November 7, 2019 — Letter

We write with urgency to express our deep concern about FDIC-supervised banks’ involvement in rent-a-bank schemes used to help high-cost lenders evade state interest rate caps, and predatory lenders’ expressed intent to expand those schemes to evade the new California interest rate cap that goes into effect January 1, 2020.

As described in an attachment to this letter, FinWise Bank and Republic Bank & Trust are already helping OppLoans and/or Elevate make loans up to 160% in several states that do not allow those rates. In addition, at least three large predatory lenders, which currently charge from 135% to 199% APR on high-cost installment loans that will be illegal under the new California law, have already indicated their plans to start or expand rent-a-bank arrangements into California, with the clear intent to evade the new interest rate cap. We urge you to stop FDIC-supervisee banks from engaging in these shams before they start and to cease the rent-a-bank operations in other states.