House Record, June 24, 2021 — Congressional Record
Summary
Congressional Record, House, page H3099, June 24, 2021. In debate on a bill about lending to LGBTQ-owned businesses, remarks in support state that the bill would expand the section 1071 reporting requirements, under which financial institutions report information about the race, ethnicity, and sex of credit applicants who serve as principal owners of small businesses, to include sexual orientation and gender identity. The remarks state that the bill passed unanimously out of the House Financial Services Committee with a voice vote and is supported by the Human Rights Campaign, the National Center for Transgender Equality, and the National Gay and Lesbian Chamber of Commerce, among others.
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“House Record, June 24, 2021 — Congressional Record.”
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June 24, 2021 CONGRESSIONAL RECORD — HOUSE H3099
am filling out the application, I would Madam Speaker, this bill takes nec- forcement of the ECOA, requires financial in-
probably indicate that I am a minority essary action to help ensure that stitutions to report information about the race,
person, although I don’t like the term. LGBTQ-owned businesses are treated ethnicity, and sex of credit applicants who
I use it only to communicate. I do not fairly by financial institutions and pro- serve as principal owners of small businesses.
like the term ‘‘minority.’’ But for the tected against lending discrimination. My legislation would expand the 1071 report-
purpose of communicating today, I The bill passed unanimously out of the ing requirements to include not only sex but
would indicate that I am a minority House Financial Services Committee also sexual orientation and gender identity. It
person. with a voice vote. So I am pleased that would enable anti-discrimination enforcement
The only thing this bill will do, as it the majority leader has worked with where none might exist.
relates to acquiring the intelligence, is me to bring this bill back up for a vote Even though the United States has made
give us another space so that we can quickly. substantial strides toward LGBTQ equality, the
now indicate that, if you so choose, This bill is supported by the Human mission is far from accomplished. Seventy
Madam Speaker, you are a member of Rights Campaign, the National Center percent of the LGBTQ community remains un-
the LGBTQ-plus community. for Transgender Equality, Out Leader- protected by anti-discrimination laws. When it
In filling out this form, if I chose not ship, the National Gay and Lesbian comes to credit, according to the Williams In-
to indicate I was a minority person, I Chamber of Commerce, and many oth- stitute, more than 7.7 million LGBTQ adults
wouldn’t have to. I would just sign it, ers. live in states that offer no protection against
completing the other aspects of it, and Although some of my colleagues did discrimination based on sexual orientation or
I would be done with it. not support this bill last week, I urge gender identity.
It only allows for the placement of them to reconsider, to support all It is often said that knowledge is power.
additional language on the document small businesses this week, and vote Knowledge affords us the power to detect dis-
so that persons who desire to—and it is ‘‘yes’’ on H.R. 1443. crimination that might otherwise go unde-
important to note, Madam Speaker, I would like to thank the ranking tected. Take, as an example, the Home Mort-
that you must have the desire; it is member for his consideration, his sup- gage Disclosure Act, which is analogous to
with intentionality, and you volun- port. In closing, I would just like to the legislation before us. Both the National
tarily do this—would indicate, if you add that, as Mr. GREEN identified, I, Community Reinvestment Coalition and Iowa
choose to, that you are a member of too, am a victim of discrimination for State University reviewed data from the HMDA
the LGBTQ-plus community. most of my life, and all of my family and found that same-sex couples were denied
and my dear friends and sometimes the loans at higher rates than heterosexual cou-
b 1315
entire neighborhood that I have lived ples, despite having comparable creditworthi-
I must say, candidly, I really don’t in. ness. It also found those same-sex couples
see how this can become the debate So we know what it feels like, and we paid higher fees and interests. The lesson of
that it has become. At some point in know that there is, for example, today, the HMDA is that sunlight can be a powerful
this country, we have to understand a huge wealth gap because of discrimi- disinfectant against discrimination.
that discriminating against people be- nation, a lack of being able to borrow H.R. 1443 would make credit more acces-
cause of who they are is inappropriate. from the banks that were making cred- sible, credit laws more enforceable, and credi-
It is unlawful. it available to so many others. It was tors more accountable. It would represent a
I am the son of a segregated South, not made to us. So oftentimes we were triumph of transparency in the service of eco-
where I was lawfully discriminated not able to buy a home. We were not nomic opportunity for all, regardless of who
against. I know what it looks like. I able to get a loan for the basic kind of you are and whom you love.
know what it smells like. I know what things that any family would need. The SPEAKER pro tempore. All time
it sounds like. I know what invidious So we cannot, and I cannot be a part for debate has expired.
discrimination tastes like. I drank of public policy and systems and proto- Pursuant to House Resolution 486,
from filthy colored water fountains in cols that would exclude the LGBTQ the previous question is ordered on the
my lifetime. community from being able to get bill, as amended.
I don’t wish any of this type of be- loans in the ways that others are The question is on the engrossment
havior that I had to endure on anyone doing. It is pure discrimination. It and third reading of the bill.
else, so I rise today in support of this must stop. The bill was ordered to be engrossed
legislation as a continuation of my Madam Speaker, I urge all of my col- and read a third time, and was read the
mission to do all that I can to help oth- leagues on both sides of the aisle to third time.
ers avoid the horrors of invidious dis- vote ‘‘yea’’ on H.R. 1443, and I yield The SPEAKER pro tempore. The
crimination. back the balance of my time. question is on passage of the bill.
I am so grateful to Chairwoman Mr. TORRES of New York. Madam Speak- The question was taken; and the
WATERS for all she has done. She has er, in the United States, there are 1.4 million Speaker pro tempore announced that
always been a friend, not only to me, LGBTQ businesses contributing more than the ayes appeared to have it.
but to those who are among the least, $1.7 trillion to the American economy. We Mr. ROSENDALE. Madam Speaker,
the last, and the lost. And I thank the have a vested interest in sustaining and on that I demand the yeas and nays.
gentlewoman for all that she has done. strengthening these businesses with equal ac- The SPEAKER pro tempore. Pursu-
Mr. MCHENRY. Madam Speaker, I cess to credit, which is the beating heart of ant to section 3(s) of House Resolution
yield myself the balance of my time. the American economy. 8, the yeas and nays are ordered.
Madam Speaker, I think my col- As a former New York City Council Member, Pursuant to clause 8 of rule XX, fur-
league Mr. GREEN outlines this well. I partnered with the National LGBTQ Chamber ther proceedings on this question are
This is not a mandatory reporting bill, of Commerce to establish the nation’s largest postponed.
but data collection. Though the terms municipal certification program for LGBTQ f
may not be perfect to Chairman business enterprises, enabling those busi-
GREEN’s points and perhaps we need to nesses to enjoy equal access to a $25 billion PROVIDING FOR CONGRESSIONAL
look at the language of this reporting, pool of government procurement. DISAPPROVAL OF THE RULE
for sure, but this is not a mandatory The legislation before us, H.R. 1443, builds SUBMITTED BY THE OFFICE OF
reporting bill. This is voluntary infor- on a foundation laid by several statutes and THE COMPTROLLER OF CUR-
mation that borrowers can offer up or regulations. The Equal Credit Opportunity Act RENCY RELATING TO ‘‘NATIONAL
not. Data is a good thing, especially if (ECOA) prohibits credit discrimination, includ- BANKS AND FEDERAL SAVINGS
it is provided voluntarily. ing but not limited to sex discrimination. A new ASSOCIATIONS AS LENDERS’’
ctelli on DSK11ZRN23PROD with HOUSE
For those reasons, I support this bill interpretive rule from the Consumer Financial Ms. WATERS. Madam Speaker, pur-
and I urge its adoption. Protection Bureau (CFPB) clarifies that the suant to House Resolution 486, I call up
Madam Speaker, I yield back the bal- ECOA’s prohibition against sex discrimination the joint resolution (S.J. Res. 15) pro-
ance of my time. applies to sexual orientation and gender iden- viding for congressional disapproval
Ms. WATERS. Madam Speaker, I tity. Section 1071 of the Dodd-Frank Act, under chapter 8 of title 5, United
yield myself the balance of my time. which exists to enable and enhance the en- States Code, of the rule submitted by
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H3100 CONGRESSIONAL RECORD — HOUSE June 24, 2021
the Office of the Comptroller of Cur- partnered with banks, so long as they Additionally, let’s not forget that
rency relating to ‘‘National Banks and held the primary economic interest in during the last election, Nebraska
Federal Savings Associations as Lend- a consumer loan. joined 45 States and the District of Co-
ers’’, and ask for its immediate consid- Trump’s OCC allowed nonbanks to lumbia that have already passed legis-
eration in the House. launder their loans through OCC-char- lation to limit usury rates for small-
The Clerk read the title of the joint tered banks, as long as the bank is list- dollar installment loans.
resolution. ed on the loan origination documents, The Trump-era True Lender Rule is a
The SPEAKER pro tempore. Pursu- effectively allowing nonbanks to ig- backdoor way for nonbanks to charge
ant to House Resolution 486, the joint nore State usury laws. triple-digit interest rates on loans at
resolution is considered read. Simply put, before this Trump-era the expense of consumers in States
The text of the joint resolution is as rule was finalized, if a nonbank in Cali- where voters turned out to pass inter-
follows: fornia, which has an interest rate cap est rate cap laws.
S.J. RES. 15 of, for example, 36 percent, wanted to No wonder some called this the ‘‘fake
make a loan to a customer in Cali- lender’’ rule.
Resolved by the Senate and House of Rep- For these reasons, I urge my col-
resentatives of the United States of America in fornia, the nonbank can’t charge more
Congress assembled, That Congress dis- than 36 percent. OCC’s True Lender leagues to support this bill. And for
approves the rule submitted by the Office of Rule turns this commonsense legal those who did not understand what we
the Comptroller of Currency relating to ‘‘Na- were talking about when we talked
doctrine on its head.
tional Banks and Federal Savings Associa- What the Trump-era rule says is that about the True Lender Rule, I think I
tions as Lenders’’ (85 Fed. Reg. 68742 (Octo- this nonbank can now partner with a have laid it out in such a way that you
ber 30, 2020)), and such rule shall have no understand this is predatory. This is a
force or effect.
national bank that is based in, for ex-
rip-off. And for these reasons, I urge
ample, Utah, which doesn’t have an in-
The SPEAKER pro tempore. The my colleagues to support this bill.
terest rate cap, to now legally charge Madam Speaker, I reserve the bal-
joint resolution shall be debatable for virtually any interest rate to the con-
one hour, equally divided and con- ance of my time.
sumers in California. Mr. MCHENRY. Madam Speaker, I
trolled by the chair and ranking minor- This is true even if the bank in Utah
ity member of the Committee on Fi- yield myself such time as I may con-
has done nothing but put its name on sume.
nancial Services or their respective the loan paperwork and intends to im- Madam Speaker, I rise in strong op-
designee. mediately transfer the loan to the position to this resolution.
The gentlewoman from California nonbank in California. We have seen Earlier this week, President Biden
(Ms. WATERS) and the gentleman from interest rates of more than 150 percent met with financial regulators. From
North Carolina (Mr. MCHENRY) each charged to consumers in this way. the four-sentence recap released by the
will control 30 minutes. The committee’s work has shone a White House, we know one of the topics
The Chair recognizes the gentle- spotlight on heartbreaking stories of they discussed was ‘‘promoting finan-
woman from California. the harm that this rule has caused to cial inclusion and responsibly increas-
GENERAL LEAVE consumers and small business owners. ing access to credit.’’
