Eight states and the District of Columbia are suing national banking regulators over a rule change that has just come into effect.
According to a file filed on Jan. 5, the New York attorney general is leading the case against the Office of Currency Auditor and current auditor Brian Brooks.
The OCC had already established its “True Lender” rule in October, which came into force at the end of December. The rule stipulates that a loan to which a national bank is a lender can be based on the national guidelines of the OCC rather than those of the individual states. The controversy here is that many states have particularly strict anti-usury regulations that cap interest rates in hopes of preventing predatory loans. Today’s complaint alleges that the OCC did not take the concerns seriously:
“While the OCC pays lip service to condemnation of predatory loans, it advocates credit relationships based on circumventing usury laws to protect consumers.
For its part, the OCC said when announcing the rule:
“Banks’ credit relationships with third parties can facilitate access to affordable credit. However, increasing legal uncertainty about such relationships can discourage banks and third parties from partnering, restricting competition and deterring the innovations that result from those partnerships ultimately restrict access. ” to affordable credit. “
In today’s complaint, state regulators allege that the OCC has exceeded its authority by overriding or preventing state law. They say the regulator also violated the Administrative Procedure Act by rushing their rule out the door without taking any comments on their proposed rule seriously. In addition, regulators are asking the court to “state that the OCC has violated the APA because its True Lender Rule is arbitrary, capricious, an abuse of power, or otherwise inconsistent with the law.”
The OCC declined Cointelegraph’s request for comment on the litigation.
At the end of December, an association of state banking supervisory authorities filed similar complaints against the OCC because it had chartered a non-custodian blockchain credit platform as a national bank. These regulators assured Cointelegraph that the pre-ruling principle of the OCC was the central legal problem.
In the meantime, the OCC only sent out a new interpretation letter last night that would enable the national banks to operate nodes for stable coin networks. For these and similar regulations, Brooks has developed into a folk hero in the crypto community since his takeover as Acting Comptroller in May.