This letter urges Congress to reject H.R. 7886 (Davidson), American Lending Fairness Act. States currently have the right to opt out of the federal law (the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) that allows state-chartered banks to ignore rate limits outside their home state. Many predatory nonbank lenders use “rent-a-bank” schemes where they launder their loans through out-of-state, state-chartered banks so they can charge 100% to 200% APR, rates that are illegal for many nonbank installment loans in 45 states.4 Iowa, Colorado, and recently Oregon opted out of DIDMCA and other states are considering doing so. H.R. 7866 would eliminate states’ ability to stop exploitative, unaffordable predatory lending through rent-a-bank schemes.
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