New York Attorney General Letitia James filed a lawsuit against the Office of the Comptroller of the Currency (OCC) over a rule that would undermine New York’s efforts to prevent predatory lenders from charging high interest rates on loans and bypassing state interest rate caps — or usury laws — already in place.
The new rule would enable predatory lenders to circumvent these caps through ‘rent-a-bank’ schemes — arrangements in which heavily regulated national banks act as lenders in name only for the express purpose of enabling payday lenders and other non-bank lenders to evade state consumer protection laws.
“This rule would be a mistake at any time, but the Trump Administration’s attempts to unleash predatory lenders on unsuspecting New Yorkers in the midst of a pandemic is cruel and heartless,” said James. “Rather than stem the tide of exploitative and predatory loans that trap vulnerable consumers in cycles of debt, the Trump Administration wants to open the floodgates by sanctioning schemes that allow the financial services industry to target New Yorkers and paint a bullseye on their backs. Rent-a-bank schemes make a mockery of federal law, and the administration’s sanctioning of these schemes undermines the sovereignty of the states where legislatures and voters have told payday lenders, in no uncertain terms, that their ‘services’ are not welcome here.”