CARSON CITY, Nev. -- Twenty state Attorneys General, including Aaron Ford from Nevada, are slamming proposed new federal banking guidelines for not addressing what are known as "rent-a-bank" schemes.
The state leaders asked federal regulators for a crackdown on non-bank lenders that partner with real banks to make loans sold to the non-bank partner.
By using the bank's name on paperwork, the non-bank can claim the loan should not be subject to state regulations, including interest-rate caps.
Rebecca Borné, senior policy council at the Center for Responsible Lending, said the federal guidance should explicitly condemn rent-a-bank arrangements.
"Because the guidance is essentially silent on it, it definitely raises the question of, is it going to be read as permission for more banks to engage in these rent-a-bank schemes?" Borné pointed out.
Also Tuesday, a coalition of consumer and civil rights groups sent a letter to federal regulators calling for a crackdown on rent-a-bank partnerships.
In June, President Joe Biden eliminated a Trump-era "true lender" rule, saying it favored predatory lenders over consumers.
A report from the National Consumer Law Center said in Nevada, a company called Elevate offers loans under the "Rise" brand, with interest rates of 149%, in connection with FinWise Bank or Capital Community Bank. Elevate also offers "Elastic"-branded loans up to 109% effective APR, through Republic Bank and Trust.
Nevada passed a bill in 2019 limiting predatory lending practices and capping interest rates to about 40% for installment loans.
Borné noted loans with high rates can lead to an unending cycle of debt.
"These loans are designed to be unaffordable," Borné asserted. "Lenders succeed by causing borrowers to fail. Customers pay on these loans for years, often without reducing the principal."
The National Consumer Law Center also warned of a company known as Axcess Financial, working under the name "Check 'n Go." It offers loans with the brand-name "Xact," up to 199% APR, through an agreement with Capital Community Bank.
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Lawmakers in Olympia this session moved to add more protections for consumers against predatory loans.
Washington state lawmakers passed Senate Bill 6025 unanimously in both chambers, closing a loophole companies were using to evade caps on the amount of interest charged on loans.
Sam Leonard, an attorney in Seattle, said tech companies providing financial services such as loans would charter out of state banks, especially in Utah, where lenders can charge unlimited interest rates.
"These fintech lenders a lot of times will charge 150, 200% interest on relatively small dollar loans, $3,000, $5,000 and the like," Leonard explained.
Washington state has a set of protections called the Consumer Loan Act to shield people from predatory loans. Leonard said capping interest rates at the federal level would help people across the country.
However, he emphasized the bill goes a long way to increase protections for Washingtonians.
"Not a lot of states at this time have passed similar legislation," Leonard pointed out. "Washington is out in front of the curve with regard to protecting low-income Washingtonians or other Washingtonians that might enter into these predatory loan products."
Leonard added the issue with predatory loans is they keep people in continuous debt cycles.
"Loan products like these essentially strip low-income individuals' ability to improve their economic situation," Leonard noted.
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While there's snow in the immediate forecast, the spring storm season has arrived in Minnesota and state officials said with complaints related to homeowner insurance claims on the rise, it is important to monitor changes in policies.
The Minnesota Commerce Department said complaints from policyholders, largely stemming from their claims being denied, have more than doubled since 2020.
Julia Dreier, deputy commissioner of insurance for the Minnesota Department of Commerce, said under a changing climate, the nation is seeing plenty of extreme weather events resulting in wind and hail damage, and insurance companies are adjusting to what's happening.
"Insurance costs are going to increase," Dreier pointed out. "We do want to make sure that Minnesotans are prepared."
As some carriers narrow what is covered or require higher deductibles, Dreier urged consumers to carefully review their policy when it is up for renewal, to avoid surprises when they have to file a claim. The department acknowledged changes can slip under the radar when consumers rely on paperless statements sent via email, or with busy schedules preventing them from reading all the fine print in documents they receive.
The department emphasized it is a complicated process in getting complaints resolved, noting some can be partially reversed in favor of the homeowner. Dreier noted they work closely with the industry to make sure a company's actions are within the letter of the law.
"One of our jobs is to make sure that insurance companies aren't doing something unethical when they're submitting their policy forms to us and their rates to us for review," Dreier added.
The department does have a new video on its YouTube channel, which offers more details on how to better prepare yourself ahead of any future claims, including knowing whether your policy offers flood protection and assessing the value of items in your home.
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Wisconsin has announced a big development in trying to establish more digital equity around the state.
Gov. Tony Evers and the Public Service Commission say Wisconsin's blueprint for digital equity has been accepted by the National Telecommunications and Information Administration.
That means the state is eligible for up to $30 million to implement its approach over the next five years.
Martha Cranley - state director for AARP Wisconsin - called it a robust plan, noting that older populations continue to face challenges in being connected to the digital world.
"We know that at least 15% of people 50-plus in Wisconsin are not connected," said Cranley, "either because the wires simply don't come to their house, or they don't have a device, or they don't know how to use it."
Cranley said the lack of connection is especially concerning in rural areas across northern Wisconsin, where aging communities have limited resources.
Stakeholders also note an infusion of new aid is helpful with the federal government's Affordable Connectivity Program - which provides discounts on monthly internet bills for eligible households - in danger of running out of money.
Cranley said the state's plan came together following extensive public outreach, in which her organization helped convey the need for improved internet access for those 50 and older.
"They certainly heard from older people about how important this is to connect to their doctor," said Cranley, "and to connect to government services, and frankly, find employment."
Overall, Evers says the plan's federal approval means more than 410,000 homes and businesses will be better positioned to be connected to new or improved high-speed internet service.
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