By / Jul 1

Last week, the House of Representatives voted 218-208 to repeal the Office of the Comptroller of the Currency’s (OCC) 2017 ‘True Lender’ rule. Republican Rep. Glenn Grothman (WI-06) voted to pass this bipartisan Congressional Review Act (CRA) aimed at the OCC’s misguided rule. The bill now heads to President Biden’s desk for his signature or veto. 

The 2017 OCC rule allowed payday lenders to partner with out of state banks, thus evading state interest rate caps in their own state. This partnership is known as a “rent-a-bank” scheme, which allows banks to “rent” their name to lenders in an outside state in order to avoid consumer protection laws. The rule states that these partner banks operated as the ‘true lender’ and originator of the loan, so though the consumer and the payday lender are in one state, their state laws did not apply to the loan. The Congressional Review Act allows Congress to repeal rules promulgated by a federal agency, such as this 2017 OCC rule. 

The ERLC has long applauded states’ efforts to curtail unjust lending practices in their states. Currently, 19 states and the District of Columbia have 36% interest rate caps. We believe that these common sense consumer protection laws should be respected rather than undermined by federal regulation. Predatory lenders should not be granted a loophole from state laws that promote responsible and honest lending practices and that represent the will of the voters of those states. 

As the Southern Baptist Convention affirmed in 2014, “predatory lending fails to respect the dignity of the person created in the image of God and interferes with human flourishing.” To learn more about the harms of payday lending and why Southern Baptists oppose it, read the ERLC’s explainer here

Six years ago, the ERLC joined the Faith for Just Lending Coalition (FJL) to advocate for an end to the payday debt trap. FJL has been working since the 2017 OCC rule was first proposed to oppose its implementation and released a statement yesterday applauding the House for its vote to repeal the harmful rule. 

The ERLC is grateful to both chambers of Congress for taking action to roll back this harmful regulation. Predatory lending is out of step with God’s design for financial relationships, and we celebrate this progress toward ending the payday debt trap. 

The ERLC will continue to advocate for legislation that curbs payday lending, including for the re-introduction of the Veterans and Consumers Fair Credit Act (VCFCA). To learn more about the VCFCA and why the ERLC supports it, read our issue brief here. The ERLC is proud to have advocated for the repeal of the OCC’s ‘True Lender’ rule and we urge President Biden to swiftly sign it into law. 

By / May 14

Last night, the Senate voted 52-47 to repeal the Office of the Comptroller of the Currency’s (OCC) 2017 ‘True Lender’ rule. Republican Sens. Lummis (WY), Collins (ME), and Rubio (FL) voted to pass this bipartisan Congressional Review Act (CRA) aimed at the OCC’s misguided rule. The bill now heads to the House of Representatives for consideration. 

The background 

The 2017 OCC rule allowed payday lenders to partner with out of state banks, thus evading state interest rate caps in their own state. This partnership is known as a “rent-a-bank” scheme allowing banks to “rent” their name to lenders in an outside state in order to avoid consumer protection laws. The rule states that these partner banks operated as the ‘true lender’ and originator of the loan, so though the consumer and the payday lender are in one state, their state laws did not apply to the loan. 

The ERLC has long applauded states’ efforts to curtail unjust lending practices in their states. Currently, 19 states and the District of Columbia have 36% interest rate caps. We believe that these common sense consumer protection laws should be honored, and not undermined by deceptive regulatory definitions. Predatory lenders should not be granted a loophole from state laws that promote responsible and honest lending practices. 

The average annual interest rate on payday loans in states without an interest rate cap is 391%. This unfair and exorbitant interest rate traps families in cycles of poverty and debt, leading many to rollover their payday loans eight or nine times. 

Calling for an end to payday lending

Scripture speaks clearly against usurious lending practices. A just nation protects consumers from exploitive business relationships and regulates lenders to ensure just treatment. As the Southern Baptist Convention affirmed in 2014, “predatory lending fails to respect the dignity of the person created in the image of God and interferes with human flourishing.”

These values prompted the ERLC to join the Faith for Just Lending Coalition (FJL) and advocate for an end to the payday debt trap. FJL has been working since the 2017 OCC rule was first proposed to oppose its implementation and released a statement yesterday applauding the Senate for its vote to repeal the harmful rule. 

Chairman of the Senate Banking Committee, Sen. Sherrod Brown (OH), conducted a hearing on the CRA and cited FJL and ERLC’s advocacy on this issue: “a broad, bipartisan coalition is asking Congress to overturn the OCC’s harmful True Lender Rule. That support includes […] the Southern Baptist Convention […] and other members of the Faith in Just Lending Coalition.”

