Congress Moves to Repeal OCC’s “True Lender” Rule

JD Supra ^ | May 29, 2021 | Pillsbury Winthrop Shaw Pittman

[gattaca]

TAKEAWAYS The Senate has voted to repeal the True Lender Rule using the Congressional Review Act, a measure allowing Congress to disapprove of agency actions and nullify recently adopted administrative rules.

The True Lender Rule is a recent Office of the Comptroller of the Currency rule designed to identify which party in a partnership between a national bank and a third party is deemed the “true lender.”

Without the rule, these partnerships now face regulatory uncertainty, with legal and compliance requirements potentially determined on a case-by-case basis.

On May 11, 2021, the Senate voted to repeal a Trump Administration regulation that defines which party is the “true lender” in partnerships between banks and non-banks, including financial technology and other non-bank lending companies. The Senate resolution now heads to the House of Representatives, which is expected to pass the resolution. President Biden has signaled his support for the repeal and will likely enact the repeal following a vote in the House. The repeal of this rule could create regulatory uncertainty for fintechs and other non-bank lenders that were relying on the rule.

[gattaca]

I don't have much information on this. It is in the Federal Register on what Trump's Regulations do not allow but the Dems are accusing the regulations of the direct opposite.

OKAY....it's the OCC True Lender Rule which ties into the Federal Bank Laws. The Dems argue about higher interest rates but it does nothing of the sort. That is still the state's responsibility. How can this be Trump's regulations?

(S.J. Res. 15. is the bill.)

[Steely Tom]

Don’t know anything about this, but it sounds like the sort of thing that was being done in the years leading up to the 2008 financial meltdown.

[Rurudyne]

Maybe it’s made it harder for Democrats to steal money from other investors?

[Governor Dinwiddie]

Biden is all for obfuscation of who the true lender is. You know, Joe's Friendly Neighborhood Mortgage Company is really a Goldman Sachs Hedge Fund, whose employees wouldn't live in your neighborhood in a million years, let alone give a tinker's damn about you personally.

Trump was all for transparency. And cleaning out the swamp.

[MortMan]

The rule Trump put forward clarified the “true lender” so that the bank and its partner could know what parts of the laws and regulations applied to which partner. Repealing the rule appears to reinstate that uncertainty, which will cause the money to not be loaned out as often.

Xiden is simply trying to stad borrowers in the back by obfuscating the meaning of the law.

[lodi90]

Xiden is simply trying to stad borrowers in the back by obfuscating the meaning of the law.

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Or looking for more lobbyist cash to influence a new rule/law.

[Flaming Conservative]

I don’t know anything about this, but I do know that Byedone won’t be happy until he’s rolled back every single improvement President Trump made! SO evil!

[Renfrew]

This is the big banks wanting something, pretty much the only thing that can get both parties in Congress to jump to action.

[Ahithophel]

Know Your Customer rule for banks-good. Know Your Lender rule for banks-bad. Figures.

[Wuli]

The rule made a lot of legal work, and work for lawyers unnecessary, as it provided legal clarity.

Now one of the Dims favorite donor classes - lawyers - will again get work arguing in courts and with regulators which of their parties in a financial relationship is the “true lender” in the relationship, because without the Trump era rule that situation is not clear, it is a gray area in the law.

If there is one thing lawyers hate in the law it is full transparency. Just look at all the legislation they are responsible for, where lack of transparency is the norm, and it provides plenty of wiggle room for the DOJ and regulators to choose who to persecute and why.