To the editor,
A current BankThink op-ed (“
Some state-chartered banks associate with nonbank lenders that make loans at rates of interest above what state legislation permits. It is a “rent-a-bank” scheme.
These loans usually load shoppers with debt, result in repeat reborrowing or bleed debtors dry till they default. Contemplate OppFi, Enova and Elevate — massive, publicly-traded nonbank lenders that use this scheme to difficulty loans at or above 100% APR. These firms’ public filings with the SEC present
Moreover, the Middle for Accountable Lending calculated that an individual with a typical OppFi mortgage of $1,500 can pay
Lease-a-bank schemes are facilitated by the 1980 Depository Establishment Deregulation and Financial Management Act, or DIDMCA. By opting out of DIDMCA, as Colorado has performed, state policymakers can reassert their potential to implement their very own legal guidelines and make sure that lenders headquartered of their state do not face unfair competitors from out-of-state lenders with no regard for state sovereignty.
Policymakers and regulators ought to comply with Colorado’s lead by defending shoppers from predatory rent-a-bank loans and defending the legal guidelines already put in place. Banks and traders can be clever to keep away from