Ms. WATERS. Madam Speaker, I ask Let me give you a real-world example I agree with that concept, and I
unanimous consent that all Members of a Black-owned small business that think we should all agree with that
may have 5 legislative days within was harmed by one of these rent-a- concept. Unfortunately, my Democrat
which to revise and extend their re- bank schemes authorized by Trump’s colleagues here in the House and the
marks on S.J. Res. 15 and to insert ex- OCC. Senate don’t seem to be on the same
traneous material thereon. A recent news report detailed the page with the Biden administration.
The SPEAKER pro tempore. Is there case of Carlos and Markisha Swepson, This resolution we are considering
objection to the request of the gentle- who were the owners of Boulevard Bi- today would actually make financial
woman from California? stro, a restaurant in Harlem, New services more expensive and credit less
There was no objection. York. As they told NBC News, they available to consumers and to small
Ms. WATERS. Madam Speaker, I took out several business loans for businesses and families across the
yield myself such time as I may con- $67,000 and were charged a whopping 268 country.
sume. percent APR. So why are my Democrat colleagues
Madam Speaker, I rise today in sup- For all intents and purposes, their strong-arming this resolution through
port of S.J. Res. 15, a resolution to in- lender was World Business Lenders, a Congress?
validate the Office of the Comptroller nonbank lender that has a partnership Well, the answer is pretty simple. It
of the Currency’s so-called True Lender with Axos Bank. This is a bank in New is politics. That is what it is. Let’s call
Rule under the Congressional Review York State. Even though the loan was this what it is. It is blue States and
Act. made by World Business Lenders, be- their leftwing, so-called consumer pro-
This resolution would end a dan- cause Axos Bank’s name was on the tection advocates who want to, again,
gerous Trump-era rule that would loan documents, the nonbank could by- limit the reach of national banks and
allow predatory lenders to evade State pass the New York usury limit of 25 partnerships under the guise of ‘‘con-
usury laws and target consumers with percent APR. sumer protection.’’
high interest rate loans of 150 percent Due to the pandemic, the Swepsons Democrats are more interested in
or higher through sham partnerships are now behind on their loan payments. scoring political points with leftwing
with banks. They are now facing foreclosure pro- activists than supporting the bor-
I would like to thank Representative rowers and small businesses that this
ceedings filed by World Business Lend-
GARCÍA from Illinois for introducing OCC True Lender Rule helps.
ers on a home they own that acts as
the House companion to this measure collateral for the high interest rate b 1330
and for his leadership in fighting to loans. If not for Trump’s rule, the We have witnessed Democrats work
protect consumers from predatory Swepsons would have only been for decades to limit the scope of na-
lending schemes. charged a 25 percent interest rate and tional banks through one measure or
My committee has held several hear- would probably not be facing financial another.
ings that have exposed the consumer ruin. The National Bank Act was signed
harm that results from these rent-a- If Congress lets this Trump-era rule into law in 1864. We have national
bank schemes and explored how the stand, these kinds of predatory, triple- banks. We have had national banks for
ctelli on DSK11ZRN23PROD with HOUSE
Trump administration’s harmful rule digit interest rate loans will continue 157 years in this country similar to
erodes the consumer protections. to be made through these kinds of rent- today. What they are striking at is op-
The OCC’s rule undoes centuries of a-bank schemes, and lenders will con- position to what we have lived with for
case law that ensured that nonbank fi- tinue to take advantage of small busi- over 157 years of well-regulated na-
nancial institutions were subject to ness owners and other consumers des- tional banks doing business across the
State interest rate caps when they perate to stay afloat. country.
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June 24, 2021 CONGRESSIONAL RECORD — HOUSE H3101
The left, my colleagues on the oppo- This legal clarity enables bank and rule? They don’t. There are other ele-
site side of the aisle, will provide mis- fintech partnerships to provide their ments that the left opposes that actu-
leading statements about interest rates customers with the financial products ally, on a bipartisan basis, we oppose,
and spurious arguments about State they want and need. but the true lender rule is not it.
versus Federal regulation. They will Consider this: According to the New It is a question of whether or not the
argue consumers are harmed and this York Federal Reserve, one in four Afri- bank that is providing you the loan is,
so-called partisan rule that they are can-American-owned firms used in fact, the true lender. That is it. It is
driving invites bad banking practices. fintechs to access PPP loans, one in not fancier than that, people. That is
Above all else, my colleagues across four. And they did so using this legal what it is. That is what we are arguing
the aisle see this as an opportunity to doctrine that enabled that to happen in about today, and that is kind of the ab-
rebuke the last administration, simply partnerships with national banks. surdity of this stuff that we are debat-
because they don’t like the former Technology helps create greater fi- ing right now, because it is that sim-
President. I understand that. There is nancial inclusion. So why are my Dem- ple.
plenty of debate about that. But we ocrat colleagues so afraid of tech- So let’s promote financial inclusion
should not tinker with existing law nology, so afraid of innovation? the way that the President outlined,
that is longstanding and predates this Per usual, my Democrat colleagues which was promoting financial inclu-
President or any other President. We are willing to ignore facts in favor of sion, making rates more competitive
should be talking about the contents of myths that back up their preferred and the cost of credit cheaper for indi-
that law. narrative. That is unfortunate, espe- viduals. Let’s do that. Let’s oppose this
I would like to remind my friends as cially for something this important. resolution before us so we can have
well that it was the Obama administra- The left likes to say that banks can sound principles, so we can drive that
tion who supported the risk-manage- charge whatever interest rate they inclusion that is necessary and very
ment principles underlying the true want. That is simply not true. Federal important.
lender rule. It was an effort to regu- law gives national banks and Federal Madam Speaker, I reserve the bal-
late, to ensure that instead of having savings associations the same author- ance of my time.
shadow banking provide these services, ity that State banks have regarding ex- Ms. WATERS. Madam Speaker, I
that you have well-regulated consumer portation of interest rates. yield 1 minute to the gentlewoman
protection laws at the Federal level as Now, both Federal- and State-char- from California (Ms. PELOSI), the
a part of this process. tered banks must conform to applica- Speaker of the House of Representa-
So once again, we have the oppor- ble interest rate limits in those States. tives.
tunity to come together to support States retain the authority to set in- Ms. PELOSI. Madam Speaker, I
good, bipartisan policy, rather than terest rates, which varies from State to thank the gentlewoman for her leader-
doing what the Democrats would rath- State. ship in bringing this important legisla-
er do, which is appease the woke left. Here is another myth: Third-party tion, more than one piece of legisla-
So let’s stop the political theatrics bank partnerships will use this rule to tion, to the floor today.
and talk about what the true lender skirt State supervision and usury laws. As I rise to speak in support of re-
rule actually does, not what my Demo- Simply not true. versing the anti-consumer fake lender
crat colleagues claim it does. The truth is, banks primarily partner rule pushed through in the final weeks
The rule specifies that when a bank with third parties to reach additional of the previous administration, I just
makes a loan, the bank is the true markets, benefiting from a particular want to take a moment to put it in
lender if, as of the date of origination, expertise or technology to improve perspective.
it is named as the lender in the loan their efficiency. Partnerships with Madam Speaker, in November, the
agreement or funds the loan. That loan third parties do not change the bank’s people elected Democratic majorities
would be regulated by the entity mak- authority or expose interest rate dif- in the Congress that would be for the
ing the loan, funding the loan, and the ferentials. people, fighting for the public inter-
regulation would fall upon them. So And last, but not least, progressive ests, not the special interests.
the consumers have Federal consumer activists cite the interest rate as a real To that end, they elected majorities
protection laws that would act on that problem with the true lender rule. that would reverse the damage in-
loan. That is what it does. They are pushing a 36 percent best rate flicted on their health and financial se-
My friends that created the Con- cap. They have even pushed it at the curity by the last administration.
sumer Protection Bureau, I thought national level. The math simply That mission is why the House this
you wanted that, and yet you are argu- doesn’t back up this falsehood. week is passing legislation under the
ing against that with this rule today. The true lender rule was not some Congressional Review Act to reverse
It is pretty straightforward; it is a sinister plan by the previous adminis- three of the past President’s most egre-
pretty straightforward law. It tration to trick borrowers. It was not. gious assaults on families’ well-being.
shouldn’t be political. It simply was not the case. This legal The Congressional Review Act is one
This rule also clarifies that as the principle was established in 1864 with of Congress’ most important tools to
true lender of a loan, a bank holds the the National Bank Act. It is being un- reassert the power of the people’s
responsibility of complying with Fed- dermined by an attempt at politics House to deliver for the people and to
eral law. This eliminates the greatest rather than sound policy, and what we reclaim our authority under the Con-
risk associated with abuse of rent-a- should support is good, bipartisan pol- stitution, upholding the balance of
charter schemes, which we agree are icy that provides clarity to banks and powers that is the foundation of our
bad, and I think we could be doing fintechs so they can better serve our American democracy.
something about that rather than this constituents and the consumers of With the gentlewoman’s permission,
spurious argument we have today. America. That is it. I wish to speak to the anti-consumer
In October of last year, the OCC fi- We have a well-regulated banking fake lender rule, but also speak to two
nalized the true lender rule that is system. We do. It is not perfect. We other issues under the Congressional
being debated today. This was a second have States that have various laws Review Act this afternoon.
step in a decades-long process to clar- that are operable in their States, but On the floor today is legislation,
ify the bank-third-party relationship we also have a national system here as again, to reverse the anti-consumer
when issuing a loan. It has been long- well. fake lender rule pushed through in the
standing practice, but there have been We have worked harmoniously, not final weeks of the previous administra-
ctelli on DSK11ZRN23PROD with HOUSE
lawsuits, a great deal of uncertainty perfectly, over the last 157 years since tion.
about it, a lot of questions in par- we established the national banking This fake lender rule greenlights
ticular jurisdictions around the coun- system. But why undermine a key prin- rent-a-bank schemes in which preda-
try on the nature of those partnerships, ciple of that national banking system tory lenders evade bank interest rate
and it clarifies those partnerships in a by spurious arguments that actually limits to swindle vulnerable con-
rules-based regime. don’t have to do with the true lender sumers. This is done by putting a bank
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H3102 CONGRESSIONAL RECORD — HOUSE June 24, 2021
name on loan paperwork and claiming builds on the commitment of the Presi- Democrats are constantly putting
that the bank, not the predatory lend- dent and the Democratic Congress to their disdain for America’s banks
er, issued the loan. tackle the climate crisis. ahead of the needs of their constitu-
To take one example, in California, As the administration has stated, ad- ents, and this bill is another prime ex-
where the interest rate on a 2-year dressing methane pollution is an ur- ample of this unfortunate practice.
$2,000 loan is capped at 25 percent, lend- gent and essential step. I firmly oppose this bill and its pre-
ers can use rent-a-bank partnerships to Madam Speaker, with that, as Speak- vention of widespread financial inclu-
make loans with rates up to 225 per- er, I am proud to be able to use the sion, especially for low- and moderate-
cent. Speaker’s prerogative to speak beyond income consumers.
This bipartisan resolution to end the the item on the floor right now. Ms. WATERS. Madam Speaker, I
fake lender rule is supported by many: I am proud to support these impor- yield 2 minutes to the gentleman from
a bipartisan coalition of 25 State attor- tant actions to reverse the Trump dam- Illinois (Mr. GARCÍA), who is also the
neys general; faith leaders, including age and to deliver results that make a sponsor of the House companion to this
the National Latino Evangelical Coali- difference in the lives of hardworking legislation.
tion, the National Association of American families. Mr. GARCÍA of Illinois. Madam
Evangelicals, the National Baptist I thank all of our leaders for this leg- Speaker, I rise in strong support of S.J.
