Eight states and the District of Columbia are suing the nationwide financial institution regulator over a rule change that simply got here into imp
Eight states and the District of Columbia are suing the nationwide financial institution regulator over a rule change that simply got here into impact.
Per a Jan. 5 submitting, New York’s legal professional common is main the cost in opposition to the Workplace of the Comptroller of the Foreign money and present Appearing Comptroller Brian Brooks.
Again in October, the OCC laid out its “True Lender” rule, which took impact on the finish of December. The rule dictates {that a} mortgage that features a nationwide financial institution as a lender can due to this fact depend on the OCC’s nationwide steering relatively than that of particular person states. The controversy right here is that many states have particularly robust anti-usury provisions, which cap rates of interest within the hope of stopping predatory lending. Right this moment’s grievance alleges that the OCC has not taken the considerations severely:
“Whereas the OCC pays lip service to condemning predatory lending, it offers its wholesale endorsement to lending relationships predicated on evasion of usury legal guidelines designed to guard shoppers.”
The OCC, for its half, stated upon saying the rule that:
“Banks’ lending relationships with third events can facilitate entry to inexpensive credit score. Nevertheless, growing authorized uncertainty relating to such relationships could discourage banks and third events from partnering, restrict competitors, and chill the innovation that outcomes from these partnerships. This may increasingly in the end limit entry to inexpensive credit score.”
Of their grievance from at this time, the state regulators declare that the OCC overstepped its authority by overriding — or preempting— state legislation. They are saying the regulator additionally violated the Administrative Process Act in dashing its rule out the door with out taking feedback on its rule proposal severely. Furthermore, the regulators ask the court docket to “declare that the OCC violated the APA as a result of its True Lender Rule is bigoted, capricious, an abuse of discretion, or in any other case not in accordance with legislation.”
The OCC declined Cointelegraph’s request for touch upon the litigation.
On the finish of December, an affiliation of state banking regulators filed related complaints in opposition to the OCC for its work to constitution a non-depository blockchain lending platform as a nationwide financial institution. These regulators assured Cointelegraph that it was the precept of the OCC’s preemption that was the core authorized problem.
In the meantime, simply final evening, the OCC despatched out a brand new interpretive letter that may permit nationwide banks to run nodes for stablecoin networks. For this and related rulemakings, Brooks has change into a people hero among the many crypto group since taking up as Appearing Comptroller in Could.