December 19, 2019


“The proposed rule by the Office of the Comptroller of the Currency (OCC) would cause an unwarranted expansion of state law preemption to non-depository institutions. The standard, identified by the federal courts, with limited affiliate and agent exceptions, requires a showing that the application of state usury laws to such non-depository institutions would significantly interfere with a national bank's ability to exercise its powers.

The OCC has not explained how the ordinary application of state usury laws to non-depository institutions that acquire loans from national banks would substantially interfere with national bank powers. We recognize and support the need for regulated banking institutions to transfer loan risks off their balance sheets. Nonetheless, we must avoid facilitating what is essentially a laundering of loans through federal institutions to non-depository institutions in an end run around consumer-protective state usury limits.

The Department further recognizes and welcomes the use of technology and innovation in delivering and enhancing access to financial services and products. However, identifying the “true lender” in a transaction or set of transactions, especially when both federal and non-depository institutions are involved, is a vital and important exercise. The OCC’s proposed rule would muddy these waters and make it far more difficult to protect consumers. We must avoid rent-a-bank charter arrangements, which not only could facilitate abusive practices, but also could create an unlevel playing field vis-a-vis regulated banking institutions.”