Advocates Welcome New Bank Regulator, Call on Congress to Repeal “Fake Lender” Rule

Andy Spears
3 min readMay 5, 2021

Advocates welcomed reports that Treasury Secretary Janet Yellen plans to appoint a new acting head of the Office of the Comptroller of the Currency (OCC), replacing Blake Paulson, in light of the highly deceptive and false claims that the agency, under Paulson’s leadership, put forward as Congress debates overturning the OCC’s “fake lender” rule. The fake lender rule will enable a massive expansion of predatory lending in all 50 states if the rule is permitted to remain in effect. Congress must pass the Congressional Review Act (CRA) resolution introduced by Senators Sherrod Brown (D-OH), Chris Van Hollen (D-MD), S.J. Res. 15, and Rep. “Chuy” García. H.J. Res. 35, to overturn the fake lender rule.

Even with a new acting comptroller and eventually a permanent one, advocates stressed the urgency of Congress repealing the fake lender rule. “Congress must repeal the OCC fake lender rule because it is doing active harm right now, defending a predatory business model that destroys small businesses, homes, and lives,” said Lauren Saunders, associate director of the National Consumer Law Center. “It could easily be two years or more before the rule could be repealed through rulemaking, and families, especially Black and Brown and low-income families, cannot wait.”

Predatory small business lenders are using the fake lender rule today to defend a 268% APR rate on loans totaling $67,000 to a restaurant owner in New York, where the criminal usury rate is 25%. OppLoans (aka OppFi), an online lender offering 160% APR loans in about 27 states that prohibit that rate, cited the OCC’s fake lender rule in defense of its loan to a disabled veteran in California, where the legal rate is 36% plus the federal funds rate. OppLoans is evading state rate cap laws supported by broad majorities of voters in Arizona, Montana, Nebraska, and South Dakota; and also laws approved by legislatures in Maine, Ohio, and other states.

“Veterans are being harmed by evasive and predatory rent-a-bank loans, which is why groups like the Military Officers Association of America, Blue Star Families, and Veterans for Education Success support overturning the fake lender rule,” said Mike Saunders, director of military and consumer policy for Veterans for Education Success.

“The fake lender rule supports a rent-a-bank model that is being used by predatory payday and installment lenders to make triple-digit interest rate…

Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .