One hallmark of President Trump’s tenure is the zeal with which federal agencies have sought to shred federal regulations, either by repealing or simply not enforcing them. That’s been true even in cases where the deregulation is likely to raise costs for the public more than it will lower them for industry, as is the case with the administration’s effort to ease limits on methane emissions.
But the administration’s assault on regulations hasn’t been confined to those adopted by the federal government. Trump also has sought to prevent state governments from imposing their own rules to protect consumers and businesses within their borders — for example, by suing California for adopting net neutrality rules that bar broadband internet providers here from interfering with the traffic on their local networks.
Now, the administration is on to its next outrageous proposal. Two top federal bank regulators — the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency — want to allow lenders to evade state consumer protection laws in order to charge obscenely high interest rates.
States have imposed interest caps (36% is a common maximum) because non-bank lenders were charging 100% or more to borrowers with bad credit ratings and, in most cases, low incomes. The state-imposed rate caps make it harder for desperate borrowers to obtain loans that leave them in even worse shape financially, pushing them toward less damaging alternatives.
The Trump administration, which had moved previously to deregulate predatory payday lending, proposes to reverse that crackdown. That prompted about two dozen state attorneys general to accuse the two bank regulators of misreading federal law in their effort to erase state consumer protections. They’re right: The freedom granted to federally regulated banks doesn’t extend to unregulated non-bank lenders. If the administration doesn’t abandon its effort to promote predatory loans, the courts should stop it.
Los Angeles Times
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