Colorado’s Senators should vote to repeal rule enabling predatory lender evasion of CO payday law

Key opportunity to repeal the rule expires May 21

CoPIRG

DENVER – With the clock ticking, Colorado advocates are calling on Senator Bennet and Senator Hickenlooper to back the bill that will overturn a bank regulator rule that would allow predatory lenders to evade Colorado’s 36% payday loan interest rate cap. The bill must pass the Senate by May 21 to block the rule. 

In 2018, 77% of Coloradans approved Proposition 111, creating a 36% interest rate cap on payday loans. But in December of 2020, the federal Office of the Comptroller of the Currency (OCC) rushed through the “true lender” rule, a rule that allows predatory lenders to pay a bank willing to pose as the lender for their operations in states with interest rate caps, an arrangement known as “rent-a-bank.” This enables the lender to charge interest rates in excess of Colorado’s voter-approved legal limit.

The OCC’s new rule was opposed by dozens of groups representing faith leaders, civil rights advocates, military advocates and others concerned for the well-being of Colorado’s working families. It also generated opposition from eighteen legislators. 

Attorney General Phil Weiser has also joined a letter calling for the repeal of the rule. 

Members of the groups supporting repeal of the OCC’s true lender rule made the following statements:

“Coloradans overwhelmingly approved a 36% rate cap on payday loans. I’m calling on our Senators to support the bill that will protect the will of Colorado voters and the strong consumer protections we have in place,” said Danny Katz, executive director of CoPIRG.

“Inviting banks into the business of predatory lending during a pandemic that carries massive economic impacts is beyond the pale,” said Scott Wasserman, President of the Bell Policy Center. “Our federal regulators should be busy shoring up resources, responsible solutions and consumer protections, not paving the way for financial predation. Congress must repeal this harmful rule now.”

“This is simply the worst time to collapse the barriers between low-income families and predatory lenders,” said Maria Gonzalez, Founder and CEO of Adelante Community Development.  “The OCC should be ashamed at their insensitivity to the needs and the desperate situations of hardworking families. Our members of Congress should back us up and support the repeal of the true lender rule.”  

“Coloradans have faced some of the most difficult times in recent history and more difficult times are ahead. Marginalized communities are more vulnerable now more than ever.  The voters of Colorado have spoken on where they stand with payday loans. Predatory products will continue to try to find a way into our state and cause harm to those that have the least to spare. We need our Colorado leadership to be part of the solution and stand up to the people that cause harm.” – Kat Traylor, Principal at Kat Strategy