Convention USA, hundreds of banking islation for the people: Chair BOBBY Res. 15, a resolution to repeal the
law and consumer finance regulation SCOTT and Representative SUZANNE OCC’s so-called true lender rule.
scholars, and Americans across the BONAMICI on the EEOC resolution; Rep- Earlier this year, my State, Illinois,
country and across parties, urging us resentative CHUy Garcia for his work passed a law that protects our con-
to support this Congressional Review on the true lender resolution; Rep- sumers from predatory, high-interest
Act reversal of the anti-consumer fake resentative DIANA DEGETTE and Chair- loans. Eighteen other States have done
lender rule. man FRANK PALLONE, and many others, the same.
Also today, we are considering legis- on the methane resolution from the I introduced the House version of this
lation to undo the antiworker, pro-dis- Energy and Commerce Committee. resolution because the true lender rule
crimination rule forced through in the I urge strong votes for S.J. Res. 13, undermines laws like ours, laws that
final week of the past administration. 14, and 15. keep working-class people out of cycles
Coming back to the resolution on the
The EEOC was established to protect of debt they can’t pay back.
floor right now, I thank the distin- The rule is a rubber stamp for rent-a-
working people from discrimination
guished chair of the Financial Services bank schemes, where a lender can
and ensure that discrimination charges
Committee for her leadership in look- dodge State law by having a bank’s
are resolved fairly. But this rule would
ing out always for the consumer, for name on the loan paperwork. That is
impose draconian new obligations that
competition, for fairness, for the peo- all. No skin in the game, no investment
bias the conciliation process against
ple. in our communities; just a name on the
employees, toward employers; escalate
the potential for retaliation, because b 1345 paperwork.
retaliation claims make up half of Mr. MCHENRY. Madam Speaker, I This rule doesn’t encourage innova-
EEOC’s charges filed at the EEOC last yield 3 minutes to the gentleman from tion. It encourages playing games. This
year; siphon off scarce EEOC resources Missouri (Mr. LUETKEMEYER), who is isn’t a partisan issue. As a matter of
and saddle the EEOC with wasteful col- the ranking member on the Consumer fact, last year, 82 percent of Nebraska
lateral litigation, prolonging harm to Protection and Financial Institutions voters joined States like Arkansas and
workers through delays; and con- Subcommittee of the Financial Serv- South Dakota to protect their commu-
travene both the Supreme Court prece- ices Committee, and also the ranking nities from unpayable debt, and this
dent and Congressional intent. member on the Small Business Com- rule from the OCC provides bad actors
This month, civil rights and workers’ mittee. with a new tool to ignore them.
rights organizations wrote to Congress Mr. LUETKEMEYER. Madam Speak- So a broad coalition of over 400 orga-
in support of S.J. Res. 13, writing: ‘‘The er, I rise today to discuss S.J. Res. 15, nizations—rural, urban, suburban—
EEOC must be able to conduct its work House Democrats’ attempt to limit the have come together in support of this
efficiently . . . to prevent and remedy ability of our Nation’s banks to serve measure, and they include consumer
workplace discrimination. consumers by overturning the true advocates, labor advocates, veterans,
‘‘This mission is even more critical lender rule. credit unions, and many other actors,
in the middle of a global pandemic that The true lender rule was finalized by including evangelical congregations.
continues to have severe economic re- the OCC in 2020, in an effort to clarify Madam Speaker, I urge this body to
percussions for women, people of color, who was the true lender in national pass this resolution and empower
and other marginalized communities. bank third-party relationships. By pro- working-class communities like mine
‘‘The final rule will only deepen the viding this clarity, these third-party that are targeted by predatory lenders,
barriers working people face coming entities were able to provide financial and voters across the country who sup-
forward to report discrimination and services in partnership with financial port consumer protections.
obtain justice.’’ institutions with the protections of Mr. MCHENRY. Madam Speaker, I
This Congressional Review Act legis- legal precedence. yield myself such time as I may con-
lation passed the Senate. Hopefully, it Partnering with third parties like sume.
will pass the House today. fintechs gives financial institutions the Madam Speaker, I would reference
Finally, tomorrow we take up bipar- ability to increase access to credit, es- my colleagues the Federal Code, the
tisan legislation that paves the way to pecially for low- and moderate-income Federal Register, that actually has the
restore the Obama-era protections consumers and small businesses. contents of this rule.
against harmful methane pollution, Unfortunately, the bill before us is Madam Speaker, I include in the
which the most recent past President nothing more than a politically moti- RECORD the actual rule that we are de-
rolled back. vated attempt by Democrats to make bating here, and I would highlight one
Briefly, these safeguards are key pro- it more expensive and difficult for piece in particular.
tections for public health that will also banks to serve customers, and its pas- ‘‘The OCC agrees that rent-a-charter
make a serious difference in combating sage will have long-term consequences. schemes have no place in the Federal
the climate crisis. Methane is respon- According to the Congressional Re- financial system but disagrees that
sible for at least one-quarter of the view Act, if this legislation is passed, this rule facilitates such schemes. As
ctelli on DSK11ZRN23PROD with HOUSE
warming of the planet. And it is 25 the OCC will not have the ability to noted above, instead, this proposal
times more potent than carbon dioxide issue a similar rule down the road. This would help solve the problem by (1)
in trapping heat in the atmosphere. will leave bank-fintech partnerships in providing a clear and simple test for
This resolution passed on a bipar- limbo with a great deal of uncertainty determining when a bank makes a loan
tisan basis in the Senate and in the En- regarding the loans they make and who and (2) emphasizing the robust super-
ergy and Commerce Committee. It is the true lender in the relationship. visory framework that applies to any
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June 24, 2021 CONGRESSIONAL RECORD — HOUSE H3103
loan made by a bank and to all third- loan when the loan is originated as part of a III. Analysis
party relationships to which banks are lending partnership involving a bank and a As noted in the prior section, commenters
a party. As noted above, if a bank fails third party, nor has the OCC taken regu- raised a variety of issues for the OCC’s con-
latory action to resolve this ambiguity. In sideration. These are discussed below.
to satisfy its obligations under this su-
the absence of regulatory action, a growing A. OCC’s Authority To Issue the Rule
pervisory framework, the OCC will use body of case law has introduced divergent
all the tools at its disposal, including Some commenters argued the OCC lacks
standards for resolving this issue, as dis- the legal authority to issue the rule because
its enforcement authority.’’ cussed below. As a result of this legal uncer- it would contravene the unambiguous mean-
DEPARTMENT OF THE TREASURY tainty, stakeholders cannot reliably deter- ing of 12 U.S.C. 85. These commenters believe
Office of the Comptroller of the Currency mine the applicability of key laws, including that section 85 incorporates the common law
12 CFR Part 7 the law governing the permissible interest of usury as of 1864, which they view as re-
[Docket ID OCC–2020–0026] that may be charged on the loan. quiring courts to look to the substance rath-
RIN 1557–AE97 This final rule establishes a clear test for er than the form of a transaction. In a simi-
National Banks and Federal Savings Asso- determining when a bank makes a loan, by lar vein, commenters argued that section 85
ciations as Lenders interpreting the statutes that grant banks incorporates all usury laws of a state, in-
AGENCY: Office of the Comptroller of the their authority to lend. Specifically, the cluding its true lender jurisprudence. One
Currency, Treasury. final rule provides that a bank makes a loan commenter also argued that the proposal
ACTION: Final rule. when it, as of the date of origination, (1) is contradicts judicial and administrative
SUMMARY: The Office of the Comptroller named as the lender in the loan agreement precedent interpreting sections 85 and 86.
of the Currency (OCC) is issuing this final or (2) funds the loan. The OCC disagrees. The rule interprets
rule to determine when a national bank or statutes that authorize banks to lend—12
II. Overview of Comments
Federal savings association (bank) makes a U.S.C. 24, 371, and 1464(c)—and clarifies how
loan and is the ‘‘true lender,’’ including in The OCC received approximately 4,000 com- to determine when a bank exercises this
the context of a partnership between a bank ments on the proposal, the vast majority of lending authority. The OCC has clear author-
and a third party, such as a marketplace which were from individuals using a version ity to reasonably interpret these statutes,
lender. Under this rule, a bank makes a loan of one of three short form letters to express which do not specifically address when a
if, as of the date of origination, it is named opposition to the proposal. Other com- bank makes a loan.
as the lender in the loan agreement or funds menters included banks, nonbank lenders, Banks do not obtain their lending author-
the loan. industry trade associations, community ity from section 85 or 12 U.S.C. 1463(g). Nor
DATES: The final rule is effective on De- groups, academics, state government rep- are these statutes the authority the OCC is
cember 29, 2020. resentatives, and members of Congress. relying on to issue this rule. The proposal
SUPPLEMENTARY INFORMATION: Commenters supporting the proposal stat- referenced sections 85 and 1463(g) in the regu-
I. Background ed that the judicial true lender doctrine has latory text to ensure that interested parties
led to divergent standards and uncertainty understand the consequences of its interpre-
Lending partnerships between national
concerning the legitimacy of lending part- tation of sections 24, 371, and 1464(c), includ-
banks or Federal savings associations
nerships between banks and third parties. ing that this rulemaking operates together
(banks) and third parties play a critical role
They also stated that, by removing the un- with the OCC’s recently finalized ‘Madden-
in our financial system. These partnerships
certainty, the OCC would help ensure that fix’ rulemaking. When a bank makes a loan
expand access to credit and provide an ave-
banks have the confidence to enter into pursuant to the test established in this regu-
nue for banks to remain competitive as the
these lending relationships, which provide lation, the bank may subsequently sell, as-
financial sector evolves. Through these part-
affordable credit to consumers on more fa- sign, or otherwise transfer the loan without
nerships, banks often leverage technology
vorable terms than the alternatives, such as affecting the permissible interest term,
developed by innovative third parties that which is determined by reference to state
helps to reach a wider array of customers. pawn shops or payday lenders, to which un-
derserved communities often turn. Sup- law.
However, there is often uncertainty about Other commenters questioned the OCC’s
how to determine which entity is making the porting commenters also observed that the
proposal would enhance a bank’s safety and authority on different grounds. Some as-
loans and, therefore, the laws that apply to serted the OCC lacks authority to (1) exempt
these loans. This uncertainty may discour- soundness by facilitating its ability to sell
loans. These commenters also noted that the nonbanks from compliance with state law or
age banks from entering into lending part- (2) preempt state laws that determine wheth-
nerships, which, in turn, may limit competi- proposal (1) makes clear that the OCC will
hold banks accountable for products with un- er a loan is made by a nonbank lender. One
tion, restrict access to affordable credit, and commenter also asserted that the proposal is
chill the innovation that can result from fair, deceptive, abusive, or misleading fea-
tures that are offered as part of a relation- an attempt by the OCC to interpret state
these relationships. Through this rule- law. A commenter further argued that the
making, the Office of the Comptroller of the ship and (2) is consistent with the OCC’s
statutory mission to ensure that banks pro- OCC’s statutory interpretation is not reason-
Currency (OCC) is providing the legal cer- able, including because the proposal (1)
tainty necessary for banks to partner con- vide fair access to financial services.
would allow nonbanks to enjoy the benefits
fidently with other market participants and Commenters opposing the proposal stated
of federal preemption without submitting to
meet the credit needs of their customers. that it would facilitate so-called rent-a-char-
any regulatory oversight and (2) violates the
However, the OCC understands that there ter schemes, which would result in increased
presumption against preemption, especially
is concern that its rulemaking facilitates in- predatory lending and disproportionately
in an area of historical state police powers
appropriate ‘rent-a-charter’ lending impact marginalized communities. Other op- like consumer protection.
