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Bipartisan Coalition of 23 Attorneys General Argue Against Rule Alleged to Weaken States’ Ability to Enforce Usury Laws

 

  • A bipartisan coalition of 23 AGs, led by California AG Xavier Becerra, New York AG Letitia James, and Illinois AG Kwame Raoul, submitted a comment letter to the Office of the Comptroller of the Currency (“OCC”) in opposition to a proposed rule, “Permissible Interest on Loans That Are Sold, Assigned, or Otherwise Transferred” (“Proposed Rule”), which would establish that when a bank sells, assigns, or otherwise transfers a loan, the interest permissible prior to the transfer remains in effect following the transfer.
  • In the comment letter, the AGs argue that, because certain banks are exempt from state usury limits and the Proposed Rule would allow the interest rate charged by the exempt institution to carry over to future debt holders, the Proposed Rule would help shield predatory lending practices by payday, car title, and installment lenders, and facilitate “rent-a-bank” schemes in which national banks would enter into sham partnerships with unregulated entities so that these entities can exceed state interest caps by buying loans that the national banks originate specifically for that purpose.
  • The comment period for the Proposed Rule closed on January 21, 2020.