Congress Should Listen to Bipartisan Coalition of AGs Warning of Financial Harm to Vulnerable Consumers – Not Greedy Industry Lobbyists
WASHINGTON, D.C. – Ahead of today’s Senate Banking committee hearing on the growing threat to consumers known as ‘Rent-a-Bank’ and as Congress considers a Congressional Review Act resolution aiming to undo the OCC’s harmful “true lender” rule, government watchdog Accountable.US released a new report spotlighting one of the worst predatory lenders that stands to benefit from preserving the Trump era rule: World Business Lenders (WBL).
WBL is a New Jersey-based company that uses out-of-state banks to evade state usury laws and sock small business owners with interest rates as high as 268%. WBL has a checkered history of trapping small business owners in the debt trap during the pandemic, leading at least one to lose their home. And while WBL offers little leniency to the consumers and small businesses owners it has exploited (allowing its founder and CEO to live in opulence), Accountable.US found the company took at least $2.19 million in taxpayer-backed funds from the Trump SBA’s Paycheck Protection Program.
WBL is the poster child for the potential wave of usury that could plague consumers as a result of keeping the Trump ‘true lender’ rule, no matter the protections their states put in place. Other lowlights: WBL hired convicted fraudsters tied to infamous ‘Wolf of Wall Street’ con man Jordan Belfort – and fired 100 minority workers after taking a nearly $17 million grant that required those hires. Despite its poor reputation, the Trump OCC directly defended the company and its rent-a-bank business model in an amicus brief.
“Congress faces a clear choice: protect consumers from abusive triple-digit interest rates — or protect the profits of millionaire predatory lenders who are exploiting the vulnerable during this pandemic. A triple-digit interest payday loan is no less predatory when it’s laundered through a chartered bank, and that’s why this Trump-era special interest loophole must be closed,” said Jeremy Funk, spokesman for Accountable.US. “If senators are concerned about predatory lending, they should prove it by supporting a strong national interest rate cap — or at least not interfere with states that didn’t wait for Washington to crack down on debt trap schemes.”
In addition, Accountable.US released findings on how the financial industry went all-in in the so-called “True Lender” policy. On top of spending millions on lobbying, the industry gave over $200,000 to signers of a key letter from Congressional Republicans that almost certainly provided political cover for the controversial rule. Notably, the $200k came pouring in during the three weeks before and three weeks after the letter was sent.
Congress should instead listen to the hundreds of consumer and advocacy groups and bipartisan group of attorneys general supporting the CRA that would close the floodgates of predatory lending in states that proactively cracked down on abusive APRs.
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