Dodd-Frank Revisited (again)
It seems as though every few weeks a new bank subsidiary is alerted to the fact that federal preemption no longer protects it in terms of state licensing and usury issues. We will address this in a panel at this year's ELFA Annual Convention and have written about it extensively in our newsletter and elsewhere.
An added unwelcome by-product of Dodd-Frank is that some state attorneys, general and regulators, are likely to be more aggressive in dealing with usury and licensing issues. While only California has a broad lenders license that affects non-bank commercial lenders, many states place restrictions on business conducted by purchasers of retail installment paper, motor vehicle financings, micro-ticket loans and other transactions. High-interest (high-risk) lenders and lessors are particularly vulnerable in several states. This is a prime example of "look before you lend" because the penalties can be severe, including criminal prosecutions.