CFA Director Speaks Out Against OCC's Attempt to Preempt State Consumer Regulation of Banks; Calls OCC a "Runaway Agency"

WASHINGTON – Allen Fishbein, director of Housing and Credit Policy for the Consumer Federation of America has added his name to the growing list of opponents including members of Congress, State Attorneys General, state bank supervisors and state regulators, who have criticized the Office of the Comptroller of the Currency for its attempt to preempt state consumer regulation of banks. Saying the new OCC rules are “bad public policy and bad news for consumers,” Fishbein called for a reversal of “the sweeping and controversial rules” to preempt state authority. In his statement, Fishbein stated that, “We are disturbed that the OCC rules override the application of critical state consumer protections as they apply to national banks and their operating subsidiaries. These rules permit OCC regulated institutions to ignore state consumer protections, including predatory lending and privacy safeguards. They also tie the hands of state officials from taking enforcement actions on behalf of national bank customers. All of our organizations have expressed their strong opposition to this aggressive preemption approach. Unfortunately, this little known federal agency seems to be more interested in protecting its turf than in protecting consumers. As a consequence, we believe that the time has come for Congress to take the necessary actions to rein in this runaway agency and curb the reach of these rules.” The OCC, said Fishbein, argues their new rules just codify long-standing practice and authority in this area. “This is not true,” stated the director. “The overly broad new preemption standards adopted by the OCC pushed the outer edge of the envelope of federal authority in this area.” For many years, he continued, it has been widely accepted in law and in practice that national banks are subject to state laws unless the laws discriminate again them or significantly burden them. “The OCC preemption rule radically changes this traditional view and dictates that national banks in the future will be immune from a host of consumer lending and deposit taking laws that have any impact on them,” Fishbein said. He further pointed out that another argument the OCC has made for the new rules – that they will bring more uniformity for the laws that govern national banks – are inaccurate. “The OCC is kidding itself, or worse still, trying to fool the public into believing that the agency has adequate resources to take on the sole responsibility for protecting customers of national banks and for addressing their grievances. A majority of the OCC bank examiners are assigned to monitoring the safety and soundness of national banks, while the agency has only 40-customer service agents assigned to deal with all consumer complaints against all national banks and all their operating subsidiaries. The numbers simply do not work.” He added that by asserting its “exclusive jurisdiction in this area, the OCC has all but acknowledged the lack of adequate existing federal standards to protect vulnerable consumers from lending abuse.” While not discounting the “valuable role” the OCC plays in regulating national banks and discouraging abusive practices by these institutions, “we believe that the nation’s long-standing federalist approach to enforcement – with both state and federal governments working to protect borrowers – is the best system for consumers. It is regrettable that the OCC has chosen an approach that will block states’ efforts to protect their citizens, while failing to substitute meaningful and stronger national consumer protections..,” stated Fishbein. -