schemes—arrangements in which a bank re- posing commenters stated that the proposal This rulemaking does not assert authority
ceives a fee to ‘rent’ its charter and unique is an attempt by the OCC to improperly reg- over nonbanks, preempt state laws applica-
legal status to a third party. These schemes ulate nonbank lenders, a role they consider ble to nonbank lenders, or interpret state
are designed to enable the third party to to be reserved exclusively to the states. Op- law. It interprets federal banking law and
evade state and local laws, including some posing commenters also asserted that the has no direct applicability to any nonbank
state consumer protection laws, and to allow OCC did not have sufficient legal authority entity or activity. Rather, in identifying the
the bank to disclaim any compliance respon- to issue the proposal and that the proposal true lender, the rule pinpoints key elements
sibility for the loans. These arrangements violated the Administrative Procedure Act of the statutory, regulatory, and supervisory
have absolutely no place in the federal bank- (APA) and 12 U.S.C. 25b. framework applicable to the loan in ques-
ing system and are addressed by this rule- Both supporting and opposing commenters tion. As noted in the proposal, if a nonbank
making, which holds banks accountable for recommended changes. These recommenda- partner is the true lender, the relevant state
all loans they make, including those made in tions included (1) adopting a test that re- (and not OCC) would regulate the lending ac-
the context of marketplace lending partner- quires the true lender to have a predominant tivity, and the OCC would assess the bank’s
ships or other loan sale arrangements. economic interest in the loan; (2) providing third-party risk management in connection
On July 22, 2020, the OCC published a no- additional ‘‘safe harbor’’ requirements to en- with the relationship itself.
tice of proposed rulemaking (proposal or hance consumer protections (e.g., interest Furthermore, because commenters ex-
NPR) to determine when a bank makes a rate caps); (3) clarifying that certain tradi- pressed concern that this rule would under-
loan. Under the proposal, a bank made a loan tional bank lending activities do not fall mine state usury caps, it is also important
if, as of the date of origination, it (1) was under the funding prong of the rule (e.g., in- to emphasize that sections 85 and 1463(g) pro-
named as the lender in the loan agreement direct auto lending and mortgage warehouse vide a choice of law framework for deter-
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or (2) funded the loan. lending); (4) providing additional details on mining which state’s law applies to bank
As the proposal explained, federal law au- how the OCC would supervise these relation- loans and, in this way, incorporate, rather
thorizes banks to enter into contracts, to ships; and (5) stating that the rule will not than eliminate, state law. These statutes re-
make loans, and to subsequently transfer displace certain federal consumer protection quire that a bank refer to, and comply with,
these loans and assign the loan contracts. laws and regulations. the usury cap established by the laws of the
The statutory framework, however, does not The comments are addressed in greater de- state where the bank is located. Thus, dis-
specifically address which entity makes a tail below. parities between the usury caps applicable to
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H3104 CONGRESSIONAL RECORD — HOUSE June 24, 2021
particular bank loans result primarily from capricious and, therefore, in violation of the the funding prong does not include certain
differences in the state laws that impose APA. Some commenters argued that the pro- lending or financing arrangements such as
these caps, not from an interpretation that posal lacks an evidentiary basis, either en- warehouse lending, indirect auto lending
section 85 or 1463(g) preempt state law. tirely or with respect to certain assertions, (through bank purchases of retail install-
A commenter also asserted that the OCC’s such as the existence of legal uncertainty. ment contracts (RICs)), loan syndication,
interpretation is not reasonable because it The OCC disagrees. The APA’s arbitrary and and other structured finance.
(1) does not solve the problem it claims to capricious standard requires an agency to These commenters are correct that the
remedy, arguing that the proposal itself is make rational and informed decisions based funding prong of the proposal generally does
unclear and requires banks to undertake a on the information before it. Furthermore, not include these types of arrangements:
fact-specific analysis and (2) departs from the standard does not require the OCC to de- They do not involve a bank funding a loan at
federal cases holding that state true lender velop or cite empirical or other data to sup- the time of origination. For example, when a
law applies to lending relationships between port its rule or wait for problems to mate- bank purchases a RIC from an auto dealer, as
banks and nonbanks. rialize before acting. Instead, the OCC may is often the case with indirect auto lending,
The OCC believes that this rule provides a rely on its expertise to address the problems the bank does not ‘‘fund’’ the loan. When a
simple, bright-line test to determine when a that may arise. bank provides a warehouse loan to a third
bank has made a loan and, therefore, is the The OCC has decided to issue this rule to party that subsequently draws on that ware-
true lender in a lending relationship. The resolve the effects of legal uncertainty on house loan to lend to other borrowers, the
only required factual analysis is whether the banks and their third-party relationships. In bank is not funding the loans to these other
bank is named as the lender or funds the this case, the OCC’s views are informed by borrowers. In contrast, and as noted in the
loan. The OCC has evaluated various stand- courts’ divergent true lender tests and the proposal, the bank is the true lender in a
ards established by courts and has deter- resulting lack of predictability faced by table funding arrangement when the bank
mined that a clear, predictable, and easily stakeholders. While the OCC understands its funds the loan at origination.
administrable test is preferable. This test rule may not resolve all legal uncertainty Another commenter recommended that the
will provide legal certainty, and the OCC’s for every loan, this is not a prerequisite for OCC consider the ‘‘safe harbor’’ established
robust supervisory framework effectively the agency to take this narrowly tailored ac- in the recent settlement between the Colo-
targets predatory lending, achieving the tion. Taking these considerations into ac- rado Attorney General and several financial
same goal as a more complex true lender count, the OCC has made a rational and in- institutions and fintech lenders. While we
test. formed decision to issue this rule. are aware of this settlement, the OCC be-
Several commenters also asserted that the Commenters also argued that the OCC’s ac- lieves that our approach achieves the goal of
proposal contravenes 12 U.S.C. 1, which tions violate the APA because the agency legal certainty while providing the necessary
charges the OCC with ensuring that banks has not given notice of its intention to re- safeguards.
treat customers fairly. One commenter also verse an existing policy or provided the fac- One commenter requested that the OCC ex-
argued that the proposal is inconsistent with tual, legal, and policy reasons for doing so. pressly state in the final rule that the rule-
the Community Reinvestment Act (CRA) be- Specifically, these commenters referenced making is not intended to displace or alter
cause it encourages predatory lending. As the OCC’s longstanding policy prohibiting other regulatory regimes, including those
the OCC explained in the proposal, the rule’s banks from entering into rent-a-charter that address consumer protection. Another
purpose is to provide legal certainty to ex- schemes. This rulemaking does not reverse commenter requested that the OCC clarify
pand access to credit, a goal that is entirely the OCC’s position. The OCC’s longstanding how account information in true lender ar-
consistent with the agency’s statutory and unwavering opposition to predatory rangements should be reported to consumer
charge to ensure fair treatment of customers lending, including but not limited to preda- reporting agencies under the Fair Credit Re-
and banks’ statutory obligation to serve the tory lending as part of a third-party rela- porting Act. As the preamble to the proposal
convenience and needs of their communities. tionship, remains intact and strong. In fact, noted, the OCC’s rule does not affect the ap-
B. 12 U.S.C. 25b this rulemaking would solve the rent-a-char- plication of any federal consumer financial
Several commenters asserted that the ter issues raised and ensure that banks do laws, including, but not limited to, the
agency should have complied with 12 U.S.C. not participate in those arrangements. As meaning of the terms (1) ‘‘creditor’’ in the
25b, which applies when the OCC issues a reg- noted in the proposal, the OCC’s statutes and Truth in Lending Act (15 U.S.C. 1601 et seq.)
ulation or order that preempts a state con- regulations, enforceable guidelines, guid- and Regulation Z (12 CFR part 1026) and (2)
sumer financial law. Some of these com- ance, and enforcement authority provide ro- ‘‘lender’’ in Regulation X (12 CFR part 1024),
menters argued that the proposal fails to bust and effective safeguards against preda- which implements the Real Estate Settle-
meet the preemption standard articulated in tory lending when a bank exercises its lend- ment Procedures Act of 1974 (12 U.S.C. 2601 et
Barnett Bank of Marion County, N.A. v. Nel- ing authority. This rule does not alter this seq.). Similarly, the OCC’s rule does not af-
son, Florida Insurance Commissioner, et al. framework but rather reinforces its impor- fect the applicability of the Home Mortgage
(Barnett), as incorporated into section 25b. tance by clarifying that it applies to every Disclosure Act (12 U.S.C. 2801 et seq.), the
Commenters also argued that (1) section loan a bank makes and by providing a simple Equal Credit Opportunity Act (15 U.S.C. 1691
25b(f) does not exempt the OCC’s proposal test to identify precisely when a bank has et seq.), the Fair Credit Reporting Act (15
from the requirements of section 25b because made a loan. If a bank fails to satisfy its U.S.C. 1681 et seq.), or their implementing
the rule is not limited to banks charging in- compliance obligations, the OCC will not regulations (Regulation C (12 CFR part 1003),
terest and (2) the proposal undermines or hesitate to use its enforcement authority Regulation B (12 CFR part 1002), and Regula-
contravenes section 25b(h) because it extends consistent with its longstanding policy and tion V (12 CFR part 1022)), respectively. The
preemptive treatment to subsidiaries, affili- practice. OCC recommends that commenters direct
ates, and agents of banks. Furthermore, the final rule does not questions regarding these statutes and regu-
The OCC disagrees: The requirements of change the OCC’s expectation that all banks lations to the Consumer Financial Protec-
section 25b are inapplicable to this rule- establish and maintain prudent credit under- tion Bureau.
making. Section 25b applies when the Comp- writing practices and comply with applicable Some commenters stated that the two
troller determines, on a case-by-case basis, law, even when they partner with third par- prongs in the proposal’s test would produce
that a state consumer financial law is pre- ties. These expectations were in place before contradictory and absurd results. For exam-
empted pursuant to the standard for conflict the OCC issued its proposal and will remain ple, several commenters noted that, under
preemption established by the Supreme in place after the final rule takes effect. For the proposal, two banks could be the true
Court in Barnett, i.e., when the Comptroller these reasons, the final rule does not rep- lender (e.g., at origination, one bank is
makes a preemption determination. This resent a change in OCC policy. named as the lender on the loan agreement
rulemaking does not preempt a state con- D. Comments on the Proposed Regulatory and another bank funds the loan). In re-
sumer financial law but rather interprets a Text sponse to this comment, we have amended
bank’s federal authority to lend. Further- the regulatory text to provide that where
As noted previously, the OCC’s proposed
more, commenters arguing that section one bank is named as the lender in the loan
regulatory text set out a test for deter-
25b(f) (which addresses section 85) does not agreement and another bank funds the loan,
mining when a bank has made a loan for pur-
exempt this rulemaking from the procedures the bank named as the lender in the loan
poses of 12 U.S.C. 24, 85, 371, 1463(g), and
in section 25b and that sections 25b(b)(2), (e), agreement makes the loan. This approach
1464(c). Under this test, a bank made a loan
and (h)(2) (which address bank subsidiaries, will provide additional clarity and allow
if, as of the date of origination, it was named
affiliates, and agents) preclude the agency stakeholders, including borrowers, to easily
as the lender in the loan agreement or fund-
from issuing this rule are mistaken; this identify the bank that makes the loan. Oth-
ed the loan.
rulemaking is not an interpretation of sec- erwise, the OCC adopts the regulatory text
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Some commenters supported the rule with-
tion 85, nor does it address the applicability out change, stating that the proposal pro- as proposed.
of state law to bank subsidiaries, affiliates, vided the clarity needed to determine which E. Rent-a-Charter Concerns; Supervisory Ex-
or agents. entity is the true lender in a lending rela- pectations
C. Administrative Procedure Act tionship. Other commenters supported the The OCC received multiple comments ex-
Several commenters asserted that, for var- proposal as a general matter but suggested pressing concern that the proposal would fa-
ious reasons, the proposal is arbitrary and specific changes, including clarifying that cilitate rent-a-charter relationships and
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June 24, 2021 CONGRESSIONAL RECORD — HOUSE H3105
thereby enable nonbank lenders to engage in ‘‘unfair or deceptive acts or practices in or allowing banks to enter into rent-a-charter
predatory or otherwise abusive lending prac- affecting commerce’’ are unlawful. The schemes, the final rule will ensure that
tices. These commenters noted that Dodd-Frank Wall Street Reform and Con- banks understand that the OCC will continue
nonbanks are generally not subject to the sumer Protection Act also prohibits unfair, to hold banks accountable for their lending
type of prudential supervision that applies to deceptive, or ‘‘abusive’’ acts or practices. activities.
banks and that usury caps are the most ef- The OCC has taken a number of public en- IV. Regulatory Analyses
fective method to curb predatory lending by forcement actions against banks for vio-
Paperwork Reduction Act. In accordance
nonbanks. They argued that the OCC’s rule lating section 5 of the FTC Act and will con-
with the requirements of the Paperwork Re-
would effectively nullify these caps and fa- tinue to exercise its enforcement authority
duction Act of 1995 (PRA), 44 U.S.C. 3501 et
cilitate the expansion of predatory lending. to address unlawful actions.
