NEW YORK (1010 WINS) – State Attorney General Letitia James filed a lawsuit Thursday to stop a Trump administration rule she said would allow predatory payday lenders to bypass state interest-rate caps and take advantage of New Yorkers.
James is among eight attorneys general from across the country filing the suit against the Federal Deposit Insurance Corporation (FDIC) over a rule they said allows the federal government to preempt state usury laws.
Under existing federal law, federally insured state-chartered banks are exempt from state interest-rate caps. The FDIC rule extends these exemptions to any non-bank lender that buys loans originated by an exempt bank. The attorneys general said this will allow predatory payday lenders to use these federally insured banks to issue loans with interest rates that exceed state law.
James and the coalition of attorneys general want the rule to be declared unlawful. They argue the FDIC has exceeded its authority.
“The FDIC was created to protect consumers, but the Trump Administration is trying to turn this agency into just another avenue by which big banks pad their profit margins,” James said in a statement. “Time and time again, this administration has gone to bat for predatory payday lenders and has been persistent in its attempts to eviscerate rules designed to protect consumers from falling into vicious debt cycles.”
1010 WINS has reached out to the FDIC for comment.