Dear Representative Hollingsworth:
With respect to the Conference of State Bank Supervisors (CSBS), 1 i will be composing to convey our membersвЂ™ severe concerns with and opposition towards the Modernizing Credit Opportunities Act (H.R. 4439), which seeks to determine that a bank could be the вЂњtrue lenderвЂќ in just about any loan project arrangement having a service provider that is third-party. State regulators have window that is unique bank and non-bank financing relationships by virtue of the work chartering banks, licensing non- bank loan providers, and overseeing the conduct of both forms of entities, including financing partnerships between your two. State regulators will also be the вЂњboots on a lawn,вЂќ policing their markets to guard consumers from harmful and exploitative lending options that run afoul of state legislation.
State regulators are worried that H.R. 4439 could cause вЂњrent-a-charterвЂќ arrangements between banking institutions and lenders that are non-bank have already been specifically made to circumvent state usury and licensing guidelines. For instance, some states have actually bans on pay day loans or limitations on interest levels and loan terms. 2 H.R. 4439 would start the entranceway for loan providers trying to exploit preemption that is federal partnering having a bank to supply usurious loans that could otherwise break state legislation.
The capability to export interest levels across states lines вЂ“ just like the advantageous asset of deposit insurance coverage вЂ“ is a privilege afforded simply to banking institutions, in part, simply because they must adhere to a host of вЂњcradle-to- graveвЂќ regulations, including stringent money and liquidity needs, community reinvestment demands, merger and affiliation limitations, and prior approval or notice needs for an important percentage of their activities. Continue reading