Published: April 2023

FDIC should downgrade FinWise Bank over predatory ‘rent-a-bank’ lending

A coalition of consumer advocacy organizations submitted a letter to the FDIC urging the agency to downgrade FinWise Bank’s Community Reinvestment Act rating in light of the bank’s providing assistance to several nonbank lenders that enables them to make high-cost predatory loans they could not make directly.

Consumer Action is part of a coalition of consumer advocates that submitted a letter to the Federal Deposit Insurance Corporation (FDIC) urging the agency to downgrade FinWise Bank’s Community Reinvestment Act (CRA) rating. FinWise Bank helps several nonbank lenders make predatory loans at APRs of up to 160% that the lenders cannot legally make directly because the triple-digit interest rates are prohibited by many states. Utah, where FinWise Bank is headquartered, is one of seven states that don’t have caps on loan interest rates. The loans that FinWise facilitates are not only usurious, they also pose a host of other consumer protection problems and potential legal violations, including debt collection abuses and credit reporting errors. Along with the letter, the groups submitted a sampling of the hundreds, if not thousands, of complaints made to the Consumer Financial Protection Bureau (CFPB) about the three nonbank partners that make predatory loans with the help of FinWise. Signers contend that FinWise’s activities are anathema to the CRA, which requires financial institutions to help meet the credit needs of the communities they serve.

Lead Organization

National Consumer Law Center

More Information

Click here to read the coalition letter.

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