
responsible credit and clarifies responsibility and
accountability in lending involving third-party partnerships.
Bank third-party partnerships help banks better serve their
communities by expanding access to affordable credit products
from mainstream financial service providers. Such access is
particularly important as individuals and small businesses
across the country work to recover from effects of the COVID-
19 pandemic. Banks seek partnerships with third parties for a
variety of legitimate reasons, including reaching additional
markets, benefiting from specific expertise or technology,
and improving the efficiency and cost of their own
operations. The OCC's third-party risk management guidance
and supplemental exam procedures make clear to banks that
they retain the risks for activities conducted through
relationships with third parties.
With the legal and regulatory certainty provided by the
rule, lending by banks made in partnership with third parties
can be assessed as part of the ongoing supervision of these
banks, including as part of the OCC's examinations to
evaluate bank compliance with applicable laws and regulations
that ensure consumer protection, Bank Secrecy Act and anti-
money laundering compliance, required disclosures, and other
obligations associated with making loans. The OCC clarified
examiner responsibilities in assessing true lender activities
in third-party relationships in 202l. This clarification
addressed considerations related to assessing banks' due
diligence on the lending product or activity (e.g., terms and
scope) and the third party; credit risk management, including
underwriting practices; model risk management; compliance
management systems; and ongoing monitoring of the lending
activity and the third party's performance.
If a bank fails to satisfy any of its compliance
obligations, the OCC will not hesitate to use its supervisory
and enforcement authorities to correct the deficiencies,
protect consumers, and ensure the federal banking system
operates in a safe, sound, and fair manner.
As you consider the Congressional Review Act resolution,
you should be confident that the OCC issued this rule with
the intent to enhance its ability to supervise bank lending.
The rulemaking conformed to the Administrative Procedure Act,
and the agency considered all stakeholder comments provided
during the rulemaking process. The resulting rule is
consistent with the authority granted to the agency by
Congress.
It is also important to dispel misperceptions of the rule,
many of which are repeated by opponents of the rule. To be
clear, the rule does not change banks' authority to export
interest rates. That authority is granted by federal statute.
Nor does the rule permit national banks to charge whatever
rate they like; national banks and federal savings
associations have the same authority as state banks regarding
the exportation of interest rates. Both federal and state-
chartered banks must conform to applicable interest rate
limits. Disparities of interest rates from state to state
result from differences in the state laws that impose these
caps, not OCC rules or actions. States retain the authority
to set interest rates, and rates vary from state-to-state.
The rule does not limit states' ability to regulate the
conduct of state-licensed and regulated nonbank lenders,
which engage in the vast majority of predatory lending.
States are the primary regulators of nonbank lenders,
including payday lenders. Nonbank lenders are generally also
subject to the rules and enforcement actions of the Consumer
Financial Protection Bureau (CFPB).
[[Page H3108]]
It is also important to understand why demand exists for
short-term, small-dollar credit products and why many
consumers rely on nonbank sources of such credit, including
payday lenders. Unfortunately, mainstream service providers,
including commercial banks, largely abandoned short-term
small-dolJar lending over the past two decades. The resulting
lack of choice and fewer options pushed up the cost of these
products and forced consumers to seek services on less
favorable terms. Because millions of U.S. consumers do not
have sufficient savings or access to traditional credit, they
borrow nearly $90 billion each year in short-term small-
dollar loans typically ranging from $300 to $5,000 to make
ends meet and to address things like emergency car repairs
and other unexpected expenses. That is why the OCC has
remained vocal about encouraging banks to provide consumers
with more safe and affordable options to meet these small-
dollar needs. In providing these products, banks should
consider the ``Interagency Lending Principles for Offering
Responsible Small-Dollar Loans,'' published in May 2020.
Banks should also consider the full and actual cost of a
credit product and its affordability. Fees associated with
short-term loans may range from $10 to $30 per $100 borrowed,
and the imputed annual percentage rate (APR) of those loans
can appear to exceed 100 percent or more. But often, the fees
and total cost of these loans to the consumer can be less
than that of loans made with a 36 percent APR, when such
loans are available at all.
As you consider the Congressional Review Act resolution,
please keep in mind what may be an unintended consequence of
a Congressional Review Act disapproval. Disapproving the
OCC's true lender rule will constrain future Comptroller
ability to address the true lender issue and may limit the
OCC's ability to take supervisory or enforcement actions
against banks that would have been deemed to have ``made''
the loan under the true lender rule. Rather than vacate the
rule, limit future Comptrollers from taking up similar rules
or possibly hamstring the OCC's enforcement authority,
changes to the rule, if any, should be made through the
agency's rulemaking process and in accordance with the
Administrative Procedures Act.