Every sector of public life has a role to play in ending payday lending. This includes individuals who should steward their money well, churches who should help financially struggling families and individuals, and governing authorities who should regulate consumer loan interest rates. 

The ERLC is grateful to the Senate for passing such an important bill to curb the proliferation of payday lenders across the country. Predatory lending is out of sync with God’s design for financial relationships, and we celebrate one small step in ending the payday debt trap. 

The ERLC will continue to advocate for the repeal of the 2017 OCC ‘True Lender’ rule as the CRA moves to the House of Representatives, and President Biden’s desk for signature.

By / May 13

Jeff Pickering and Brooke Kramer are joined by the Rev. Dr. Gabriel Salguero to discuss why Christians should care about ending the payday debt trap and how the Faith for Just Lending (FJL) coalition is advocating against payday lending. Salguero is the pastor at The Gathering Place, a Latino-led multi-ethnic Assemblies of God congregation in Orlando and also the president and founder of the National Latino Evangelical Coalition (NALEC).

“Payday lending is a form of economic predation and grinds the faces of the poor into the ground. As Christians, we are called by Jesus, by the prophets and by the apostles to care for the poor, individually, and also about the way social and political and corporate structures contribute to the misery of the impoverished. Groups across this diverse coalition don’t agree on every issue in the public square, but I am happy to work together on this issue to stand against unchecked usury and work for economic justice, human dignity and family stability.” — Russell Moore

Guest Biography

The Rev. Dr. Gabriel Salguero is pastor at The Gathering Place, a Latino-led multi-ethnic Assemblies of God congregation in Orlando, Florida. Salguero is also the president and founder of the National Latino Evangelical Coalition (NALEC), a coalition of several thousand evangelical congregations in the United States. He was the former Director of the Hispanic Leadership Program (HLP), and the Institute for Faith and Public Life at Princeton Theological Seminary. Salguero has been named as one of the nation’s most prominent Latino evangelical leaders by the New York Times, NBC Universal, Univisión, and many other outlets. In addition, his leadership on issues of young male education and criminal justice reform has been featured by the Discovery Channel and the Oprah Winfrey Network. Rev. Salguero has served on the White House Faith-Based Advisory Council, the National Association of Evangelicals (NAE), and the National Advisory Council of the My Brother’s Keeper Alliance. Salguero holds a BA in Spanish and History from Rutgers University, and M.Div (magna cum laude) from New Brunswick Theological Seminary, he pursued a Ph.D in Christian Social Ethics at Union Theological Seminary, and holds a Doctorate in Divinity from Eastern Nazarene College. Rev. Salguero lives together with his wife, the Rev. Jeanette Salguero and their two sons in Orlando, Florida.

Resources from the Conversation

By / May 13

The ERLC opposes unjust lending practices that exploit the vulnerable, are predicated on consumer loss, and trap families in cycles of debt. Payday lending serves as a significant contributing factor to the economic struggle for many Americans. The practice of providing short-term cash loans at unreasonably high interest rates forces families and individuals to make financial decisions that are often impossible to recover from. Southern Baptists are opposed to predatory lending practices that target financially unstable persons. Any lending practice that intentionally uses and exposes vulnerable individuals is unacceptable and should be strictly regulated by government protections.

Scripture strongly condemns usurious and exploitative lending practices. Recognizing the dignity of every person extends to business and financial relationships as well as interpersonal ones. As the Southern Baptist Convention affirms, “God is opposed to those who take advantage of the weak, poor, and vulnerable” and “predatory lending fails to respect the dignity of the person created in the image of God and interferes with human flourishing.”

Currently, 19 states and the District of Columbia have implemented interest rate protections to prohibit predatory lenders from exploiting vulnerable Americans. The Office of the Comptroller of the Currency (OCC)’s “National Banks and Federal Savings Associations as Lenders” rule overrides existing state protections by legalizing predatory lending even in states that have prohibited it.

The OCC‘s rule allows non-bank lenders to partner with banks as the “true lender” and evade state interest rate caps. Lenders can charge unfair interest rates regardless of existing state protections under the OCC’s “true lender” rule. 

The average annual interest rate on payday loans in states without an interest rate cap is 391 percent. This high-cost lending often traps families in cycles of debt that leave already impoverished families with crippling debts. The payday lending industry exploits individuals with financially desperate situations. The industry’s business model is predicated on borrower failure and specifically targets vulnerable people. Predatory lenders should not be granted a loophole from state laws that promote responsible and honest lending practices. 

The ERLC strongly opposes the OCC’s “True Lender” rule as it undermines state authority, threatens existing consumer protections, and allows predatory lenders increased access to financially vulnerable Americans.