What’s the fate of bank-nonbank partnerships after ‘true lender’ vote?
By Brendan Pedersen and Hannah Lang
The Senate’s rejection of a Trump-era rule making it easier for banks to sell loans to third parties spells considerable uncertainty for fintech firms, even as the Biden administration likely prepares to remake the standard. The chamber’s passage of a Congressional Review Act resolution striking down the Office of the Comptroller of the Currency’s “true lender” regulation all but guarantees the rule’s demise. The resolution now moves to the Democrat-controlled House, where it is expected to pass….The outcome was an “important reminder” that historically, banking issues haven’t always been fiercely partisan, according to Karen Petrou, managing partner at Federal Financial Analytics. She said the bipartisan vote reflects a diverse coalition of interests that opposed the rule, including consumer advocates and states’ rights supporters. “Many people mistook this as a purely Democratic initiative because of all the consumer advocacy, but this was actually a broad coalition with deep roots also in the GOP,” she said. With the OCC’s new Biden-appointed comptroller, Michael Hsu, starting this week, the agency was already expected to revisit the “true lender” rule with or without a congressional reversal. Therefore, the Senate’s vote Tuesday shouldn’t have caught the industry off guard, Petrou said.