‘Rent-a-banks’ involving Utah high-interest lending falling under scrutiny of Congress

Customer teams state that high-interest loan providers — who issue such things as payday or automobile title loans — are using a way that is novel evade state rate of interest caps nationwide: They partner with banks in Utah, which sets no limitation on prices.

With what the teams call a “rent-a-bank scheme,” such loan providers solicit, structure and gather on loans that charge as much as 222per cent annual interest — however their partner banking institutions in Utah theoretically issue or support the loans to evade caps somewhere else.

Groups attacked the partnerships in congressional testimony Wednesday along with three Utah banking institutions they state may take place: FinWise, Capital Community Bank and TAB Bank.

“The rogue banking institutions that permit these schemes plainly feel safe that today’s regulators will turn an eye that is blind this abuse for the bank charter,” Lauren Saunders, connect manager associated with the nationwide customer Law Center, testified towards the House Financial solutions Committee.

Committee Chairwoman Maxine Waters, D-Calif., stated that is due to the fact Trump management has proposed guideline modifications which make the attention limit evasion easier, including making clear that that loan offered by a bank to a different organization will carry the interest that is initial given. (more…)