September 2, 2020
Acting Comptroller associated with the Currency Brian Brooks 400 7th St SW Washington, DC 20219
Re: responses on Proposal вЂњNational Banks and Federal Savings Associations as LendersвЂќ Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find below the reviews regarding the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) in reaction to your OCC Notice of Proposed Rulemaking, National Banks and Federal Savings Associations as Lenders, OCC-2020-0026, RIN-1557-AE97.
HOPE is a credit union, community development standard bank and policy institute providing you with affordable monetary services; leverages personal, public and philanthropic resources; and partcipates in policy analysis to satisfy its objective of strengthening communities, building assets, and enhancing everyday lives in economically troubled areas throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. Throughout the last 25 years, HOPE has created over $2.5 billion in funding that includes benefited significantly more than 1.5 million people.
Because of the experiences of our users, described herein, our company is worried that the OCC proposition will rather add to than alleviate, the burdens of high-cost financing within our area. In most five Deep South states, high-cost loan providers, such as for example payday and vehicle name lenders, happen to be saturating our communities. As an example, in 2017 in Tennessee, there have been over 1,200 cash advance storefronts, a lot more than McDonaldвЂ™s and Walmart places combined. 1 when it comes to costs drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee come in the most notable ten states, and high-cost lenders strain a lot more than $1.6 billion each year from low-income borrowers in these four states. 2
These loans were particularly harmful at that time of COVID-19, magnifying the crisis that is financial. HOPE people paid over $54,000 to rent-a-bank lenders within the last few ninety days alone. This amount that is staggering the hefty burden of your membersвЂ™ relationship with predatory loan providers, especially at the same time whenever people are straining in order to make ends talk with reduced costs and needing monetary cushions to keep home to keep safe. It is specially real for lower-income households within the Deep Southern, where in states like Mississippi, Alabama, Tennessee, and Louisiana over fifty percent of households making $35,000 have observed income loss considering that the pandemic. 3 For Ebony households, that are disproportionately targeted by predatory lenders, a lot more than 1 in 2 in all of our Deep South states have likewise skilled loss in employment earnings. We now have additionally seen exactly how portions of peopleвЂ™s COVID relief that is financial such as for example stimulus repayments, happens to be reduced by portions of these funds likely to payday loan providers as opposed to fundamental requirements.
Currently, there was one or more high-cost lender in every state into the Deep Southern area making these loans through the bank partnership arrangement. See Appendix. The OCC proposition advances the dangers that more high-cost loan providers will draw out extra costs, along with the assistance that is willing of banks. We observe that up to now, these plans include just banks that are FDIC-supervised. Nevertheless, the OCC proposition may start the doorway for national banking institutions to enter such partnerships as well.
The Proposal Exacerbates the Harms Experienced by HOPEвЂ™s Members
HOPEвЂ™s concerns in regards to the harms of the loans aren’t hypothetical. HOPE users have already been caught by loans facilitated by rent-a-bank partnerships, placing their success that is economic in and therefore irritating our objective to construct wide range among low-income communities and communities of color into the Deep South. While rent-a-bank loans are hailed as available credit when it comes to economically susceptible, we all know the contrary to be real. Folks are maybe not being harmed by the lack of the loans supported by the OCC proposition; instead, it’s the existence of extra cost this is certainly high-loan that is the issue blog link. The expansion of these high-cost loan products will further exacerbate the financial strain of low-income borrowers in the Deep South if promulgated by this rule.
During the period of simply the previous 90 days, 67 HOPE members had one or more loan from either Elastic, increase, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. This will be a concerning quantity. Individuals stuck when you look at the rent-a-bank loans are individuals on fixed incomes getting social safety or impairment advantages, veterans, pupils, instructors, and employees at hospitals, take out places, and also pay day loan stores.