OCC Pre-empts Georgia Lending Law

The Office of the Comptroller of the Currency has issued an order to pre-empt Georgia's anti-predatory lending law and the regulator of national banks also issued proposed guidelines for pre-empting other state lending laws.

"It is a matter of constitutional law and federal statute that the powers of national banks cannot be obstructed by state laws or regulations," comptroller John Hawke Jr. said.

He noted there is "no evidence" that national banks are engaged in predatory lending practices and the proposed rule establishes a strong anti-predatory lending standard.

The proposed rule would, for example, prohibit national banks from making loans when they cannot reasonably expect to be repaid without recourse to the borrower's collateral.

"The standards we are proposing will not only keep abuses from creeping into the system, but will protect consumers without having the unintended consequence of restricting access to credit," the comptroller said.

The American Bankers Association and the Financial Services Roundtable welcomed OCC's decision. But Sen. Paul Sarbanes, D- Md., is not pleased. The ranking Democrat on the Senate Banking Committee said the decision is "contrary to clear congressional intent that deference be extended to the states in the areas of consumer protection and fair lending."

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