Rule Threatened to Re-Open the Doors to 200% APR Loans in Illinois


CONTACTS: Brent Adams,, 773-844-5544

Jane Doyle,, 708-527-7568

CHICAGO: Consumer advocates are applauding Congress’s 218-208 vote today to repeal the so-called “true lender” rule — a Trump-era bank regulation by the Office of the Comptroller of the Currency (OCC) that makes it easier for predatory lenders to partner with national banks to evade state laws like Illinois’s recently adopted 36% rate cap. In other states with rate caps, these so-called “rent-a-bank” schemes enable predatory lenders to charge 160% APR or higher. 

In May, the Senate voted to repeal the rule by a vote of 52-47. Today’s House vote on the repeal, Senate Joint Resolution 15, was a mostly party line vote with all Democrats in favor and all but one Republican opposed. (The one Republican to vote in favor was Congressman Glenn Grothman of Wisconsin.) The companion resolution in the House was introduced by Rep. Chuy García (D-IL-04).

“Predatory lenders trap working class communities like mine in harmful cycles of debt. States like Illinois continue to pass laws to protect their residents from these debt traps, but the OCC’s True Lender rule gives bad actors a rubber stamp to undermine those laws,” said Congressman Jesús G. “Chuy” García. “I’m proud that the House joined the Senate to repeal this rule and strengthen consumer protections, and I look forward to the President signing our resolution.”

“Today’s vote, while a major victory for Illinois consumers, is not the end of the battle,” said Brent Adams, Senior Vice President of Policy & Communication for Woodstock Institute. “Given the amount of money at stake, we expect predatory lenders to continue to try various tactics to trap Illinois consumers in cycles of high-cost debt.”

Before Illinois passed a 36% rate cap, the average APR on a payday loan was 297%. Charging in excess of 36% became illegal in Illinois on March 23 of this year. Over the past few months, lenders have pushed bills in the Illinois General Assembly to get carve outs, exemptions, or loopholes put into the law. The lenders have also gone to court. The pawnbrokers filed a lawsuit in Sangamon County, and a group of installment lenders filed a lawsuit in Cook County.

Federal law shields many banks, including national banks, from having to comply with state rate caps. The rule voted on today is called “true lender” because, under the rule, the national bank can be deemed the “true” – or actual – lender simply by adding its name to the loan agreement. Under these schemes, the predatory nonbank lender still designs, markets, processes, and collects the loan, while harvesting most of the proceeds.

In many states with rate caps, several high-cost online installment lenders, including Chicago-based OppLoans (a.k.a. OppFi), are offering loans up to 160% or higher by putting an obscure bank’s name on the loan agreement. OppLoans offers 160% APR loans in 26 states that prohibit triple-digit rate loans. The company cited the “true lender” rule in defense of its loan to a disabled veteran in California, where the legal rate on the loan is 24%. 

“We are so thrilled to see that Congress has stepped in to overturn the so-called true lender rule,” said Andy Posner, Capital Good Fund’s Founder and CEO. “When states like Illinois implement strong consumer protections, such as their newly enacted 36% rate cap, the playing field is leveled for equitable lenders like us. The True Lender rule would have allowed predatory lenders to evade these common-sense reforms, harming consumers in two ways: first, by exposing them to the ultra-high-interest loans that many states ban, and second by making it harder for lenders offering affordable products to compete. We look forward to continuing to engage with Congress on other consumer protections, such as a national 36% APR rate cap.”

Now that both chambers of Congress have approved the resolution, it goes to the President’s desk for his signature. The White House supports the repeal.