Could it be that Trump administration officials and appointees feel their time is limited and that they need to act quickly to get their final giveaways to the core industries before a change in political direction? of the country will intervene in 2021?
This is certainly the impression one has of the latest remarkable announcement from the Office of the Comptroller of the Currency, which is currently headed by an “interim” agency manager which was installed in March by Trump’s Treasury Secretary Steve Mnuchin. The proposal would effectively squeeze out long-standing and hard-won consumer protections states like North Carolina have put in place to regulate predatory “payday” loans.
This is a press release distributed this morning to the right people at Center for Responsible Lending:
Durham, NC – Yesterday the Office of the Comptroller of the Currency (OCC) proposed a rule that would allow predatory lenders to partner with foreign banks in an attempt to escape the interest rate cap of the North Carolina.
The “real lender” rule would allow the same situation as the North Carolina banking commissioner end in 2006. Payday lenders like Advance America operated statewide, charging annual interest rates of up to 400%, which violated North Carolina law and trapped people in cycles of debt at cost. Student. North Carolina is currently recording $ 457 million per year in breakdown assistance and car title costs by applying our consumer protections.
Payday and auto title loans are marketed as a quick relief for cash strapped borrowers, but overwhelming evidence shows that the business model of these lenders is based on engaging customers in a long repeat cycle. term. Payday lenders get 75% of their turnover from borrowers with more than 10 loans per year.
At triple-digit interest rates, the cycle causes extreme financial distress for borrowers who struggle to pay their bills, incur bank charges that trigger bank account closings, and are more likely to file for bankruptcy than those in the same situation without payday loans.
Center for Responsible Lending (CRL) North Carolina Policy Director Rochelle Sparko issued the following statement:
“The OCC proposal shows great insensitivity to the plight of essential workers and other North Carolinians, for whom predatory loans are both more dangerous and potentially more harmful than ever. Our State saw the destruction caused by predatory lenders and drove them from our borders in 2006. It would be a shame to see them come back, settle in our shopping centers, and put their wealth-stripping machines back into service, especially in communities of color where they settle most often and where families are devastated by the COVID-19 pandemic and its economic consequences. “
The deadline for comments to the OCC on this rule proposal is September 3, 2020. The FDIC has already expressed interest in publishing its own “true lender” rule proposal.
CRL plans to write a commentary in August on the proposal to which individuals and organizations will be invited to lend their names. Click here to learn more and receive updates on this and related issues.