Sen. Chris Van Hollen (D-Md.), Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and Rep. Chuy Garcia (D-Ill.) today introduced legislation to repeal the OCC’s “true lender” rule finalized in October. The resolution would employ the Congressional Review Act, which allows Congress to vote by simple majority to overturn rules finalized within the previous 60 days Congress is in session using expedited congressional procedure.
The OCC’s final rule established a clear test to determine when a bank making a loan is considered the “true lender” in the context of a partnership between a bank and a third party. Under the final rule, a bank makes a loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan. A loan originated by a bank that satisfies either part of this test would retain its status as a bank-originated loan if the loan is sold, assigned, or otherwise transferred to a nonbank entity.
In addition to repealing the final rule, a Congressional Review Act resolution prohibits the agency from reissuing a substantially similar rule.