Once the Senate returns from its latest recess, the world’s greatest deliberative body will take up a Resolution of Disapproval under the Congressional Review Act for a Trump era rule which aided working class Americans in obtaining access to financial instruments. Progressives are so blinded by hatred for banking institutions, they are giving Sens. Sherrod Brown (D-OH) and Elizabeth Warren (D-MA) a platform to rail against the industry and to advocate for further government intervention in the sector. For this attack on liberty and the working class to be successful, the Democrats only need one Republican to validate this effort at extremism by voting with them.
During the Trump Administration, the Office of the Comptroller of the Currency (OCC) finalized the “National Banks and Federal Savings Associations as Lenders” rule. This rule actually prevents the same predatory lending practices which Sens. Brown and Warren insist the industry tacitly engages in and claim to be eliminating. The rule solved a controversial rent-a-charter issue which allowed some state chartered financial institutions to skirt state laws by “renting” a federally chartered institution. The rule ensures legitimate banks and financial institutions are tied to every issued loan instrument by requiring those “true lenders’ to be obligated for compliance associated with the origin of the loan.
Now the progressives seek to undo that rule, which protects low and middle income Americas, because they are distracted and not focused on returning Americans to the workforce. Sen. Brown, as Chairman of the Senate Banking Committee, held hearings on topics such as “Separate but Unequal: The Legacy of Racial Discrimination in Housing,” “The Student Debt Burden and Its Impact on Racial Justice, Borrowers, & The Economy,” and “The Dignity of Work.” These may be worthy issues for hearings, but it seems like the Senate ought to be more focused on kick starting the economy and enacting policies which get the currently 8 million people back in the active workforce. Only a misguided progressive would seek to limit opportunities for people with credit issues by restricting access to loan instruments.
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Sen. Warren’s priorities this Congress mirror a similar vengeful attitude on private sector. Warren recently attacked Bitcoin because of some imagined “environmental impact” and is pushing the Biden Administration to forgive all student debt. Forgiving debt, without addressing the underlying issues which caused the problem in the first place, would create perverse incentives for the next generation of college students to get a loan and seek forgiveness or bankruptcy. For those who worked through school, scrimped and saved, or took on extra jobs to pay off student debt, Sen. Warren thinks you are a sucker for actually paying off your student loans.
Now, as many times before, the progressives come for the banks. They desperately wish this resolution to pass and are blinded by hatred of financial institutions which cater to those who have trouble getting traditional loans. They want to punish them, because some owners of these institutions make money off the loans, yet they ignore the fact that because of limited access to financial instruments many of the people they claim to protect will be shut off completely to credit. True Lender rule resulted in greater financial inclusion and broader access to credit by lowering of risk through the expansion of lending due to expanded loan sales. The breadth of these loan sales reduces interest rates for borrowers.
If the progressives are successful in killing the True Lender rule, the results will be financial pain for borrowers with low and middle incomes. Less competition in the markets means interest rates will rise. However, despite these regulatory changes, progressives will continue blaming the financial institutions which bear the brunt of these requirements. Progressives love to blame the private sector for all the woes of a struggling economy largely caused by government shut downs and an inefficient allocation of stimulus money.
When this comes up for a vote, expect the champions of free markets and liberty - Sens. Rand Paul (R-KY), Mike Lee (R-UT) and Cynthia Lummis (R-WY) - to vocally and rigorously oppose this effort. Conservatives such as Sens. John Barrasso (R-WY), Lummis, Dan Sullivan (R-AK), and Lisa Murkowski (R-AK), who represent rural votes – which would be significantly impacted by the change – who should continue to have access to these loan instruments.
Elite progressive politicians from coastal urban areas who care more about the big city liberals who fund their campaigns and never have had to resort to a short term loan instrument are being paternalistic in injecting government between a struggling rural population and banks willing to serve them. These folks and need more, not less, freedom to get a loan when they need one – and they don’t need Sherrod Brown nor Elizabeth Warren’s permission to do so.
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