Consumer teams state that high-interest loan providers — who issue such things as payday or automobile title loans — are using a unique solution to evade state rate of interest caps nationally: They partner with banking institutions in Utah, which places 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 222% annual interest — however their partner banking institutions in Utah theoretically problem or support the loans to evade caps somewhere else.
Groups attacked the partnerships in congressional testimony along with three Utah banks they say are involved: FinWise personal loans missouri, Capital Community Bank and TAB Bank wednesday.
“The rogue banking institutions that allow these schemes demonstrably feel at ease that today’s regulators will turn an eye that is blind this abuse associated with bank charter,” Lauren Saunders, connect manager associated with the nationwide customer Law Center, testified to your House Financial solutions Committee. Continue reading “вЂRent-a-banks’ involving Utah lending that is high-interest under scrutiny of Congress”