Lawsuit filed to protect New Yorkers from high interest rates from non-banks

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FILE – In this June 15, 2018, file photo, cash is fanned out from a wallet in North Andover, Mass. High-interest payday and online lenders have long been among the few options for Americans with bad credit and lower incomes. Guidance issued in the spring by federal regulators cut a previously suggested rate cap on loans and that could mean banks start lending small-dollar, high-interest loans. (AP Photo/Elise Amendola, File)

NEW YORK, N.Y. (WWTI) — The New York Attorney General filed a lawsuit to stop the federal government from allowing predatory to charge high interest rates on loans and bypassing state interest caps.

Attorney General James, along with the attorneys general of California and Illinois, filed the suit to stop a new Trump Administration rule allowing the federal government to preempt state usury laws and allow third-party entities to target consumers.

The federal National Bank Act, national banks that are licensed and regulated by the Office of the Comptroller of the Currency can charge interest on loans at the maximum rate permitted by their home state.

The new OCC rule would extend the National Bank Act exemption for federally-regulated banks to non-bank debt buyers, such as payday lenders or any other entity that purchases debt from a national bank.

“As our state and nation continue to suffer the devastating effects of COVID-19, with millions of Americans still unemployed and struggling to make ends meet, it is reprehensible that the Administration has chosen to protect big banks’ profits rather than vulnerable consumers’ wallets,” said Attorney General James. “All this rule does is make it easier for bad actors to charge New Yorkers triple-digit interest rates on loans and chart a path to more easily take advantage of consumers.”

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