Office of the Comptroller of the Currency. (Source: Shutterstock)
NAFCU, CUNA and others roundly applauded the House of Representatives move to revoke the Office of the Comptroller of the Currency's "True Lender" rule on Thursday. The rule was upended by a vote of 218-210, with one Republican lawmaker siding with Democrats.
Credit union organizations have pushed to get this rule overturned, especially after the Senate voted to dismantle it in May.
"NAFCU applauds the House of Representatives for voting to overturn the OCC's anti-consumer true lender rule," said NAFCU President and CEO Dan Berger. "This rule has allowed banks to blur regulatory lines in partnership with high-cost online lenders to charge consumers interest rates of over 100%, evade consumer protection laws and usury caps, and promote payday lending schemes. Not only would this rule have threatened the COVID-19 economic recovery, but it would have severely harmed American consumers."
Days before the House vote, CUNA sent a letter to lawmakers asking to overturn the rule. "We believe the OCC's final rule is not in the best interest of consumers and should be withdrawn. Instead, the OCC, in coordination with its sister banking regulators, should focus its relief efforts on facilitating and promoting the fair and reasonable loan options that are offered by local-community based lenders like credit unions," the letter read. "CUNA has long held the position that similar products and services should be regulated similarly so that consumer protection runs with a product or service, not with the entity providing the products or service."
Consumer advocate organizations, such as the National Consumer Law Center (NCLC), were also pleased by the House vote. "Congress's vote to repeal the OCC fake lender rule is critical because predatory rent-a-bank schemes are destroying small businesses, homes, and lives," said National Consumer Law Center Associate Director, Lauren Saunders.
During his speech on the House floor on Thursday, Rep. Patrick McHenry (R-N.C.), who is the top Republican on the House Financial Services Committee, said, "The true lender rule was not some sinister plan by the previous Administration to trick borrowers. It is good, bipartisan policy that provides clarity to banks and fintechs so they can better serve their customers. That's it."
Earlier this month the American Bankers Association wrote a letter in support of keeping the rule, stating that "invalidation of the True Lender Rule removes the opportunity to create a more fulsome true lender framework. This would diminish the OCC's work to promote accountability and ensure responsible partnerships. To reiterate, we think the existing rule can be strengthened, but if the House eliminates the rule with this resolution it will only make that more challenging."
The issue now moves to President Biden's desk for signature, which he's expected to do. NAFCU pressed President Biden to sign it soon. "NAFCU urges President Biden to quickly sign this measure and for Congress to advance legislation promoting better opportunities for those that need financial services, such as allowing community-based, not-for-profit credit unions to add underserved areas to their fields of membership," said Berger.
CUNA and the NCLC also want the president to not waste time in signing the measure.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
