Group representing consumers says bank partners with predatory lenders, should face a penalty
A national consumer advocacy group is calling on federal regulators to take action against a bank it says is harming consumers through a partnership with a known predatory lender.
The National Consumer Law Center (NCLC) is calling on the FDIC to downgrade the rating of FinWise Bank as a result of the bank's partnership with fintech lenders charging loan interest rates of up to 160% APR.
NCLC cited FinWise's partnerships with American First Finance, Elevate, and Opportunity Financial (OppFi) - lenders known to charge triple-digit interest rates on a range of loan product.
“Hundreds of complaints revealing FinWise Bank’s predatory puppy loans, unaffordable lending and potential violations of the law strongly support downgrading the bank’s Community Reinvestment Act rating” said Lauren Saunders, associate director at the National Consumer Law Center. “FinWise Bank’s predatory credit that borrowers can’t afford to repay and that evades state interest rates does not meet the convenience and needs of communities as required by the CRA.”
NCLC cited the FDIC's previous downgrade of TAB Bank as precedent for the proposed downgrade of FinWise. TAB's status was downgraded as a result of a partnership with fintech lender EasyPay - a company known to offer triple-digit interest rate loans up to 189%.
“The FDIC’s assessment of FinWise Bank must take into account the full scope of its business practices,” said Nadine Chabrier, senior policy and litigation counsel at the Center for Responsible Lending. “High-cost credit that extracts wealth and crushes borrowers with debt does not meet communities’ credit needs and must be penalized on CRA exams.”