NAFSA Sends Letter to Senate Leaders Expressing Support for OCC’s True Lender Rule

As the U.S. Senate prepares to consider a resolution introduced by Senators Chris Van Hollen (D-Md.) and Sherrod Brown (D-Ohio) that would overturn the Office of the Comptroller of the Currency (OCC)’s “True Lender” Rule, Native American Financial Services Association (NAFSA) Executive Director Gary Davis sent a letter opposing the resolution and supporting the rule.

The resolution would nullify the rule using the Congressional Review Act, which is “an oversight tool that Congress may use to overturn rules issued by federal agencies,” according to a report from the Congressional Research Service. The rule was finalized by the OCC in October and clarifies that “a national bank is the true lender if, at the time of the loan’s origination, it is named as the lender in a loan agreement or if the bank funds the loan,” according to American Banker. “This means the national bank is responsible for ensuring the loan complies with consumer protection laws, but it also means that state interest caps do not apply.”

“The OCC’s True Lender Rule establishes legal clarity and a regulatory framework around banks working with financial technology companies to provide loans to consumers without sacrificing consumer protections,” Davis wrote in the letter to Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.). “It does this by providing a bright-line test in determining the true lender of such a loan. The Rule greatly benefits underserved consumers by encouraging small, community banks (that work with financial technology companies because they lack the technology in-house) to reach underserved consumers.”

“This is crucially important to Native Americans, many of whom live in geographically remote and rural areas,” Davis continued. “For these individuals, access to credit is not guaranteed, and poverty and unemployment are no small issue.”

The rule is also opposed by a group of bank and fintech trade associations, who also sent a letter to Senate Leadership late last week. If the rule is overturned, regulators would be unable to issue a rule that is “substantially the same” as the version that was struck down.