As explained above, in a rent-a-charter ar- Banks also are subject to federal fair lend- seq., the OCC may not conduct or sponsor,
rangement, a lender receives a fee to rent ing laws and may not engage in unlawful dis- and respondents are not required to respond
out its charter and unique legal status to crimination, such as ‘‘steering’’ a borrower to, an information collection unless it dis-
originate loans on behalf of a third party, en- to a higher cost loan on the basis of the bor- plays a currently valid Office of Management
abling the third party to evade state and rower’s race, national origin, age, or gender. and Budget (OMB) control number. The OCC
local laws, such as usury caps and other con- If a bank engages in any unlawful discrimi- has reviewed the final rule and determined
sumer protection laws. At the same time, natory practices, the OCC will take appro- that it will not introduce any new or revise
the lender disclaims any responsibility for priate action under the federal fair lending any existing collection of information pursu-
these loans. As a result of these arrange- laws. Further, under the CRA regulations, ant to the PRA. Therefore, no submission
ments, consumers can find themselves in CRA-related lending practices that violate will be made to OMB for review.
debt to an unscrupulous nonbank lender that federal fair lending laws, the FTC Act, or Regulatory Flexibility Act. The Regu-
is subject to very little or no prudential su- Home Ownership and Equity Protection Act, latory Flexibility Act (RFA), 5 U.S.C. 601 et
pervision on a loan at an interest rate gross- or that evidence other discriminatory or ille- seq., requires an agency, in connection with
ly in excess of the state usury cap. gal credit practices, can adversely affect a a final rule, to prepare a Final Regulatory
The OCC agrees that rent-a-charter bank’s CRA performance rating. Flexibility Analysis describing the impact of
schemes have no place in the federal finan- The OCC has also taken significant steps the rule on small entities (defined by the
cial system but disagrees that this rule fa- to eliminate predatory, unfair, or deceptive Small Business Administration (SBA) for
cilitates such schemes. As noted above, in- practices in the federal banking system, rec- purposes of the RFA to include commercial
stead, this proposal would help solve the ognizing that ‘‘[s]uch practices are incon- banks and savings institutions with total as-
problem by (1) providing a clear and simple sistent with important national objectives, sets of $600 million or less and trust compa-
test for determining when a bank makes a including the goals of fair access to credit, nies with total assets of $41.5 million or less)
loan and (2) emphasizing the robust super- community development, and stable home- or to certify that the final rule would not
visory framework that applies to any loan ownership by the broadest spectrum of have a significant economic impact on a sub-
made by a bank and to all third-party rela- America.’’ To address these concerns, the stantial number of small entities.
tionships to which banks are a party. As OCC requires banks engaged in lending to The OCC currently supervises approxi-
noted above, if a bank fails to satisfy its ob- take into account the borrower’s ability to mately 745 small entities. The OCC expects
ligations under this supervisory framework, repay the loan according to its terms. In the that all of these small entities would be im-
the OCC will use all the tools at its disposal, OCC’s experience, ‘‘a departure from funda- pacted by the rule. While this final rule
including its enforcement authority. mental principles of loan underwriting gen- could affect how banks structure their cur-
Although the proposal discussed this su- erally forms the basis of abusive lending: rent or future third-party relationships as
pervisory framework in detail, it bears re- Lending without a determination that a bor- well as the amount of loans originated by
peating because of its importance to this rower can reasonably be expected to repay banks, the OCC believes the costs associated
rulemaking. Every bank is responsible for es- the loan from resources other than the col- with any administrative changes in bank
tablishing and maintaining prudent credit lateral securing the loan, and relying instead lending policies and procedures would be de
underwriting practices that: (1) Are commen- on the foreclosure value of the borrower’s minimis. Banks already have systems, poli-
surate with the types of loans the bank will collateral to recover principal, interest, and cies, and procedures in place for issuing
make and consider the terms and conditions fees.’’ loans when third parties are involved. It
under which they will be made; (2) consider Additionally, the OCC has cautioned banks takes significantly less time to amend exist-
the nature of the markets in which the loans about lending activities that may be consid- ing policies than to create them, and the
will be made; (3) provide for consideration, ered predatory, unfair, or deceptive, noting OCC does not expect any needed adjustments
prior to credit commitment, of the bor- that many such lending practices are unlaw- will involve an extraordinary demand on a
rower’s overall financial condition and re- ful under existing federal laws and regula- bank’s human resources. In addition, any
sources, the financial responsibility of any tions or otherwise present significant safety, costs would likely be absorbed as ongoing ad-
guarantor, the nature and value of any un- soundness, or other risks. These practices in- ministrative expenses. Therefore, the OCC
derlying collateral, and the borrower’s char- clude those that target prospective bor- certifies that this rule will not have a sig-
acter and willingness to repay as agreed; (4) rowers who cannot afford credit on the terms nificant economic impact on a substantial
establish a system of independent, ongoing being offered, provide inadequate disclosures number of small entities. Accordingly, a
credit review and appropriate communica- of the true costs and risks of transactions, Final Regulatory Flexibility Analysis is not
tion to management and to the board of di- involve loans with high fees and frequent re- required.
rectors; (5) take adequate account of con- newals, or constitute loan ‘‘flipping’’ (fre- Unfunded Mandates Reform Act. Con-
centration of credit risk; and (6) are appro- quent re-financings that result in little or no sistent with the Unfunded Mandates Reform
priate to the size of the institution and the economic benefit to the borrower that are Act of 1995 (UMRA), 2 U.S.C. 1532, the OCC
nature and scope of its activities. Moreover, undertaken with the primary or sole objec- considers whether a final rule includes a fed-
every bank is expected to have loan docu- tive of generating additional fees). Policies eral mandate that may result in the expendi-
mentation practices that: (1) Enable the in- and procedures should also be designed to en- ture by state, local, and tribal governments,
stitution to make an informed lending deci- sure clear and transparent disclosure of the in the aggregate, or by the private sector, of
sion and assess risk, as necessary, on an on- terms of the loan, including relative costs, $100 million adjusted for inflation (currently
going basis; (2) identify the purpose of a loan risks, and benefits of the loan transaction, $157 million) in any one year. The final rule
and the source of repayment and assess the which helps to mitigate the risk that a does not impose new mandates. Therefore,
ability of the borrower to repay the indebt- transaction could be unfair or deceptive. The the OCC concludes that implementation of
edness in a timely manner; (3) ensure that NPR also highlighted specific questions that the final rule would not result in an expendi-
any claim against a borrower is legally en- the OCC evaluates as part of its robust su- ture of $157 million or more annually by
forceable; (4) demonstrate appropriate ad- pervision of banks’ lending relationships. state, local, and tribal governments, or by
ministration and monitoring of a loan; and In addition to this framework targeted at the private sector.
(5) take account of the size and complexity banks’ lending activities, the OCC has issued Riegle Community Development and Regu-
of a loan. Every bank should also have ap- comprehensive guidance on third-party risk latory Improvement Act. Pursuant to sec-
propriate internal controls and information management. These standards apply to any tion 302(a) of the Riegle Community Devel-
systems to assess and manage the risks asso- relationship between a bank and a third opment and Regulatory Improvement Act of
ciated with its lending activities, including party, including lending relationships, re- 1994 (RCDRIA), 12 U.S.C. 4802(a), in deter-
those that provide for monitoring adherence gardless of which entity is the true lender. mining the effective date and administrative
to established policies and compliance with Pursuant to this guidance, the OCC expects compliance requirements for new regulations
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applicable laws and regulations, as well as banks to institute appropriate safeguards to that impose additional reporting, disclosure,
internal audit systems. manage the risks associated with their third- or other requirements on insured depository
In addition, a bank’s lending must comply party relationships. institutions, the OCC must consider, con-
with all applicable laws and regulations, in- Under the final rule, this robust super- sistent with principles of safety and sound-
cluding federal consumer protection laws. visory framework will continue to apply to ness and the public interest, any administra-
For example, section 5 of the Federal Trade banks that are the true lender in a lending tive burdens that such regulations would
Commission Act (FTC Act) provides that relationship with a third party. Rather than place on depository institutions, including
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H3106 CONGRESSIONAL RECORD — HOUSE June 24, 2021
small depository institutions, and customers by taking away the legal principle by Ms. TLAIB. Madam Speaker, we
of depository institutions, as well as the ben- which a bank can make a loan. That is know it is expensive to be poor in our
efits of such regulations. In addition, section what this rule does, and that is the ab- country; that we live in a country with
302(b) of RCDRIA, 12 U.S.C. 4802(b), requires
surdity of this debate. That is why I a system that continues to put profit
new regulations and amendments to regula-
tions that impose additional reporting, dis- oppose this attempt on the floor today. before our people, and it must stop.
closures, or other new requirements on in- Madam Speaker, I yield 2 minutes to In my home State of Michigan, com-
sured depository institutions generally to the gentleman from Georgia (Mr. munities that are more than a quarter
take effect on the first day of a calendar LOUDERMILK), my colleague and friend. Black and Latino have 50 percent more
quarter that begins on or after the date on Mr. LOUDERMILK. Madam Speaker, payday lenders than anywhere else in
which the regulations are published in final I thank my friend and colleague from the State. These lenders target our
form. This final rule imposes no additional North Carolina for managing the oppo- communities, the most financially vul-
reporting, disclosure, or other requirements sition to this. nerable communities. Payday lenders
on insured depository institutions, and in Michigan are 62 percent more com-
Look, it is simple. The reason we are
therefore, section 302 is not applicable to
here today is to debate the Democrats’ mon in low-income Census tracts com-
this rule.
