Congress removes Trump-era payday lender regulations – NBC10 Philadelphia
Parliament on Thursday overturned a set of regulations enacted on the last day of the Trump administration, effectively allowing payday lenders to circumvent state laws restricting interest rates.
The House of Representatives voted between 218 and 208 to overturn the Comptroller’s Office payday loan regulations, with a Republican voting for the Democratic Party.
Thursday’s vote to overturn the OCC’s “real lender rules” was the first time a Democrat in Parliament has successfully overturned a regulation using the Parliamentary Testing Act.
The law was enacted in the mid-1990s, allowing Congress to reject the rules and regulations of federal agencies by a simple majority vote in the House of Representatives and the Senate. Its authority is limited to a specific period of time after the agency finalizes the regulation, typically around 60 legislative days.
The Senate voted 52-47 on May 11 to overturn OCC rules. The bill is now being sent to President Joe Biden, who is expected to sign it.
The Democratic Party has sought to end the practice of payday lending, which critics have called the âbank lendingâ system, by overturning the Trump administration’s rules enacted in late 2020.
Payday lenders are regulated at the state level, but payday lenders partner with banks with national bank charters to create large installment loans. National banks are not based in any state and are not subject to the usury laws of each state.
“The state’s interest rate restrictions were the easiest way to stop predatory lending, and OCC rules would have avoided them altogether,” said the deputy director of the National Consumer Law Center, a consumer advocacy group. A Lauren Sanders said.
This is not the first time that âbank rentâ has become a problem. Federal regulators cracked down on this practice in the 1990s, but it is growing again with the proliferation of fintech companies specializing in online banking and online-only financial services.
An example of how this practice works can be found in Elevate, a Texas-based financial technology company that offers high-value installment loans such as payday loans. Elevate offers loans in several states, including Arizona. Arizona limits payday loan interest rates to 36%. Elevate uses banks in Utah and Kentucky to make these loans, so Elevate can make up to 149% in Arizona. In other states, Elevate has an annual loan of 299%.
In a statement, Biden’s office of the Comptroller of the Currency said it was “respecting” Congress by rescinding its regulations.
“We want to reaffirm the long-held position of government agencies that predatory lending does not exist in the Federal Reserve,” Michael J. Sue of the Office of the Monetary Affairs Comptroller said in a statement.
Thursday’s vote was the first Democratic vote, but former President Donald Trump and the Republican-controlled parliament used the Parliamentary Review Act when he came to power in 2017 and was enacted during the decline of the Obama administration. Overturned 15 rules and regulations.
Before Trump, the law was only used once when Republicans in Congress decided to abolish a series of ergonomic regulations enacted on the last day of the Clinton administration in 2001.
The House of Representatives also used the law on Thursday to overturn a set of regulations approved by the Equal Employment Opportunity Commission under Trump on the issue of employment discrimination. The vote was 219-210.
Home is expected to use it again on Friday to overturn Trump-era regulations that allowed oil and gas companies to produce more methane when drilling.
Both bills were passed by the Senate.
Congress Removes Trump-Era Payday Lender Regulations – NBC10 Philadelphia
Source Link Congress Removes Trump-Era Payday Lender Regulations – NBC10 Philadelphia