Enclosed is a fact sheet that provides additional
information for your awareness. If you have any questions or
need additional information, please do not hesitate to
contact me or Carrie Moore, Director, Congressional
Relations.
Sincerely,
Blake J. Paulson,
Acting Comptroller of the Currency.
Mr. BARR. The point I want to highlight is that the former Acting
Comptroller was making the point that disapproving the OCC's true
lender rule will constrain a future Comptroller's ability to address
the true lender issue and limit the OCC's ability to take supervisory
or enforcement actions against banks that would have been deemed to
have made the loan under the true lender rule; meaning that the way the
CRA law operates, if the House passes this resolution, we will have a
permanent problem in the credit markets that will deprive low- and
moderate-income Americans of the financial products that they
desperately need.
That is why I urge all my colleagues to reject this misguided
proposal.
Ms. WATERS. Madam Speaker, I yield 1 minute to the gentlewoman from
California (Ms. Porter).
Ms. PORTER. Madam Speaker, I express my gratitude to Chairwoman
Waters for allowing me to speak in support of invalidating the
predatory true lender rule.
In our home State, the legislature passed an interest rate cap of 36
percent on loans of up to $10,000 about 2 years ago.
Before California Governor Newsom had even signed this bill into law,
predatory online lenders began plotting during their shareholder
earnings calls to evade the new law through rent-a-bank arrangements.
Companies like Speedy Cash and CashNetUSA went so far as to gloat about
the California law creating a huge opportunity for them by driving out
their competition, subprime title lenders based in California.
Since the founding of the United States, States have chosen to impose
their own limits on interest rates that lenders may charge consumers.
The Trump administration's true lender rule greenlit these rent-a-bank
schemes and, in doing so, undermined the will of Californians who,
through the democratic process, chose to prohibit abusive interest
rates.
The true lender rule violates our federalist democracy, and it must
be invalidated.
Mr. McHENRY. Madam Speaker, I yield 2 minutes to the gentleman from
Florida (Mr. Donalds), who has been a great new Member of Congress.
Mr. DONALDS. Madam Speaker, I thank the gentleman for yielding to
allow me to speak on this matter.
It is important to understand, Madam Speaker, that having access to
financial products is critical for not only the innovation of our
markets but for the future expansion of our markets. It is time to take
the pettiness out of politics and actually prioritize policy that puts
Americans first and puts America first.
True lender is not being discussed in a way that considers people. If
that were the case, we would be recognizing the incredible ways it has
spurred innovation in our markets and has provided more access to
credit and other financial products for Americans.
Instead of Congress working together to create financial equity in a
sustainable way or ensuring that the United States remains a global
leader, Democrats are working to undo anything accomplished under the
Trump administration, even if it means sacrificing the good of the
people.
I support assessing harmful financial policies of the past and
working to undo some of the mistakes that have been made. In fact, we
could benefit from assessing legislation like Dodd-Frank, which has put
tremendous downward pressure on community banks being formed in the
United States. But that is not what is being done here.
We are not having honest conversations. My peers across the aisle are
undoing good policy without an objective view to determine how it helps
or hurts Americans.
Fintech has played a significant role in transforming our markets,
helping smaller banks become more competitive, and creating more
products and access for Americans. The true lender rule has supported
that because it clarifies the legal framework that allows these bank
and nonbank partnerships to be successful for consumers.
We should be prioritizing fair access to financial services for
Americans and work to protect and promote innovation in our markets so
that consumers have as many pathways as possible to prosperity and
achieving the American Dream.
If we scrap the true lender rule, we will disrupt our market, stifle
innovation, and hinder access to accountable and affordable credit for
consumers and small businesses. This is not the precedent we should set
in this body. It is a gross abuse of power and a knife in the back of
consumers.
Ms. WATERS. Madam Speaker, I reserve the balance of my time.
Mr. McHENRY. Madam Speaker, I yield myself the balance of my time.
The true lender rule specifies that when a bank makes a loan, the
bank is the true lender. The rule clarifies what was uncertain and,
therefore, made those loans more expensive.
This gives certainty to the marketplace. It is a good thing. The true
lender rule is a good thing.
Under the true lender rule, we have fintechs that have been enabled
to make loans in coordination with banks and regulated like the people
that they work with, like the banks that they work with, which means
the loans fall under Federal consumer protection laws, under Federal
usury laws, under Federal laws.
One case in point, what the true lender rule enabled was one out of
four African American-owned businesses accessing credit through
fintechs.
I would ask Members to review a few pieces of evidence that I have
here.
Madam Speaker, I would refer the Members to a study conducted by NYU
highlighting the important role that fintechs play in supporting
African American-owned small businesses.
I would also refer the Members to letters in opposition to S.J. Res.
