The Senate today voted 52 to 47 to repeal the OCC’s “true lender” rule using a Congressional Review Act resolution. The rule, finalized in 2020, established a test to determine when a bank is considered the true lender on a loan made in a partnership with a nonbank entity.
The American Bankers Association expressed its disappointment with the Senate action. “We share the view that this rule could be improved and support changes,” said ABA EVP James Ballentine. “By employing the blunt instrument of the Congressional Review Act to reject this rule, however, the Senate is effectively preventing any similar, improved rule from ever being promulgated.” Under the Congressional Review Act, a resolution that receives simple majorities in each house of Congress and the president’s signature may overturn regulations finalized within the previous 60 days Congress is in session. A resolution using this procedure also prohibits the agency in question from reissuing a substantially similar rule.
“We urge the House to consider the long-term ramifications for consumers and innovation that rejecting this rule would create,” Ballentine added. “We believe that responsible innovation in financial services holds tremendous potential to expand access to fair and affordable credit, particularly for unbanked and underbanked consumers. Let’s improve this rule instead of turning back the clock.”