ABA Opposes Resolution to Invalidate OCC’s ‘True Lender’ Rule

The American Bankers Association and a coalition of financial trade groups wrote in opposition today to a resolution that would invalidate the OCC’s “true lender” rule that established a test to determine when a bank is considered the true lender on a loan made in a partnership with a nonbank entity.

In a letter to House leaders, the groups urged lawmakers to oppose the measure, noting that while changes should be made to the rule, but invalidating it through a joint resolution issued under the Congressional Review Act would prohibit the OCC from reissuing a substantively similar rule and would “remov[e]the opportunity to create a more fulsome true lender framework.”

The groups said that the next comptroller of the currency should analyze the rule and consider whether to initiate a new rulemaking to create a more robust true lender framework for providing safe and affordable credit to consumers. “The True Lender Rule has provided clarity for determining which entity originates a loan in a bank-nonbank partnership,” they wrote. “That legal certainty has tangible benefits for borrowers seeking affordable credit and for market participants, which will promote economic growth. We are concerned that using a CRA resolution of disapproval would reduce access to affordable credit, harming consumers and the communities in which they live.”