Senate votes to repeal CUNA-opposed ‘true lender’ proposal

May 11, 2021

The Senate voted 52-47 Tuesday night in favor of a CUNA-backed repeal of the Office of the Comptroller of the Currency’s “true lender” rulemaking. CUNA wrote Senate leadership Tuesday supporting the repeal, which was done via the Congressional Review Act (CRA).

“CUNA has significant concerns with the ‘true lender’ proposal as it could be exploited to promote ‘rent-a-charter’ arrangements between payday lenders and national banks, which can be used to evade state restrictions on high interest rates or loan terms,” wrote CUNA President/CEO Jim Nussle. “We believe the OCC’s final rule is not in the best interest of consumers and should be withdrawn.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.”

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.

“Credit unions and banks are subject to most of the same consumer protection laws. While not perfect, these requirements help protect consumers,” Nussle wrote. “Unfortunately, clever fintechs and others can use partnerships with banks and possibly a banking charter to avoid consumer protections with the approval of the OCC.”

Under the OCC’s proposal a national bank would be considered the true lender of the loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan.

CUNA wrote to the Senate Banking, Housing, and Urban Affairs Committee last month with concerns over the proposal.

The House will vote on the repeal next.