Eight states and the District of Columbia are suing US banking regulators over changing laws that have just come into effect.
According to a presentation from January 5th The New York Attorney General is leading the case against the Office of the Currency Auditor and current auditor Brian Brooks.
In October, The OCC introduced its “True Lender” law, which came into effect in late December. The law stipulates that a loan to which a national bank belongs as a lender can therefore depend more on the national guidelines of the OCC than on those of individual states. The controversy here is that many states have particularly strong usury regulations that cap interest rates in hopes of preventing predatory credit. The complaint filed today alleges that the OCC did not take these concerns seriously:
“While the OCC loudly advocates condemning predatory loans, it fully supports credit relationships based on evading usury laws to protect consumers.”
For its part, when announcing the law, the OCC said:
“Banks’ credit relationships with third parties can facilitate access to affordable credit. However, increased legal uncertainty surrounding such relationships can discourage banks and third parties from partnering, restricting competition and deterring the resulting innovation.” Ultimately, this can limit access to affordable credit. “
In your complaint today State regulators claim that the OCC exceeded its authority by overriding or preventing state law. They say the regulator also violated the Administrative Procedure Act by speeding up their law without taking any comments on their proposal seriously. In addition, regulators are asking the court to “determine that the OCC has violated the APA because its real lender law is arbitrary, capricious, an abuse of power, or otherwise inconsistent with the law”.
The OCC declined Cointelegraph’s request for comment on the litigation.
In late December, an association of state banking regulators filed similar complaints the OCC for its work to create a blockchain-based credit platform as a national bank. These regulators assured Cointelegraph that the OCC’s preference principle was the most important legal issue.
In the meantime, just last night The OCC sent a new interpretation letter that would enable national banks to operate nodes for stable coin networks. Through this and similar laws, Brooks has grown into an advocate for the crypto community since taking over as acting comptroller in May.