RELIEF! Advocates Applaud Senate Vote to Overturn Trump Era “Fake Lender” Rule

Andy Spears
4 min readMay 12, 2021

Three Republicans joined with Senate Democrats to overturn a regulation that allowed predatory lenders to usurp state banking rules and charge outrageous interest rates in excess of 100%.

Here’s more on the rule and the victory for consumers as the measure heads to the House.

In a 52–47 vote, the U.S. Senate voted to overturn the OCC’s “fake lender” rule, which allows predatory lenders to evade state interest rate laws by putting a bank’s name on the paperwork. S.J. Res. 15, a resolution under the Congressional Review Act (CRA), was introduced by Senators Chris Van Hollen (D-MD) and Sherrod Brown (D-OH). Rep. “Chuy” García introduced a parallel resolution, H.J. Res. 35, in the U.S. House of Representatives. Now that the Senate approved the resolution, the House has until the end of this legislative session to vote on it.

Advocates applauded the Senate vote and urged the House to act quickly to prevent a massive expansion of predatory lending in all 50 states. In a bipartisan vote, Republican Senators Cynthia Lummis (R-WY), Susan Collins (R-ME), Marco Rubio (R-FL) joined with Democrats to protect small businesses, veterans, and consumers across the nation being devastated by the fake lender rule.

“The bipartisan vote in the Senate shows the importance of repealing the OCC fake lender rule now because it is doing active harm right now, defending a predatory business model that destroys small businesses, homes, and lives,” said National Consumer Law Center Associate Director Lauren Saunders. “Congress must act because it could easily be two years or more before the rule could be repealed through rulemaking, and small business and families devastated by COVID, especially in Black and Brown communities, cannot wait.”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%, secured by property in New Jersey, where the legal limit is 30%. OppLoans (aka OppFi), an online lender offering 160% APR loans in 26 states that prohibit triple-digit rate loans, cited the OCC’s fake lender rule in defense of its loan to a disabled veteran in California, where the legal rate on the loan is 24%. OppLoans is evading state rate cap laws supported by broad majorities of voters in Arizona, Montana, Nebraska, and South Dakota; and also laws…

Andy Spears

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