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Articles & Publications

By on September 9, 2021

Articles & Publications

Raising of Longstanding OCC Consent Purchase May Signal Environment that is improved for Partnerships


On February 14, any office of this Comptroller associated with Currency (OCC) terminated a longstanding order that is cease-and-desist payday loan provider ACE money Express, Inc. Underneath the regards to your order, which was indeed in impact since 2002, ACE money was prohibited from “entering into any type of written or dental contract to offer any solutions, including payday financing, to virtually any nationwide bank or its subsidiaries without having the previous approval of this OCC.” The raising your order ended up being done without fanfare, while the OCC didn’t issue a press launch or any other general public statements describing the reason why because of its action. Nonetheless, we believe it would likely portend an attitude that is favorable the federal degree toward “bank model” lending relationships.

The OCC placed ACE money underneath the 2002 purchase in reaction to alleged unsafe and unsound practices that amounted up to a “pattern of mismanagement” associated with the policies and procedures of Goleta nationwide Bank, the bank that is national which ACE maintained a financing relationship. The particular allegations included gross carelessness in the control of loan files ( e.g., 641 files had been allegedly disposed of by tossing them right into a dumpster) and systemic problems in recordkeeping that led to many violations for the Equal Credit chance therefore the Truth In Lending Acts. In announcing your order on October 29, 2002, then-Comptroller of this Currency John D. Hawke, Jr. stated, “We have expressed concern often times in past times in regards to the dangers nationwide banks reveal themselves to when they lease out their charters to third-party vendors and neglect to exercise noise oversight.”

Beneath the regards to the events master that is agency contract, ACE money purchased a 90-95 per cent involvement desire for pay day loans originated by Goleta nationwide Bank, and performed marketing, servicing and collections tasks underneath the way of Goleta. The 2002 purchase didn’t deal with the parties’ bank partnership program that is lending aside from the ambiguous declaration that “the Comptroller has significant policy issues regarding programs for this type,” which may be read as handling how a system was operated versus its nature.


ACE money stays at the mercy of a related CFPB consent purchase that will not restrict the company from contracting with national banking institutions or any other finance institutions to perform servicing tasks related to financing.

Pepper Points

The OCC’s lifting for the permission purchase against ACE money should really be seen in light of several articles quoting Comptroller associated with Currency Joseph Otting as having a very good fascination with seeing nationwide banks increase small-dollar financing to customers, including to borrowers that are economically disadvantaged.

If prudently handled in a way in keeping with the security and soundness axioms outlined in OCC Bulletin 2013-29 (danger Management – Third Party Relationships), lending relationships between nationwide banking institutions and nonbank loan providers provide a means that is efficient nationwide banks to attain a wider pool of possible borrowers.

The OCC’s action shouldn’t be interpreted as signaling a far more permissive posture toward the kind of security and soundness failures that ACE money ended up being purported to have involved with.

The materials in this book was made as associated with the date established above and it is centered on guidelines, court choices, administrative rulings and congressional materials that existed at that moment, and may never be construed as legal counsel or appropriate views on particular facts. The data in this book is certainly not meant to produce, additionally the transmission and receipt from it will not represent, a lawyer-client relationship.

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