Nebraska Advocates Oppose Rent-a-Bank Scheme

Andy Spears
2 min readApr 26, 2021

Advocates in Nebraska are speaking out on a federal regulatory rule that would allow payday predators to circumvent state interest rate caps. Here’s more from the Omaha World-Herald:

As a former Republican state senator and a veteran who advocates for other veterans’ rights, we know how important it is to stand up when predatory lenders are trying to take advantage of Nebraskans. For this reason, we feel compelled to speak up on the harmful proposed federal rule that would give banks a loophole to begin partnering with non-bank lenders to supersede our state’s interest rate caps on loans.

The proposed rule would welcome banks into the predatory lending business — charging exorbitantly high interest rates in violation of state law, even as banks are getting zero-interest rate loans from the government and paying near-zero rates of interest on their customer’s savings accounts. The federal Office of the Comptroller of the Currency (OCC) claims the bank would become the “true lender,” even if a non-bank lender is marketing and managing the loan. National banks can generally preempt state interest rate caps.

Federal Rule Would Negate Nebraska Law

Because we don’t think Nebraskans should have to pay high interest rates, we were both involved in the successful 2020 ballot initiative to cap rates on payday loans, a form of predatory lending, at 36%. Last November, nearly 83% of Nebraska voters — from all political persuasions — approved Measure 428. But the current rule proposed by the OCC would trample over the will of Nebraskans. In fact, the rule also violates federal law and a warning from Congress in 2010 that interest-rate preemption of state law is limited to banks. It also violates decades of precedent that bank charters should not be rented out.


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Andy Spears

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