WASHINGTON - January 28 - The Office of the Comptroller of the Currency (OCC) has adopted a new rule exempting nationally chartered banks from nearly all state consumer protection statutes. Gail Hillebrand, a senior attorney for Consumers Union, issued the following statement in opposition to this rule as the House Financial Services Subcommittee on Oversight and Investigations held a hearing on the regulation:
National banks now have a get out of jail free card when it comes to the enforcement of many state consumer protection laws. The OCC rule exempts nationally chartered banks from such state laws as those governing checking accounts, predatory lending, restrictions on credit card company practices, disclosures in credit contracts, and credit terms for any kind of loan.
National banks dominate the U.S. banking marketplace, accounting for more than 55 percent of U.S. banking assets. The new OCC rule exempts seven of the top ten U.S. financial institutions from most state consumer protection laws.
The loss of these state laws will harm U.S. consumers, make it likely that banking industry abuses have to spread nationwide before they can be outlawed, place national banks at an unfair advantage over credit unions and state chartered banks, and reduce innovation in consumer protection at the state level.
This far-reaching rule will stymie the development of consumer protections as new problems arise. Over the years, state governments have demonstrated that they are much more responsive to emerging consumer problems than Congress, which has been slow to address many marketplace abuses. U.S. consumers should not have to wait for a persistent, nationwide abuse by banks before a remedy or a preventative law can be passed and enforced to protect them. State lawmakers are simply unlikely to enact needed protections if they do not apply to the largest players in the banking marketplace.
A copy of Consumers Unions comments filed with the OCC in opposition to the rule are available online at http://www.consumersunion.org/pub/core_financial_services/000770.html