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HOPE Opposes Federal Action to Expand Predatory Lending

October 28th, 2020

JACKSON, MS – Yesterday, the Office of Comptroller of the Currency (OCC) finalized new rules that will encourage high-cost lenders to partner with banks to enable high-cost lending and undermine state law protections facilitating high-cost lenders’ partnerships with banks in a “rent-a-bank” arrangement. Last month, Hope Policy Institute submitted comments to the OCC opposing its proposal because it would deepen the financial insecurity of people here in the Deep South.

Highlights of the comment included:

  • There is at least one high-cost lender in every Deep South state making these loans via the bank partnership arrangement, charging rates as high as 180% APR.
  • HOPE’s research finds that rent-a-bank loans are deepening people’s financial burdens, not relieving them.
  • The OCC proposal will put at risk the consumer protections that currently exist in our region, particularly the 17% constitutional interest rate cap in Arkansas, which saves Arkansans $139 million a year in fees that would otherwise be drained by high-cost lenders.

Statement by Calandra Davis, Hope Policy Institute Analyst:

“We hear first-hand from our members about the resulting harms from high cost loans such as difficulty paying bills, the psychological stress caused by unaffordable debt, and the subsequent inability to build wealth in the future. High-cost lenders, such as payday lenders and car title lenders, strip away over $1.6 billion a year from the pocketbooks of people here in the Deep South.  The OCC’s rule increases the risk that more high-cost lenders will extract additional fees, aided by the willing assistance of partnering banks.  States and Congress must move forward to enact protections, such as an interest rate cap of 36% or less, to stop the debt trap.”

Read more about our analysis in our comment to the OCC:

About Hope Policy Institute

HOPE (Hope Enterprise Corporation, Hope Credit Union and Hope Policy Institute) provides financial services; aggregates resources; and engages in advocacy to mitigate the extent to which factors such as race, gender, birthplace and wealth limit one’s ability to prosper. Since 1994, HOPE has generated more than $2.5 billion in financing that has benefitted more than 1.5 million people in Alabama, Arkansas, Louisiana, Mississippi and Tennessee.

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