Eight states and the District of Columbia are suing the national bank regulator over the newly effective rule change.
According to the January 5 document, the New York attorney general will charge against the Office of the Comptroller of Currency and the current Acting Comptroller Brian Brooks.
As early as October, the OCC formulated its "True Lender" rule, which took effect at the end of December. The rule stipulates that a loan that includes a national bank as a lender can therefore rely on the OCC's national guidance, rather than the guidance of individual states. The dispute here is that many states have particularly strong anti-usury regulations that limit interest rates to prevent predatory lending. Today’s complaint states that the OCC has not taken these concerns seriously:
"While the OCC pays lip service to condemning predatory lending, it gives its wholesale endorsement to lending relationships predicated on evasion of usury laws designed to protect consumers."
For its part, the OCC announced the following rule:
"Banks' lending relationships with third parties can facilitate access to affordable credit. However, increasing legal uncertainty regarding such relationships may discourage banks and third parties from partnering, limit competition, and chill the innovation that results from these partnerships. This may ultimately restrict access to affordable credit."
In today's complaint, the state regulators claim that the OCC overturned or preempted the state law, thus surpassing its authority. They state that the regulator, without taking its rule proposals seriously, violated the Administrative Procedure Act by pushing the rule out of the door. In addition, the regulators require the court to "declare that the OCC violated the APA because its True Lender Rule is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law."
The OCC declined a request for comment on the lawsuit.
At the end of December, an association of state banking supervisors filed similar complaints to OCC, requesting it to undertake the work of a non-depository blockchain lending platform as a national bank. These regulators assured that the principle of OCC priority purchase was a core legal issue.
At the same time, just last night, the OCC issued a new explanatory letter allowing national banks to operate nodes for the stablecoin networks. For this and similar rulemakings, Brooks has become a folk hero in the crypto community since taking over as the Acting Comptroller in May.