Federal regulators have sought to clarify a small provision on "rent-a-bank" shams in their new guidance encouraging banks to get back into small-dollar lending.

Included in the Office of the Comptroller of the Currency's May 23 guidance on small-dollar installment loans was a provision stating that loan pricing should comply with applicable state laws. A second line said the OCC would view "unfavorably" any bank partnership established "with the sole goal" of evading lower interest rate caps in a bank's home state.

Some attorneys said the OCC should further clarify its views on partnerships. Jeremy Rosenblum, a partner at Ballard Spahr LLP in Philadelphia, described the lines as "troubling language" raising concerns about longstanding federal preemption of state usury caps.

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