Consumer advocates slammed the Office of the Comptroller of the Currency (OCC) for its final rule issued today that encourages online non-bank lenders to launder their loans through banks so they can offer high-cost triple-digit loans in states where such loans are illegal. The rules were strongly opposed by a bipartisan group of attorneys general as well as by numerous community, consumer, civil rights, faith and small business organizations, and may face legal challenges.
Before the onset of the COVID-19 pandemic, black homeownership was already at historically low levels nationwide and the racial wealth gap was widening, leaving communities of color with far less wealth and fewer resources for emergencies. COVID-19 has been particularly devastating for African-Americans, low-income families, and immigrants, who are bearing the brunt of the resulting economic fallout as well.
In place of a heartless free market of panicked investors who might want to cut their losses and sell, the plan is to simulate real buying and selling of financial products like mortgages and bonds with directed deployments of the Fed’s endless trillions. And they will be endless … Marcus Stanley of Americans for Financial Reform said, “The Fed’s perspective on this is, they want to create normalcy.” But what does “normal” mean in an economy that may be changed forever?
AFR and our partners sent a letter in support of including the Medical Debt Relief Act as part of future covid-19 relief.
Unless Congress and regulators act, private equity will shed its nonperforming assets and feast on new ones. J. Crew is the latest example.
Americans of all partisan identities, and across all regions of the United States, strongly support enacting new consumer protections on high-interest lending during the coronavirus crisis. Americans are highly supportive of prohibiting all high-interest loans during the crisis and of capping interest rates for consumer loans, according to a new bipartisan poll from Lake Research Partners and Chesapeake Beach Consulting.
Letter calling on Congress to include consumer protections in COVID-19 relief
In The News: Trump Appointees Manipulated Agency’s Payday Lending Research, Ex-Staffer Claims (The New York Times)
Linda Jun, a senior policy counsel for Americans for Financial Reform, a consumer advocacy group: “To this day, despite many people asking, they haven’t provided anything about the basis for changing this rule beyond some vague references to new research. It’s hard to see the reversal as anything other than political.”
Letter to Regulators: Fifty Organizations call for Transparency In Federal Reserve/Treasury Emergency Assistance
Note: On the afternoon this letter was sent the Federal Reserve announced it would be providing additional transparency in 13(3) facilities. See our comment linked here for earlier AFR Edcucation Fund communications with the Federal Reserve on this issue. Download a pdf of the letter
In The News: Who’s getting these hundreds of billions in government aid? For now, the public may be in the dark. (The Washington Post)
Critics also noted that while the central bank has to share some basic information about the loans, other details, such as how many employees the company has retained or the compensation for its chief executive, might never be shared publicly. “We should ask for the actual deal documents. Why wouldn’t you make those public?” said Marcus Stanley, policy director at Americans for Financial Reform.