At Today's Rent-a-Bank Hearing, Take Predatory Lending Apologists With Grain of Salt
Witnesses Invited By Senate Republicans Have Industry Ties
WASHINGTON, D.C. – This morning, the Senate Banking Committee will hold a hearing on “The Reemergence of Rent-a-Bank?”, putting a critical spotlight on predatory lenders’ harmful practice of skirting state APR limits to charge consumers triple-digit interest rates using chartered bank partners. Government watchdog Accountable.US urged senators to take with a grain of salt the testimony from the witnesses invited by Senate Republicans who have clear conflicts of interest.
“We would hope the witnesses testifying in support of Rent-a-Bank schemes are fully transparent about their ties to the industry and don’t try to present themselves as objective observers,” said Jeremy Funk, spokesperson for Accountable.US. “Consumers deserve to know whose interests are really being represented. There is simply no objective case to be made for allowing predatory lenders to take advantage of consumers with abusive triple-digit interest rates even in states where there are protections in place.”
KEY BACKGROUND ON TODAY’S WITNESSES:
Brian Brooks, Former Acting Comptroller of the Currency:
- Trump appointee Brian Brooks finalized the OCC’s True Lender Rule as acting comptroller of the currency in October 2020, claiming that the rule “supports healthy markets, promotes access to credit, and protects against harmful ‘rent-a-bank’ arrangements.”
- From 2017 to 2020, Brooks served on the board of Avant LLC, a company that submitted public comment in favor of Brooks’ true lender rule.
- After Brooks “positioned himself as a crypto advocate” during his time in the Trump administration — issuing guidance that helped cryptocurrency and issuing the first national bank charter to a crypto platform in his last week in office — he revolved back into the crypto industry, becoming CEO at Binance.US and joining the board of Spring Labs in a move criticized as “continu[ing] a trend of fintechs hiring former regulators to smooth their way through compliance hurdles.”
Dr. Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia Business School:
- Calomiris submitted written testimony supporting payday lenders in their 2014 lawsuit against the FDIC, claiming that the regulators were responsible for banks terminating relationships with payday lenders and that payday lending benefitted consumers without leading to debt traps.
- Calomiris wrote two 2020 op-eds defending Trump-era OCC actions, including the agency’s rule to allow payday lenders’ “rent-a-bank” schemes and charters for fintechs, which bank regulators said would allow firms to skirt consumer protections.
- Calomiris is an expert at Cornerstone Research, an industry consulting firm that was accused of ghostwriting another professor’s defense of a payday lender’s rent-a-bank arrangement during a 2018 bankruptcy case.
Read more from government watchdog Accountable.US here.
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