US state regulators sued OCC, saying OCC did not take predatory loans seriously
Eight states and the District of Columbia are in the process of filing lawsuits over the changes to the U.S. Office of the Comptroller of Currency (OCC) that have just taken effect.
According to a document dated January 5, the New York State Attorney General is leading a complaint against the OCC and the current director of the OCC, Brian Brooks.
As early as October last year, the OCC formulated the “True Lender” rule, which took effect at the end of December last year. The rule stipulates that loans with the National Bank as the lender can follow the OCC’s national guidelines rather than individual state guidelines. The controversy here is that many states have particularly strict anti-loan usury clauses, which set a ceiling on interest rates, hoping to prevent predatory loans. The allegation against OCC stated that OCC did not take these issues seriously:
“Although the OCC verbally condemns predatory loans, it has given full support to lending relationships that circumvent usury laws aimed at protecting users.”
In announcing this rule, OCC stated:
“The bank’s loan relationship with a third party helps people obtain affordable credit. However, increased legal uncertainty about this relationship may hinder banks’ cooperation with third parties, restrict competition, and hinder these partnerships. The innovation it brings. This may ultimately limit people’s access to affordable credit.”
In the complaint starting today, the state regulators claimed that the OCC is above state law (or preemptive) and has exceeded its powers. They stated that the OCC hurriedly rejected its rules without serious consideration of its proposed rules and violated the Administrative Procedure Law. In addition, state regulators require the court to “declare that the OCC violated the Administrative Litigation Act because its “genuine lender” rules are authoritarian, capricious and abuse of discretion, or violate the law.”
OCC rejected Cointelegraph’s request for comment on the lawsuit.
At the end of December last year, an association of national banking regulators filed a similar lawsuit against OCC, accusing it of chartering a non-custodial blockchain lending platform as a national bank. These regulators assured Cointelegraph that the ultra-violence of the OCC is the core legal issue.
At the same time, on January 5, the OCC issued a new letter of explanation, allowing the National Bank to operate stablecoin network nodes. Because of this and similar rulemaking, Brooks has become a civil hero in the crypto community since taking over as OCC director in May.
