The Center for Responsible Lending (CRL) calls the rule change an “end run,” allowing lenders to overcome state regulations that limit interest rates. Critics also call it a “rent-a-bank” scheme, since the bank of record has little involvement in the actual loan, though it may loan the money to the third-party lender, which in turn loans it to the consumer.
“The OCC’s proposal provides that a bank ‘makes’ the loan and thus is the lender -- so that state interest rate laws do not apply -- so long as the bank’s name is on the loan agreement or the bank funds the loan,” CRL said in a statement. “This rule would prohibit courts from looking behind the fine print form to the truth about which party is running the loan program and is the ‘true lender.’”
