Seeking to stop the cycle of unsophisticated borrowers getting trapped in a recurring cycle of debt, multiple states have imposed regulations on payday lenders in recent years — regulations that will no longer apply to some lenders under a new Trump administration rule, Courthouse News Service reported. California, Illinois and New York sued the Office of the Comptroller of Currency, a bureau of the U.S. Treasury Department, over a new rule that makes it easier for lenders to skirt state laws that cap interest rates for payday loans. The rule finalized on June 2 makes lenders who partner with federally regulated banks exempt from state interest rate caps on loans. The states are challenging the new rule on several grounds. They claim OCC lacks the power to enact the rule, that the rule violates procedures created by Congress after the last financial crisis, that it ignores the potential for regulatory evasion of state laws and that OCC fails to provide evidence supporting its change in policy.
