On Wednesday, February 5, the House Financial Services Committee will hold the first part of a two-part hearing on “rent-a-bank” structures. The hearing is titled “Rent-A-Bank Schemes and New Debt Traps: Assessing Efforts to Evade State Consumer Protections and Interest Rate Caps.”  (Part Two is scheduled for February 26.)

The Committee Memorandum for Part One discusses the relevant case law, including Marquette and Madden, and the OCC’s and FDIC’s proposals to undo Madden.  It also discusses H.R. 5050, the “Veterans and Consumers Fair Credit Act,” which would establish a 36% nationwide rate cap for consumer loans.  (The Committee has not yet acted on the bill.)

The scheduled witnesses for Part One are:

  • Monique Limón, Chair, Banking & Finance Committee, California State Assembly
  • Graciela Aponte-Diaz, Director of Federal Campaigns, Center for Responsible Lending
  • Creola Johnson, Professor, The Ohio State University Moritz College of Law
  • Lauren Saunders, Associate Director, National Consumer Law Center
  • Brian Knight, Director and Senior Research Fellow, Program on Innovation and Governance, Mercatus Center at George Mason University

On Thursday, February 6, Director Kraninger is scheduled to testify before the House Financial Services Committee at a hearing titled, “Protecting Consumers or Allowing Consumer Abuse? A Semi-Annual Review of the Consumer Financial Protection Bureau.”  Since such a “semi-annual review” is typically associated with the release of a CFPB semi-annual report and the Fall 2018 semi-annual report was issued last February, it seems likely that the hearing was scheduled with the expectation that the CFPB will release its Fall 2019 semi-annual report before the hearing.  We would expect Director Kraninger to be the target of strong criticism from Democratic Committee members regarding, among other issues, the Bureau’s enforcement of fair lending laws under Director Kraninger’s leadership and its proposal to eliminate the final payday loan rule’s ability-to-repay requirement.