AFSa has sent a request to Capitol Hill, urging the reintroduction of the "Modernizing Credit Opportunities Act" (MCOA). This legislation has been introduced in previous sessions but is not part of the current 119th Congress. The proposed act aims to establish uniform federal standards for true lender determinations while maintaining the interconnected framework of federal banking law and ensuring a level playing field for the dual banking system.
The MCOA seeks to address ambiguities in existing law by providing a comprehensive federal framework necessary for restoring uniform national standards for true lender determinations and valid when made protections. Following Congress' repeal of the Office of the Comptroller of the Currency's True Lender Rule in 2021, there is currently no federal framework to determine true lender status in arrangements between federally insured depository institutions and financial technology companies.
Under this legislation, federally insured depository institutions would be considered true lenders if they are the party to which debt is initially owed according to loan terms, regardless of subsequent assignments or third-party service relationships. The MCOA would apply uniform standards across all federally insured institutions—national banks, state banks, and federal savings associations—ensuring competitive equality and clarifying that service provider geographic location does not affect institutional location determinations.
The AFSa emphasizes that Congress should act swiftly to reintroduce and enact the MCOA. Doing so would establish uniform federal true lender standards across all federally insured institutions, preserve valid when made protections through clear origination standards, preempt conflicting state laws undermining federal banking authority and competitive equality, and provide legal certainty for beneficial bank-fintech partnerships. Federal true lender legislation is deemed essential for maintaining stability, innovation, and competitive dynamics that have contributed to making U.S. financial markets among the strongest globally.