Congressional Review Act. For purposes of latest episode in their anti-financial pared to statewide average.
the Congressional Review Act (CRA), 5 technology agenda, but also their rush That is what folks mean when they
U.S.C. 801 et seq., the Office of Information to undo any policy of the previous ad- say that we need to abolish structural
and Regulatory Affairs (OIRA) of the OMB ministration, whether it was good or racism in our country.
determines whether a final rule is a ‘‘major bad. You cannot justify loans of 100 per-
rule,’’ as that term is defined at 5 U.S.C. Now, here are the facts: More than 30 cent APR or higher as providing access
804(2). OIRA has determined that this final to credit when they trap borrowers in
rule is not a major rule. As required by the
percent of adults are unbanked or
underbanked, 40 percent do not have destructive cycles of debt and ruin
CRA, the OCC will submit the final rule and their credit. World Business Lenders
other appropriate reports to Congress and enough savings to cover a $400 emer-
the Government Accountability Office for re- gency expense, 42 percent have a offered loans of upwards of 268 percent
view. subprime credit score and are rejected of APR, despite the fact that its rent-
Administrative Procedure Act. The APA, 5 for bank loans at a rate four times a-bank partner was regulated by the
U.S.C. 551 et seq., generally requires that a higher than those with prime credit. OCC. They found a way around the
final rule be published in the Federal Reg-
Now, fintech has been instrumental rules, and that is unacceptable.
ister not less than 30 days before its effective OCC’s rules leave States like our
date. This final rule will be effective 60 days in expanding access to credit for con-
State of Michigan no ability to enforce
after publication in the Federal Register, sumers who have little or no credit his-
their own State rate caps, giving pred-
which meets the APA’s effective date re- tory. Online lending has grown to $90
atory lenders free rein to exploit our
quirement. billion a year.
neighbors with outrageous APRs.
List of Subjects in 12 CFR Part 7 So what do consumers typically use
Repealing the true lender rule is the
Computer technology, Credit, Derivatives, these loans to pay for? first step toward protecting borrowers
Federal savings associations, Insurance, In- Funerals, weddings, car repairs, and
from predatory lenders, and I am proud
vestments, Metals, National banks, Report- home improvement.
ing and recordkeeping requirements, Securi- to support it.
Fintech is particularly important for Mr. MCHENRY. Madam Speaker, I
ties, Security bonds. minorities. In fact, fintechs were the
Office of the Comptroller of the Currency
yield 11⁄2 minutes to the gentleman
top PPP lenders to Black-owned busi- from Utah (Mr. MOORE), a great new
For the reasons set out in the preamble, nesses and Hispanic-owned businesses
the OCC amends 12 CFR part 7 as follows. Member of the Congress.
during the pandemic. Mr. MOORE of Utah. Madam Speak-
PART 7—ACTIVITIES AND OPERATIONS But there is an issue that has caused er, I rise today to speak in opposition
1. The authority citation for part 7 con- difficulty when banks and fintech com-
tinues to read as follows: to the CRA before us.
panies partner to make loans, and that Innovation in our financial industry
Authority: 12 U.S.C. 1 et seq., 25b, 29, 71,
71a, 92, 92a, 93, 93a, 95(b)(1), 371, 371d, 481, 484,
is the question of which entity is con- lifts Americans across all levels of the
1463, 1464, 1465, 1818, 1828(m) and 5412(b)(2)(B). sidered the true lender. Until recently, socioeconomic spectrum. A great ex-
2. Add § 7.1031 to read as follows: this question was attempted to be set- ample of this has been the emergence
§ 7.1031 National banks and Federal savings tled in a series of confusing and con- of the fintech industry, which has
associations as lenders. flicting lawsuits. The courts are di- helped more Americans access secure,
(a) For purposes of this section, bank vided on it. But, last year, the OCC fi- affordable credit.
means a national bank or a Federal savings nalized a rule to provide much-needed Unfortunately, government regula-
association. certainty. It is no surprise that the or- tion has stymied innovation as regu-
(b) For purposes of sections 5136 and 5197 of ganizations calling for the rule to be latory uncertainties have imposed arti-
the Revised Statutes (12 U.S.C. 24 and 12
overturned are the so-called consumer ficial barriers to our creativity. Recent
U.S.C. 85), section 24 of the Federal Reserve
Act (12 U.S.C. 371), and sections 4(g) and 5(c) groups that, for the most part, are court rulings have only exacerbated
of the Home Owners’ Loan Act (12 U.S.C. funded by trial lawyers. this uncertainty by creating confusion
1463(g) and 12 U.S.C. 1464(c)), a bank makes a The Democrats are attempting to about who the true lender of a loan is
loan when the bank, as of the date of origi- overturn this rule because some imagi- when a bank works with a third party.
nation: nary lenders could rent a bank charter In 2020, the Office of the Comptroller
(1) Is named as the lender in the loan to engage in predatory lending, but as sought to clarify this uncertainty by
agreement; or the ranking member has just stated,
(2) Funds the loan.
finalizing the true lender rule. This
(c) If, as of the date of origination, one that is clearly prohibited in the exist- rule allowed our local community and
bank is named as the lender in the loan ing rule. This resolution is devastating regional banks to provide expanded ac-
agreement for a loan and another bank funds to minority consumers and businesses, cess to banking services and lower the
that loan, the bank that is named as the those with subprime credit, and the cost of banking to consumers across
lender in the loan agreement makes the unbanked. the Nation. It is that simple.
loan. Instead of giving those people op- Commonsense reforms that help
Brian P. Brooks,
Acting Comptroller of the Currency.
tions, this resolution would direct banks and the fintech industry do busi-
[FR Doc. 2020–24134 Filed 10–29–20; 8:45 am] them to payday lenders, or in States ness, in turn, make life easier for fami-
BILLING CODE 4810–33–P like Georgia where payday lending is lies, individuals, and businesses. Unfor-
Mr. MCHENRY. Madam Speaker, ad- illegal, they will have no access to tunately, my Democrat colleagues are
ditionally, I would highlight for you credit. seeking to roll this rule back.
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that the outline here and the argu- Madam Speaker, I urge opposition to Nullifying the rule will decrease
ments by my colleagues on the other this disastrous resolution. credit accessibility for underserved
side of the aisle really strikes at the Ms. WATERS. Madam Speaker, I communities, hurt community banks’
nature of national banking. yield 2 minutes to the distinguished ability to utilize new technologies, and
So just repeal the National Banking gentlewoman from Michigan (Ms. dissuade innovation in the financial
Act rather than trying to undermine it TLAIB). services sector.
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June 24, 2021 CONGRESSIONAL RECORD — HOUSE H3107
Madam Speaker, I oppose S.J. Res. Rather than embrace innovation to Legal and regulatory certainty facilitates
15, and I encourage my colleagues to deliver cost savings to their customers, access to responsible credit and clarifies re-
vote ‘‘no.’’ many of whom have trouble accessing sponsibility and accountability in lending
involving third-party partnerships. Bank
Ms. WATERS. Madam Speaker, I traditional financial services to begin third-party partnerships help banks better
yield 2 minutes to the gentleman from with, the bank will need to retain serve their communities by expanding access
Texas (Mr. GREEN), who is also the thousand-dollar-an-hour New York to affordable credit products from main-
chair of the Subcommittee on Over- lawyers just to keep everything stream financial service providers. Such ac-
sight and Investigations. straight. And guess what? Those costs cess is particularly important as individuals
Mr. GREEN of Texas. And still I rise, get passed on to the consumer through and small businesses across the country
work to recover from effects of the COVID–
Madam Speaker. Again, I thank the higher prices or reduced product avail- 19 pandemic. Banks seek partnerships with
chairwoman for the time and the op- ability. third parties for a variety of legitimate rea-
portunity. This is yet another example of the sons, including reaching additional markets,
I would say to all, I recall the debate Democrats sacrificing good policy for benefiting from specific expertise or tech-
around the yield spread premium, the sake of political points, all under nology, and improving the efficiency and
wherein a loan originator could say to the guise of consumer protection. cost of their own operations. The OCC’s
a person, ‘‘Here is a loan, you are lucky Contrary to some of the rhetoric third-party risk management guidance and
supplemental exam procedures make clear to
to get it for 10 percent’’ when the per- from my colleagues on the other side of banks that they retain the risks for activi-
son qualified for a loan at 5 percent. the aisle, a vote for this CRA will actu- ties conducted through relationships with
We eliminated the dastardly yield ally harm the very people they purport third parties.
spread premium and the harm that it to be helping. With the legal and regulatory certainty
caused. We have a similar cir- Madam Speaker, one final point. I in- provided by the rule, lending by banks made
cumstance with the rent-a-bank clude in the RECORD an April 14, 2021, in partnership with third parties can be as-
scheme that steals the American sessed as part of the ongoing supervision of
letter to the chair of the Financial
these banks, including as part of the OCC’s
Dream, such that people who qualify Services Committee from the former examinations to evaluate bank compliance
for better loans will likely get higher OCC Acting Comptroller Blake with applicable laws and regulations that en-
loans because they don’t always under- Paulson. sure consumer protection, Bank Secrecy Act
stand the scheme. OFFICE OF THE COMPTROLLER and anti-money laundering compliance, re-
So I rise today, and I thank Mr. GAR- OF THE CURRENCY, quired disclosures, and other obligations as-
CIA for what he has done to bring this Washington, DC, April 14, 2021. sociated with making loans. The OCC clari-
bill to fruition. I thank the Chair- Hon. MAXINE WATERS, fied examiner responsibilities in assessing
Chairwoman, Committee on Financial Services, true lender activities in third-party relation-
woman, and I absolutely support the House of Representatives, Washington, DC. ships in 202l. This clarification addressed
legislation. Hon. PATRICK MCHENRY, considerations related to assessing banks’
Mr. MCHENRY. Madam Speaker, I Ranking Member, Committee on Financial Serv- due diligence on the lending product or ac-
yield 3 minutes to the gentleman from ices, House of Representatives, Washington, tivity (e.g., terms and scope) and the third
Kentucky (Mr. BARR), who is the rank- DC. party; credit risk management, including un-
ing member on the Subcommittee on DEAR CHAIRWOMAN WATERS AND RANKING derwriting practices; model risk manage-
National Security, International De- MEMBER MCHENRY: On March 26, 2021, H.J. ment; compliance management systems; and
Res. 35 was introduced, providing for Con- ongoing monitoring of the lending activity
velopment, and Monetary Policy of the
gressional disapproval under the Congres- and the third party’s performance.
Financial Services Committee. He is sional Review Act of the Office of the Comp- If a bank fails to satisfy any of its compli-
also a member of the Foreign Affairs troller of the Currency’s (OCC) final rule, en- ance obligations, the OCC will not hesitate
Committee. titled ‘‘National Banks and Federal Savings to use its supervisory and enforcement au-
thorities to correct the deficiencies, protect
b 1400 Associations as Lenders,’’ commonly re-
consumers, and ensure the federal banking
ferred to as the ‘‘True Lender’’ rule. As you
Mr. BARR. Madam Speaker, I rise and other members consider the resolution, I system operates in a safe, sound, and fair
today also in opposition to S.J. Resolu- want you to be aware of the rule’s intended manner.
tion 15, the Congressional Review Act effect and the adverse impact of overturning As you consider the Congressional Review
the rule. Act resolution, you should be confident that
repeal of the Office of the Comptroller the OCC issued this rule with the intent to
of the Currency’s true lender rule. On October 27, 2020, the OCC issued its final
true lender rule to provide legal and regu- enhance its ability to supervise bank lend-
The United States has the most vi- ing. The rulemaking conformed to the Ad-
latory certainty to national banks’ and fed-
brant and innovative financial system eral savings associations’ (banks) lending, ministrative Procedure Act, and the agency
in the world. Recent advancements in including loans made in partnerships with considered all stakeholder comments pro-
technology have fostered products and vided during the rulemaking process. The re-
third parties. The OCC’s rule specifies that a
partnerships that expand access to sulting rule is consistent with the authority
bank makes a loan and is considered to be
granted to the agency by Congress.
credit to large swaths of the population the true lender of the loan if, as of the date It is also important to dispel
that previously couldn’t access basic fi- of origination, it (1) is named as the lender misperceptions of the rule, many of which
nancial services. in the loan agreement or (2) funds the loan. are repeated by opponents of the rule. To be
Many of these innovations faced The rule clarifies that as the true lender of clear, the rule does not change banks’ au-
a loan, the bank retains the compliance obli- thority to export interest rates. That au-
challenges from regulatory red tape or gations associated with making the loan,
confusing and often conflicting rules. thority is granted by federal statute. Nor
even if the loan is later sold, thus negating does the rule permit national banks to
The OCC’s true lender rule gave needed concerns regarding harmful rent-a-charter charge whatever rate they like; national
clarity to banks and their partners, fix- arrangements. Our rulemaking prevents po- banks and federal savings associations have
ing the disastrous Madden rule. tential arrangements in which a bank re- the same authority as state banks regarding
The OCC’s true lender rule gave that ceives a fee to ‘‘rent’’ its charter and unique the exportation of interest rates. Both fed-
clarity, but unfortunately, the effort in legal status to a third party with the intent eral and state-chartered banks must conform
the House today threatens to under- of evading state and local laws, while dis- to applicable interest rate limits. Disparities
claiming any compliance responsibility for of interest rates from state to state result
mine the progress that we have made the loan. These schemes have absolutely no
and compromise underbanked individ- from differences in the state laws that im-
place in the federal banking system, and this pose these caps, not OCC rules or actions.
uals’ and small businesses’ access to fi- rule helps address them. States retain the authority to set interest
nancial services. The rule makes clear banks’ responsibility rates, and rates vary from state-to-state.
