Consumer groups hope the FDIC will crack down on rent-a-bank schemes

Consumer groups hope the FDIC will crack down on rent-a-bank schemes

Transcript¹

With a top Trump²-appointed banking³ regulator stepping down, consumer financial protection groups say the new head of the FDIC should crack down on lenders charging interest rates of 100% or more.

RACHEL MARTIN, HOST:

A bank regulator appointed by former President Trump steps down today. Consumer groups say that's a chance for the government to crack down on online lenders who charge interest as high as 200%. NPR's Chris Arnold explains.

CHRIS ARNOLD, BYLINE⁴: A couple years ago, Sarah Ahmed (ph) needed about $2,000. She'd just moved from Iowa to Tampa, Fla., and she needed to rent a new apartment and get her young son set up in an after-school program.

SARAH AHMED: So I was just kind of running a little close to the red just between moving, finishing, like, furnishing my place and getting it ready for my son.

ARNOLD: Ahmed says she tried getting a loan from a regular bank, but with her student loan debt, she couldn't qualify. So she started looking around online, and she found a lender called Personify Financial willing to loan her $2,300, and she could pay it back over two years. So she sent in her pay stubs, her financial info. Then she says, they told her what the interest rate would be.

AHMED: That was when they shared with me that it was, like, 98%.

ARNOLD: Ninety-eight percent annual interest.

And were you a little nervous about, you know, taking out a loan with a 98% interest rate?

AHMED: Of course, yeah.

ARNOLD: And typically, interest rates that high are illegal in most states, including Florida, where Ahmed lives. Lauren Saunders is an attorney with the National Consumer Law Center.

LAUREN SAUNDERS: Florida limits interest rates to about 31% on a $2,000 loan.

ARNOLD: OK, so then how can online lenders make loans with rates way higher than that?

SAUNDERS: We call this a rent-a-bank scheme.

ARNOLD: Rent-a-bank because online lenders like Personify Financial are not banks. Normally, they'd be bound by the state interest rate caps. But Saunders says they get around those by partnering up with small banks that most people have never even heard of.

SAUNDERS: Banks are exempt⁵ from most state interest rate laws, and so predatory lenders have found that they can find a rogue⁶ bank, launder⁷ their loan through the bank, call it a bank loan and claim that it's not subject to the state interest rate limit.

ARNOLD: Saunders says the vast majority of banks do not gouge⁸ people this way on loans. But her nonprofit has identified a handful that are in these rent-a-bank schemes with more than a dozen online lenders. Her rough estimate is, together, they've loaned out more than a billion dollars in recent years. So consumer groups hope that after the current head of the Federal Deposit Insurance Corporation steps down this week, the agency will rein⁹ in those banks. Sarah Ahmed's loan with that 98% interest rate came from a bank based in Utah called First Electronic Bank.

AHMED: Very little was going towards the principal balance. Most of it was going towards the interest, which was obviously devastating¹⁰. I was working my butt¹¹ off, and it was like I wasn't making any progress.

ARNOLD: A year later, her loan documents showed she'd paid $2,000 just in interest and still owed $1,500 on the principal. Lauren Saunders says First Electronic Bank actually just has one physical bank branch, but it makes these high-interest rate loans across much of the country through this rent-a-bank scheme.

SAUNDERS: It does normal things out of the branch, but it also has this side business of laundering¹² loans for predatory lenders.

ARNOLD: First Electronic Bank declined an interview. It said in a statement that it complies with the law and that it gives people access to loans when they need them, even if they have no credit history or in the past have had credit problems. The online lender that initiated¹³ the loan with Sarah Ahmed, Personify Financial, also declined an interview but said in a statement that it helps smaller banks make more credit available to borrowers. For her part, Ahmed worried that she was going to have to keep paying thousands of dollars more in interest on that loan.

AHMED: It was like I asked for help to dig out of this hole and just created a deeper hole for me to inhabit. Like, I felt stuck.

ARNOLD: Eventually, though, she got unstuck and out of the hole. She paid the loan back with help from a nonprofit that gave her an affordable¹⁴ loan with a much lower interest rate. So now she can spend more of her paycheck on things like enrolling¹⁵ her son in soccer. She just bought him cleats and a uniform. Chris Arnold, NPR News.