15: a June 8 letter from the American Bankers Association, Consumer
Bankers Association, Electronic Transactions Association, Independent
Bankers of America, Midsize Bank Coalition of America, and National
Bankers Association; an April 2, 2021, letter from FreedomWorks,
Americans for Tax Reform, National Taxpayers Union, Center for a Free
Economy, American Commitment, and Citizens Against Government Waste; a
letter from the Structured Finance Association; a letter from the
Independent Community Bankers of America; a May 11, 2021, letter from
the American Bankers Association; a May 7, 2021, letter from the
[[Page H3109]]
Americans for Prosperity; and a June 22, 2021, letter from the
Competitive Enterprise Institute, which consists of a number of
additional signatories.
None of those people are payday lenders, by the way, which is the
most spurious argument about the true lender rule. If you want to get
at payday lending, go talk about valid when made. That would be the
sound argument from there. At least it has some relationship
tangentially to payday lending. True lender does not. These are
different loans that are being described by my colleagues across the
aisle.
Let's be clear. The National Banking Act enacted in 1864 established
the principle by which and explicitly granted national banks the
ability to transfer loans State-by-State. If you don't like that model,
then repeal the 1864 National Banking Act instead of making these false
arguments about the true lender rule, which simply provides clarity
about the National Banking Act.
My colleagues across the aisle would have you believe that this is a
complex scheme cooked up by the previous administration to get around
consumer protection laws. That is not true. We are talking about 157
years of banking law here in the United States, and my colleagues
across the aisle are arguing about that.
My Democratic colleagues also ignored this basic fact: They have made
misleading statements about national banks versus State banks. They
have implied falsehoods on State interest rates. They have cited
protecting consumers when now they are just leaving them out to dry.
That is not consumer protection.
I get it, Democrats are now so politically motived that the facts and
longstanding precedent no longer matter. I think facts matter. In fact,
Democrats are so blinded by partisanship, some can't even seem to
differentiate between that doctrine of valid when made versus what we
are discussing today, which is true lender. I think we should be rooted
in fact, and our policy debates should be rooted in fact.
Make no mistake, the true lender rule provides necessary consumer
protections and supports affordable credit to more communities. The
rule does nothing to change interest rates, plain and simple. States
retain that authority.
The actions in 2020 to clarify true lender are very different than
codifying and clarifying valid when made. Both were important
clarifications, though.
The argument today is about true lender, not some massive shift away
from congressional intent, not something new, something longstanding.
Regardless, the Democrats will push through whatever they can in the
House today. But as former Acting Comptroller Brooks recently stated,
nullifying the true lender rule does nothing to undo payday lending--
nothing. And it seems to be what my colleagues across the aisle have a
real problem with.
Deal with that. Don't create needless pain for consumers. Don't drive
up the cost of credit and make it less available by repealing this true
lender rule.
This is another moment where my colleagues are working against the
national banks for politics rather than protecting consumers and
creating a more vibrant, competitive, and innovative marketplace.
We should do what is good for consumers in the financial system.
Technology and innovation facilitate financial inclusion, which should
be our goal.
Let's not waste further time here. Let's vote this idea down that we
are debating right now. Let's get back to actually driving a more
competitive marketplace and doing what is right for our constituents,
what is right for consumers, and what is right for families.
Madam Speaker, I urge a ``no'' vote on this resolution, and I yield
back the balance of my time.
Ms. WATERS. Madam Speaker, may I inquire how much time I have
remaining.
The SPEAKER pro tempore (Ms. McCollum). The gentlewoman has 18
minutes remaining.
{time} 1415
Ms. WATERS. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, this resolution would take the necessary action to
reverse the harmful Trump-era true lender rule that preys on small
business owners and individuals when they need assistance the most.
This rule is a back door for nonbanks to charge triple digit interest
rates that trap consumers.
Last month, the Senate passed this resolution on a bipartisan vote
with all Democrats voting in support. They were joined by Republican
Senators Lummis, Rubio, and Collins. This resolution is also supported
by more than 400 consumer, civil rights, veterans, small businesses,
and other organizations, including the American Civil Liberties Union,
Americans for Financial Reform, the Center for Responsible Lending,
Faith for Just Lending, the NAACP, National Association of Federally-
Insured Credit Unions, the National Consumer Law Center, Conference of
State Bank Supervisors, and 25 State attorneys general from both red
and blue States, among many others.
Madam Speaker, and Members, small businesses and underbanked
consumers do not benefit from the rule. Instead, the rule allows
nonbank lenders to launder loans through banks in order to charge those
with limited access to credit triple digit interest rates and trap
these consumers in devastating cycles of debt. These predatory rent-a-
bank schemes disproportionately prey on communities of color, draining
wealth from these communities and, in turn, perpetuating the racial
wealth gap.