I spoke with a local Kentucky bank and accountability for the loans they make The rule does not limit states’ ability to
that partners with a nonbank fintech and facilitates the OCC’s supervision of this regulate the conduct of state-licensed and
lender to provide credit to consumers, core banking activity. Disapproval of the regulated nonbank lenders, which engage in
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including many underbanked popu- rule would return bank lending relationships the vast majority of predatory lending.
to the previous state of legal and regulatory States are the primary regulators of
lations. They told me that absent the
uncertainty, which, as nearly 50 preeminent nonbank lenders, including payday lenders.
true lender rule, they will once again economic and finance scholars explained in Nonbank lenders are generally also subject
be buried in compliance costs to keep January 2021, adversely affects the function to the rules and enforcement actions of the
track of the patchwork of cases that of secondary markets and restricts the avail- Consumer Financial Protection Bureau
dictate the rules of the road. ability of credit. (CFPB).
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H3108 CONGRESSIONAL RECORD — HOUSE June 24, 2021
It is also important to understand why de- Ms. WATERS. Madam Speaker, I We are not having honest conversa-
mand exists for short-term, small-dollar yield 1 minute to the gentlewoman tions. My peers across the aisle are
credit products and why many consumers from California (Ms. PORTER). undoing good policy without an objec-
rely on nonbank sources of such credit, in- tive view to determine how it helps or
Ms. PORTER. Madam Speaker, I ex-
cluding payday lenders. Unfortunately,
mainstream service providers, including press my gratitude to Chairwoman hurts Americans.
commercial banks, largely abandoned short- WATERS for allowing me to speak in Fintech has played a significant role
term small-dolJar lending over the past two support of invalidating the predatory in transforming our markets, helping
decades. The resulting lack of choice and true lender rule. smaller banks become more competi-
fewer options pushed up the cost of these In our home State, the legislature tive, and creating more products and
products and forced consumers to seek serv- passed an interest rate cap of 36 per- access for Americans. The true lender
ices on less favorable terms. Because mil- cent on loans of up to $10,000 about 2 rule has supported that because it
lions of U.S. consumers do not have suffi- years ago. clarifies the legal framework that al-
cient savings or access to traditional credit, lows these bank and nonbank partner-
Before California Governor Newsom
they borrow nearly $90 billion each year in ships to be successful for consumers.
short-term small-dollar loans typically rang- had even signed this bill into law, pred-
atory online lenders began plotting We should be prioritizing fair access
ing from $300 to $5,000 to make ends meet and
during their shareholder earnings calls to financial services for Americans and
to address things like emergency car repairs
and other unexpected expenses. That is why to evade the new law through rent-a- work to protect and promote innova-
the OCC has remained vocal about encour- bank arrangements. Companies like tion in our markets so that consumers
aging banks to provide consumers with more Speedy Cash and CashNetUSA went so have as many pathways as possible to
safe and affordable options to meet these far as to gloat about the California law prosperity and achieving the American
small-dollar needs. In providing these prod- Dream.
creating a huge opportunity for them
ucts, banks should consider the ‘‘Interagency If we scrap the true lender rule, we
Lending Principles for Offering Responsible by driving out their competition, will disrupt our market, stifle innova-
Small-Dollar Loans,’’ published in May 2020. subprime title lenders based in Cali- tion, and hinder access to accountable
Banks should also consider the full and ac- fornia. and affordable credit for consumers and
tual cost of a credit product and its afford- Since the founding of the United small businesses. This is not the prece-
ability. Fees associated with short-term States, States have chosen to impose dent we should set in this body. It is a
loans may range from $10 to $30 per $100 bor- their own limits on interest rates that
rowed, and the imputed annual percentage gross abuse of power and a knife in the
lenders may charge consumers. The back of consumers.
rate (APR) of those loans can appear to ex- Trump administration’s true lender
ceed 100 percent or more. But often, the fees Ms. WATERS. Madam Speaker, I re-
and total cost of these loans to the consumer
rule greenlit these rent-a-bank serve the balance of my time.
can be less than that of loans made with a 36 schemes and, in doing so, undermined Mr. MCHENRY. Madam Speaker, I
percent APR, when such loans are available the will of Californians who, through yield myself the balance of my time.
at all. the democratic process, chose to pro- The true lender rule specifies that
As you consider the Congressional Review hibit abusive interest rates. when a bank makes a loan, the bank is
Act resolution, please keep in mind what The true lender rule violates our fed- the true lender. The rule clarifies what
may be an unintended consequence of a Con- eralist democracy, and it must be in- was uncertain and, therefore, made
gressional Review Act disapproval. Dis- validated. those loans more expensive.
approving the OCC’s true lender rule will Mr. MCHENRY. Madam Speaker, I This gives certainty to the market-
constrain future Comptroller ability to ad- place. It is a good thing. The true lend-
yield 2 minutes to the gentleman from
dress the true lender issue and may limit the
Florida (Mr. DONALDS), who has been a er rule is a good thing.
OCC’s ability to take supervisory or enforce-
great new Member of Congress. Under the true lender rule, we have
ment actions against banks that would have
been deemed to have ‘‘made’’ the loan under Mr. DONALDS. Madam Speaker, I fintechs that have been enabled to
the true lender rule. Rather than vacate the thank the gentleman for yielding to make loans in coordination with banks
rule, limit future Comptrollers from taking allow me to speak on this matter. and regulated like the people that they
up similar rules or possibly hamstring the It is important to understand, work with, like the banks that they
OCC’s enforcement authority, changes to the Madam Speaker, that having access to work with, which means the loans fall
rule, if any, should be made through the financial products is critical for not under Federal consumer protection
agency’s rulemaking process and in accord- laws, under Federal usury laws, under
only the innovation of our markets but
ance with the Administrative Procedures Federal laws.
Act. for the future expansion of our mar-
kets. It is time to take the pettiness One case in point, what the true lend-
Enclosed is a fact sheet that provides addi- er rule enabled was one out of four Af-
tional information for your awareness. If you out of politics and actually prioritize
policy that puts Americans first and rican American-owned businesses ac-
have any questions or need additional infor-
puts America first. cessing credit through fintechs.
mation, please do not hesitate to contact me
I would ask Members to review a few
or Carrie Moore, Director, Congressional Re- True lender is not being discussed in
lations. pieces of evidence that I have here.
a way that considers people. If that Madam Speaker, I would refer the
Sincerely, were the case, we would be recognizing
BLAKE J. PAULSON, Members to a study conducted by NYU
the incredible ways it has spurred inno- highlighting the important role that
Acting Comptroller of the Currency.
vation in our markets and has provided fintechs play in supporting African
Mr. BARR. The point I want to high- more access to credit and other finan- American-owned small businesses.
light is that the former Acting Comp- cial products for Americans. I would also refer the Members to let-
troller was making the point that dis- Instead of Congress working together ters in opposition to S.J. Res. 15: a
approving the OCC’s true lender rule to create financial equity in a sustain- June 8 letter from the American Bank-
will constrain a future Comptroller’s able way or ensuring that the United ers Association, Consumer Bankers As-
ability to address the true lender issue States remains a global leader, Demo- sociation, Electronic Transactions As-
and limit the OCC’s ability to take su- crats are working to undo anything ac- sociation, Independent Bankers of
pervisory or enforcement actions complished under the Trump adminis- America, Midsize Bank Coalition of
against banks that would have been tration, even if it means sacrificing the America, and National Bankers Asso-
deemed to have made the loan under good of the people. ciation; an April 2, 2021, letter from
the true lender rule; meaning that the I support assessing harmful financial FreedomWorks, Americans for Tax Re-
way the CRA law operates, if the House policies of the past and working to form, National Taxpayers Union, Cen-
passes this resolution, we will have a undo some of the mistakes that have ter for a Free Economy, American
permanent problem in the credit mar- been made. In fact, we could benefit Commitment, and Citizens Against
ctelli on DSK11ZRN23PROD with HOUSE
kets that will deprive low- and mod- from assessing legislation like Dodd- Government Waste; a letter from the
erate-income Americans of the finan- Frank, which has put tremendous Structured Finance Association; a let-
cial products that they desperately downward pressure on community ter from the Independent Community
need. banks being formed in the United Bankers of America; a May 11, 2021, let-
That is why I urge all my colleagues States. But that is not what is being ter from the American Bankers Asso-
to reject this misguided proposal. done here. ciation; a May 7, 2021, letter from the
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June 24, 2021 CONGRESSIONAL RECORD — HOUSE H3109
Americans for Prosperity; and a June Deal with that. Don’t create needless A disproportionate share of payday
22, 2021, letter from the Competitive pain for consumers. Don’t drive up the borrowers come from communities of
Enterprise Institute, which consists of cost of credit and make it less avail- color even after controlling for income.
a number of additional signatories. able by repealing this true lender rule. Communities of color have historically
None of those people are payday lend- This is another moment where my been left out of the banking system.
ers, by the way, which is the most spu- colleagues are working against the na- Black and Latinx consumers are much
rious argument about the true lender tional banks for politics rather than less likely to have a checking account
rule. If you want to get at payday lend- protecting consumers and creating a than White consumers, which is typi-
ing, go talk about valid when made. more vibrant, competitive, and innova- cally a requirement for a payday loan.
That would be the sound argument tive marketplace. About 17 percent of Black and 14 per-
from there. At least it has some rela- We should do what is good for con- cent of Latinx households are
tionship tangentially to payday lend- sumers in the financial system. Tech- unbanked compared to 3 percent of
ing. True lender does not. These are nology and innovation facilitate finan- White households.
different loans that are being described cial inclusion, which should be our Payday lenders target communities
by my colleagues across the aisle. goal. of color. The communities most af-
Let’s be clear. The National Banking Let’s not waste further time here. fected by redlining are the same who
Act enacted in 1864 established the Let’s vote this idea down that we are are saturated by payday lenders today,
principle by which and explicitly debating right now. Let’s get back to which are more likely to locate in
granted national banks the ability to actually driving a more competitive more affluent communities of color
transfer loans State-by-State. If you marketplace and doing what is right than in less affluent White commu-
don’t like that model, then repeal the for our constituents, what is right for nities.
