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

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

Consumer teams state that high-interest loan providers — who issue such things as payday or car title loans — are using a way that is novel evade state rate of interest caps nationwide: They partner with banking institutions 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 — but their partner banking institutions in Utah technically problem 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 are participating: FinWise, Capital Community Bank and TAB Bank.

“The rogue banking institutions that help these schemes plainly feel safe that today’s regulators will turn a blind attention to this abuse associated with the bank charter,” Lauren Saunders, connect director associated with the nationwide Consumer Law Center, testified towards the House Financial solutions Committee.