How could Troy Jackson's bill allowing higher interest rates affect Todd Schwartz?
OppFi may benefit from Maine bill allowing higher interest rates The bill introduced by Troy Jackson would have allowed online lenders to bypass Maine's existing interest rate cap of 30 percent on small-dollar loans. This change would permit companies like OppFi, which currently offers small-dollar loans with an average rate of 150 percent, to charge significantly higher rates, potentially close to 200 percent. This regulatory shift would directly increase the revenue potential for OppFi by allowing it to charge substantially more for the high-interest loans it provides to consumers with poor credit. The bill was introduced in February 2022 but ultimately did not pass.
- Effect
- Strong positive
- How direct
- 2 steps, 1 inferred by Brind
- When
- Over the long term
- The story
- Gone quiet
How it reaches Todd Schwartz
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Troy Jackson, while serving as Maine Senate president, introduced legislation that would allow online lenders to bypass Maine's interest rate caps when offering small-dollar loans to borrowers with poor credit. The bill, introduced in February 2022, was framed as a measure to "Establish Consumer Protections Regarding Small Dollar Loans".
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The legislation, introduced by Troy Jackson, would repeal portions of a 2021 law that forces online lenders outside of Maine to adhere to the state's interest rate cap of 30 percent on loans of $2,000 or less.
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- freebeacon.com Oct 13
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type of legislative body, often the upper house or chamber of a bicameral legislature
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Under the proposed bill, lenders like OppFi could charge significantly higher rates, often close to 200 percent, instead of being limited by the 30 percent cap. OppFi currently offers high-interest, small-dollar loans with an average rate of 150 percent. Since high-interest loans generate significant revenue for companies like OppFi, the ability to charge rates near 200 percent would substantially increase the company's financial returns on its small-dollar loan portfolio.
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American entrepreneur, Founder, Chief Executive Officer, and Executive Chairman of OppFi Inc., Partner at Schwartz Capital Group and Strand Equity Partners
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The facts so far
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- The previous law forces online lenders outside of Maine to adhere to the state's interest rate cap of 30 percent on loans of $2,000 or less.freebeacon.com
- Under Jackson's bill, such lenders could skirt the cap and charge significantly higher rates, often close to 200 percent.freebeacon.com
- OppFi offers high-interest, small-dollar loans—usually between $500 and $5,000 with an average rate of 150 percent.freebeacon.com
- OppFi previously agreed to a settlement forcing the company to pay a $250,000 fine and to refund over 4,000 District consumers.freebeacon.com
Why it matters
For OppFi, the ability to bypass state interest rate caps represents a significant expansion of its operational model and revenue stream. The company operates in a high-interest lending space that has faced scrutiny, including a consumer protection lawsuit in April 2021 in the District of Columbia, which accused OppFi of offering 'predatory, high-interest, short-term loans' up to 198 percent.
This legislative effort also highlights the political dynamics surrounding Troy Jackson, who used his power as Maine Senate president to introduce measures benefiting entities close to him. The bill was supported by a lobbying firm employed by Jackson's son, Chace, and the measure was framed as establishing consumer protections, despite criticism from the Maine Credit Union League.
What we don't know yet
- What is the current legislative status of the bill allowing lenders to skirt interest rate caps in Maine?
- Are there similar legislative efforts underway in other states that regulate high-interest small-dollar loans?
What would change this answer
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Reporting
- freebeacon.comOct 13
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