A disproportionate share of payday borrowers come from communities of
color even after controlling for income. Communities of color have
historically been left out of the banking system. Black and Latinx
consumers are much less likely to have a checking account than White
consumers, which is typically a requirement for a payday loan. About 17
percent of Black and 14 percent of Latinx households are unbanked
compared to 3 percent of White households.
Payday lenders target communities of color. The communities most
affected by redlining are the same who are saturated by payday lenders
today, which are more likely to locate in more affluent communities of
color than in less affluent White communities.
One borrower, a single mother living below the poverty line from
California, submitted a complaint to the CFPB about Elevate's RISE.
``I was misled by RISE Credit to believe that they were unlike other
predatory loan companies. By the time,'' she says, ``I understood what
I had signed, I had paid them thousands of dollars in interest.
``I have recently become temporarily unemployed and called them to
ask for help during my time of financial hardship. They refused any
solution and my account is headed to collections now.
``The total paid is far over the amount initially borrowed from RISE.
This is robbery, and all of the necessities I have for myself and my
children are suffering because of it.
``How is it that they can do this? I am asking for help for not only
my family, but for all of the families targeted by these predatory
loans meant to target those living in poverty and struggling to live
paycheck to paycheck.''
The fake lender rule protects lenders that not only destroy small
businesses but also threaten to take business owners' homes.
In New York, Jacob Adoni, a realtor, has been facing foreclosure
threats on a $90,000 loan with an interest rate of 138 percent APR.
In a court case--that is Adoni et al. v. World Business Lenders, LLC,
Axos Bank and Circadian Funding filed in New York in October 2019--
Adoni said he received threats that the lender would foreclose on his
home after receiving a $90,000 loan at 138 percent APR, secured by his
personal residence.
``Adoni was contacted by Circadian Funding with an offer of a
personal loan that would be funded by WLB and Axos Bank. He was told
that the loan documents would be provided to him at 12 p.m. and he must
execute them by 6 p.m. or the offer would no longer be valid.
``Adoni was told by Circadian that the loan was meant to be a
personal loan to him, but it was necessary for the loan documents to
make reference to his business.''
He has received multiple threats to foreclose on his home and the
mortgage.
[[Page H3110]]
Madam Speaker, let me just respond to some of what I have heard from
the opposite side of the aisle. I am absolutely overcome by the great
interest that my Republican colleagues have in helping minorities. I am
so moved about the fact that all this is about helping minorities who
have been put into trouble because they are subprime lenders. Now if
they are, it is because they were the victim of predatory lenders who
put them in a subprime position.
But I hardly think that this is all about taking care of minorities
and these small businesses. This is about protecting the big banks.
This is about protecting the national banks. You heard what the ranking
member said. The big national banks have been in business for years,
and we ought to let them operate the way that they have historically
operated and not interfere with them.
I don't know where they get away with protecting these big national
banks. And the constituents in their own district who are being misused
because they happen to get money, money that was lent to them by a
nonbank, and that nonbank partnered with a national bank, they are now
having to pay the interest rates of another State, perhaps--like it was
explained in California, why we have usury laws and there is a cap on
those interest rates.
When they do this kind of partnering, it is all about getting to a
State where they are made to pay whatever that big bank is allowed to
collect from them.
Madam Speaker, this is a rip-off. This is about hurting the people
who most need our help. This is about allowing this partnering to go
on. And many of those people who are borrowing from these payday
lenders and other nonbanks don't even know that they are going to be
the victims of the big banks and the interest rates that they charge.
This is absolutely ridiculous, and there is not a credible argument
from the other side of the aisle about why they should disadvantage
these minorities and small businesses that they claim that they are
protecting. This is outrageous.
Madam Speaker, I am so pleased that the Senate passed this bill. And
I am so pleased that the Republicans on the other side of the aisle--
not on the other side of the aisle, on the other side of Congress--
decided to join with the Democrats in order to do the right thing on
behalf of our constituents.
Madam Speaker, when they talk about, Oh, this is just because they
didn't like Trump and they want to undo whatever he has done, that is
their talking point for the day. This is not about that.
This committee, the Committee on Financial Services, is a new and
different kind of committee. We are not owned by the banks. We are not
here to protect the big banks and the national banks. We are here
because we are here to take care of what is right and what is fair. And
this committee is not going to be about the business of ripping off the
least of these.
Madam Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to the rule, the previous question is ordered on the joint
resolution.
The question is on the third reading of the joint resolution.
The joint resolution was ordered to be read a third time, and was
read the third time.
The SPEAKER pro tempore. The question is on passage of the joint
resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. McHENRY. Madam Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution
8, the yeas and nays are ordered.
Pursuant to clause 8 of rule XX, further proceedings on this question
are postponed.
____________________