1864 National Banking Act instead of consumers, and what is right for fami- One borrower, a single mother living
making these false arguments about lies. below the poverty line from California,
the true lender rule, which simply pro- Madam Speaker, I urge a ‘‘no’’ vote submitted a complaint to the CFPB
vides clarity about the National Bank- on this resolution, and I yield back the about Elevate’s RISE.
ing Act. balance of my time. ‘‘I was misled by RISE Credit to be-
My colleagues across the aisle would Ms. WATERS. Madam Speaker, may lieve that they were unlike other pred-
have you believe that this is a complex I inquire how much time I have re- atory loan companies. By the time,’’
scheme cooked up by the previous ad- maining. she says, ‘‘I understood what I had
ministration to get around consumer The SPEAKER pro tempore (Ms. signed, I had paid them thousands of
protection laws. That is not true. We MCCOLLUM). The gentlewoman has 18 dollars in interest.
are talking about 157 years of banking minutes remaining. ‘‘I have recently become temporarily
unemployed and called them to ask for
law here in the United States, and my b 1415 help during my time of financial hard-
colleagues across the aisle are arguing Ms. WATERS. Madam Speaker, I ship. They refused any solution and my
about that. yield myself such time as I may con-
My Democratic colleagues also ig- account is headed to collections now.
sume. ‘‘The total paid is far over the
nored this basic fact: They have made Madam Speaker, this resolution amount initially borrowed from RISE.
misleading statements about national would take the necessary action to re- This is robbery, and all of the neces-
banks versus State banks. They have verse the harmful Trump-era true lend- sities I have for myself and my chil-
implied falsehoods on State interest er rule that preys on small business dren are suffering because of it.
rates. They have cited protecting con- ‘‘How is it that they can do this? I
owners and individuals when they need
sumers when now they are just leaving am asking for help for not only my
assistance the most. This rule is a back
them out to dry. That is not consumer family, but for all of the families tar-
door for nonbanks to charge triple
protection. geted by these predatory loans meant
I get it, Democrats are now so politi- digit interest rates that trap con-
sumers. to target those living in poverty and
cally motived that the facts and long- struggling to live paycheck to pay-
Last month, the Senate passed this
standing precedent no longer matter. I check.’’
resolution on a bipartisan vote with all
think facts matter. In fact, Democrats The fake lender rule protects lenders
Democrats voting in support. They
are so blinded by partisanship, some that not only destroy small businesses
were joined by Republican Senators
can’t even seem to differentiate be- but also threaten to take business own-
LUMMIS, RUBIO, and COLLINS. This reso-
tween that doctrine of valid when made ers’ homes.
versus what we are discussing today, lution is also supported by more than
400 consumer, civil rights, veterans, In New York, Jacob Adoni, a realtor,
which is true lender. I think we should has been facing foreclosure threats on
be rooted in fact, and our policy de- small businesses, and other organiza-
tions, including the American Civil a $90,000 loan with an interest rate of
bates should be rooted in fact. 138 percent APR.
Make no mistake, the true lender Liberties Union, Americans for Finan-
In a court case—that is Adoni et al.
rule provides necessary consumer pro- cial Reform, the Center for Responsible
v. World Business Lenders, LLC, Axos
tections and supports affordable credit Lending, Faith for Just Lending, the
Bank and Circadian Funding filed in
to more communities. The rule does NAACP, National Association of Feder-
New York in October 2019—Adoni said
nothing to change interest rates, plain ally-Insured Credit Unions, the Na- he received threats that the lender
and simple. States retain that author- tional Consumer Law Center, Con- would foreclose on his home after re-
ity. ference of State Bank Supervisors, and ceiving a $90,000 loan at 138 percent
The actions in 2020 to clarify true 25 State attorneys general from both APR, secured by his personal residence.
lender are very different than codifying red and blue States, among many oth- ‘‘Adoni was contacted by Circadian
and clarifying valid when made. Both ers. Funding with an offer of a personal
were important clarifications, though. Madam Speaker, and Members, small loan that would be funded by WLB and
The argument today is about true businesses and underbanked consumers Axos Bank. He was told that the loan
lender, not some massive shift away do not benefit from the rule. Instead, documents would be provided to him at
from congressional intent, not some- the rule allows nonbank lenders to 12 p.m. and he must execute them by 6
thing new, something longstanding. launder loans through banks in order p.m. or the offer would no longer be
Regardless, the Democrats will push to charge those with limited access to valid.
through whatever they can in the credit triple digit interest rates and ‘‘Adoni was told by Circadian that
House today. But as former Acting trap these consumers in devastating the loan was meant to be a personal
ctelli on DSK11ZRN23PROD with HOUSE
Comptroller Brooks recently stated, cycles of debt. These predatory rent-a- loan to him, but it was necessary for
nullifying the true lender rule does bank schemes disproportionately prey the loan documents to make reference
nothing to undo payday lending—noth- on communities of color, draining to his business.’’
ing. And it seems to be what my col- wealth from these communities and, in He has received multiple threats to
leagues across the aisle have a real turn, perpetuating the racial wealth foreclose on his home and the mort-
problem with. gap. gage.
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H3110 CONGRESSIONAL RECORD — HOUSE June 24, 2021
Madam Speaker, let me just respond is fair. And this committee is not going GENERAL LEAVE
to some of what I have heard from the to be about the business of ripping off Mr. SCOTT of Virginia. Madam
opposite side of the aisle. I am abso- the least of these. Speaker, I ask unanimous consent that
lutely overcome by the great interest Madam Speaker, I yield back the bal- all Members have 5 legislative days to
that my Republican colleagues have in ance of my time. revise and extend their remarks and in-
helping minorities. I am so moved The SPEAKER pro tempore. All time sert extraneous materials on S.J. Res.
about the fact that all this is about for debate has expired. 13.
helping minorities who have been put Pursuant to the rule, the previous The SPEAKER pro tempore. Is there
into trouble because they are subprime question is ordered on the joint resolu- objection to the request of the gen-
lenders. Now if they are, it is because tion. tleman from Virginia?
they were the victim of predatory lend- The question is on the third reading There was no objection.
ers who put them in a subprime posi- of the joint resolution. Mr. SCOTT of Virginia. Madam
tion. The joint resolution was ordered to Speaker, I yield myself such time as I
But I hardly think that this is all be read a third time, and was read the may consume.
about taking care of minorities and third time. Madam Speaker, I rise today in sup-
these small businesses. This is about The SPEAKER pro tempore. The port of S.J. Res. 13, a Congressional Re-
protecting the big banks. This is about question is on passage of the joint reso- view Act resolution disapproving the
protecting the national banks. You lution. Equal Employment Opportunity Com-
heard what the ranking member said. The question was taken; and the mission, or EEOC, Conciliation Rule.
The big national banks have been in Speaker pro tempore announced that
This resolution will help ensure fair-
business for years, and we ought to let the ayes appeared to have it.
ness for those who bring forth charges
them operate the way that they have Mr. MCHENRY. Madam Speaker, on
of unlawful workplace discrimination.
historically operated and not interfere that I demand the yeas and nays.
with them. The SPEAKER pro tempore. Pursu- When the EEOC has found that an
I don’t know where they get away ant to section 3(s) of House Resolution employer likely violated the law, it is
with protecting these big national 8, the yeas and nays are ordered. required under title VII of the Civil
banks. And the constituents in their Pursuant to clause 8 of rule XX, fur- Rights Act of 1984 to engage in concil-
own district who are being misused be- ther proceedings on this question are iation before filing a lawsuit. This con-
cause they happen to get money, postponed. ciliation process is meant to be an in-
money that was lent to them by a formal and confidential opportunity for
f parties to settle a charge of discrimi-
nonbank, and that nonbank partnered
with a national bank, they are now PROVIDING FOR CONGRESSIONAL nation in lieu of going to court.
having to pay the interest rates of an- DISAPPROVAL OF THE RULE Unfortunately, in the final weeks of
other State, perhaps—like it was ex- SUBMITTED BY THE EQUAL EM- the Trump administration, the EEOC
plained in California, why we have PLOYMENT OPPORTUNITY COM- issued a final rule that imposed oner-
usury laws and there is a cap on those MISSION RELATING TO ‘‘UPDATE ous new requirements on the concilia-
interest rates. OF COMMISSION’S CONCILIATION tion process.
When they do this kind of partnering, PROCEDURES’’ Under the new rule, the EEOC must
it is all about getting to a State where Mr. SCOTT of Virginia. Madam provide an employer with a written
they are made to pay whatever that big Speaker, pursuant to section 7 of House summary of the facts and the nonprivi-
bank is allowed to collect from them. Resolution 486, I call up the joint reso- leged information the EEOC relied on
Madam Speaker, this is a rip-off. lution (S.J. Res. 13) providing for con- to determine that the employer vio-
This is about hurting the people who gressional disapproval under chapter 8 lated the law. Notably, the rule re-
most need our help. This is about al- of title 5, United States Code, of the quires the EEOC to expose the identi-
lowing this partnering to go on. And rule submitted by the Equal Employ- ties of workers or groups of workers for
many of those people who are bor- ment Opportunity Commission relating whom relief is being sought unless they
rowing from these payday lenders and to ‘‘Update of Commission’s Concilia- proactively request anonymity, and
other nonbanks don’t even know that tion Procedures’’, and ask for its im- their witnesses.
they are going to be the victims of the mediate consideration in the House. This new rule will put a thumb on
big banks and the interest rates that The Clerk read the title of the joint the scale in favor of employers in cases
they charge. This is absolutely ridicu- resolution. where the EEOC found that they likely
lous, and there is not a credible argu- The SPEAKER pro tempore. Pursu- violated workers’ civil rights. Specifi-
ment from the other side of the aisle ant to House Resolution 486, the joint cally, the rule incentivizes employers
about why they should disadvantage resolution is considered read. to focus litigation on whether the
these minorities and small businesses The text of the joint resolution is as EEOC failed to satisfy the rule’s new
that they claim that they are pro- follows: requirements instead of whether the
tecting. This is outrageous. S.J. RES. 13 employer engaged in unlawful discrimi-
Madam Speaker, I am so pleased that nation.
Resolved by the Senate and House of Rep-
the Senate passed this bill. And I am so In fact, on settlement—settlements
resentatives of the United States of America in
pleased that the Republicans on the Congress assembled, That Congress dis- had been more likely since the Su-
other side of the aisle—not on the approves the rule submitted by the Equal preme Court ruled that this concilia-
other side of the aisle, on the other Employment Opportunity Commission relat- tion process should be informal, unlike
side of Congress—decided to join with ing to ‘‘Update of Commission’s Conciliation the rule that was promulgated late in
the Democrats in order to do the right Procedures’’ (86 Fed. Reg. 2974; published the Trump administration. This will
thing on behalf of our constituents. January 14, 2021), and such rule shall have no
allow unscrupulous employers to drag
Madam Speaker, when they talk force or effect.
out the conciliation process, possibly
about, Oh, this is just because they The SPEAKER pro tempore. The for years—and even avoid account-
didn’t like Trump and they want to joint resolution shall be debatable for 1 ability altogether—by just litigating
undo whatever he has done, that is hour equally divided and controlled by over whether the EEOC complied with
their talking point for the day. This is the chair and ranking minority mem- the conciliation rule rather than cor-
not about that. ber of the Committee on Education and recting the discriminatory process.
This committee, the Committee on Labor or their respective designees.
ctelli on DSK11ZRN23PROD with HOUSE
Financial Services, is a new and dif- The gentleman from Virginia (Mr.
ferent kind of committee. We are not SCOTT) and the gentlewoman from b 1430
owned by the banks. We are not here to North Carolina (Ms. FOXX) each will The EEOC rule conflicts with the Su-
protect the big banks and the national control 30 minutes. preme Court’s 2015 decision in Mach
banks. We are here because we are here The Chair recognizes the gentleman Mining v. EEOC. It was a unanimous
to take care of what is right and what from Virginia. decision. It held that the EEOC must
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