1 transcript   

n.抄本，誊本，副本，肄业证书

参考例句：

• A transcript of the tapes was presented as evidence in court.一份录音带的文字本作为证据被呈交法庭。
• They wouldn't let me have a transcript of the interview.他们拒绝给我一份采访的文字整理稿。

2 trump   

n.王牌，法宝；v.打出王牌，吹喇叭

参考例句：

• He was never able to trump up the courage to have a showdown.他始终鼓不起勇气摊牌。
• The coach saved his star player for a trump card.教练保留他的明星选手，作为他的王牌。

3 banking   

n.银行业，银行学，金融业

参考例句：

• John is launching his son on a career in banking.约翰打算让儿子在银行界谋一个新职位。
• He possesses an extensive knowledge of banking.他具有广博的银行业务知识。

4 byline   

n.署名；v.署名

参考例句：

• His byline was absent as well.他的署名也不见了。
• We wish to thank the author of this article which carries no byline.我们要感谢这篇文章的那位没有署名的作者。

5 exempt   

adj.免除的；v.使免除；n.免税者，被免除义务者

参考例句：

• These goods are exempt from customs duties.这些货物免征关税。
• He is exempt from punishment about this thing.关于此事对他已免于处分。

6 rogue   

n.流氓；v.游手好闲

参考例句：

• The little rogue had his grandpa's glasses on.这淘气鬼带上了他祖父的眼镜。
• They defined him as a rogue.他们确定他为骗子。

7 launder   

v.洗涤；洗黑钱（把来路可疑的钱弄得似乎合法）

参考例句：

• She wore a freshly laundered and starched white shirt.她穿一件刚刚浆洗熨烫过的白色衬衣。
• The gang launders the steal money through their chain of restaurants.这帮匪徒通过他们的连锁饭店洗赃款。

8 gouge   

v.凿；挖出；n.半圆凿；凿孔；欺诈

参考例句：

• To make a Halloween lantern,you first have to gouge out the inside of the pumpkin.要做一个万圣节灯笼，你先得挖空这个南瓜。
• In the Middle Ages,a favourite punishment was to gouge out a prisoner's eyes.在中世纪，惩罚犯人最常用的办法是剜眼睛。

9 rein   

n.疆绳，统治，支配；vt.以僵绳控制，统治

参考例句：

• The horse answered to the slightest pull on the rein.只要缰绳轻轻一拉,马就作出反应。
• He never drew rein for a moment till he reached the river.他一刻不停地一直跑到河边。

10 devastating   

adj.毁灭性的，令人震惊的，强有力的

参考例句：

• It is the most devastating storm in 20 years.这是20年来破坏性最大的风暴。
• Affairs do have a devastating effect on marriages.婚外情确实会对婚姻造成毁灭性的影响。

11 butt   

n.笑柄；烟蒂；枪托；臀部；v.用头撞或顶

参考例句：

• The water butt catches the overflow from this pipe.大水桶盛接管子里流出的东西。
• He was the butt of their jokes.他是他们的笑柄。

12 laundering   

n.洗涤（衣等），洗烫（衣等）；洗（钱）v.洗（衣服等），洗烫（衣服等）( launder的现在分词 )；洗（黑钱）（把非法收入改头换面，变为貌似合法的收入）

参考例句：

• Separate the white clothes from the dark clothes before laundering. 洗衣前应当把浅色衣服和深色衣服分开。 来自《简明英汉词典》
• He was charged with laundering money. 他被指控洗钱。 来自《简明英汉词典》

13 initiated   

n. 创始人 adj. 新加入的 vt. 开始，创始，启蒙，介绍加入

参考例句：

• He has not yet been thoroughly initiated into the mysteries of computers. 他对计算机的奥秘尚未入门。
• The artist initiated the girl into the art world in France. 这个艺术家介绍这个女孩加入巴黎艺术界。

14 affordable   

adj.支付得起的，不太昂贵的

参考例句：

• The rent for the four-roomed house is affordable.四居室房屋的房租付得起。
• There are few affordable apartments in big cities.在大城市中没有几所公寓是便宜的。

15 enrolling   

v.招收( enrol的现在分词 )；吸收；入学；加入；[亦作enrol]( enroll的现在分词 )；登记，招收，使入伍（或入会、入学等），参加，成为成员；记入名册；卷起，包起

参考例句：

• They lashed out at the university enrolling system. 他们猛烈抨击大学的招生制度。 来自辞典例句
• You're enrolling in a country club, Billy. 你是注册加入乡村俱乐部了，比利。 来自辞典例句