September 22, 2020

Cortez Masto Calls on Administration to Keep Protections Against Predatory Lenders

Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) joined Senators Chris Van Hollen (D-Md.), Sherrod Brown (D-Ohio), and five other Senate colleagues in expressing strong opposition to the “true lender” rule proposed by the Office of the Comptroller of the Currency (OCC). In their letter to Acting Comptroller of the Currency Brian Brooks, the Senators emphasize that this proposed rule would serve as a boon to predatory lenders across the nation, harming vulnerable consumers who will face skyrocketing interest rates during an already volatile financial time. They urge the Acting Comptroller to withdraw the rule.

The Senators note that the OCC’s proposed rule bucks the national trend toward stronger borrower protections, and would eviscerate state laws limiting interest rates. “The OCC’s proposed rule runs contrary to this trend and would gut these state laws by enabling payday and other non-bank lenders to evade state interest limits by funneling high-interest, predatory loans through national banks, which are not subject to these state laws,” they write.

The Senators detail how predatory lenders would take advantage of the proposed rule, writing, “In these ‘rent-a-bank’ arrangements, the bank plays a nominal role as the formal lender of the loan. The non-bank lender, however, does all the work, bears all or nearly all of the economic risk, and collects most of the profit... Consumers have no direct interaction with the bank; they apply to and deal with the non-bank lender, which arranges and collects payments on the loan.”

They point out that the OCC cracked down on these “rent-a-bank” arrangements in 2001 and 2003 under President George W. Bush’s administration, and note, “There is no reason for the OCC to now reverse its position and enable these types of abusive schemes that prey on consumers with high-interest, predatory loans.”

The Senators go on to press that the proposed rule fails to meet the requirements laid down by Congress for overruling state consumer financial laws. In closing they write, “The OCC’s proposed true lender rule represents a disturbing return to its pre-financial crisis role in broadly applying federal preemption to undermine state consumer protection laws. For over two centuries, states have taken the lead in addressing interest rates within their borders. Now is not the time to overturn this system. We urge you to reverse course on this path, which enabled predatory lending practices and contributed to the 2008 financial crisis, and which would cause even greater financial harm to American families struggling through an even worse crisis.”

Full text of the letter is available here.


Senator Cortez Masto has pushed for robust investor and consumer protections during her time in the Senate. Recently, she sent a letter urging the administration to investigate reports that the OCC shelved an investigation into discriminatory lending. In related policies, she introduced legislation that would provide financial compensation to whistleblowers reporting wrongdoing to the Consumer Financial Protection Bureau. She has also introduced a bill to protect American consumers’ right to sue corporations for unfair practices. The legislation will help ensure that consumers who win fraud consumer causes are not liable for taxes on funds awarded to their attorney, which in some cases may be more than the plaintiff receives in redress.