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On this page, we maintain links to some significant documents (court decisions, legal briefs, journal articles, Congressional documents) about the OCC. Suggestions welcome. Featured link: See the cover story in the Fall 2001 issue of the journal New Rules, "Rogue Agencies Gut State Banking Laws," by Stacy Mitchell. "The only reason you're not afraid of the Office of the Comptroller of Currency and the Office of Thrift Supervision is because you don't know what they do. Called indentured servants to the national banking industry, they are dismantling the state regulatory system piece by piece, with nothing more than a polite scolding from Congress."
Recent Congressional Oversight Hearings On The OCC
General Powers of State Officials (including the recent OCC preemption rules) 11 Aug 04 OCC and sister agencies file brief supporting bank appeal of district court ruling upholding landmark California financial privacy law, SB1. Not surprisingly, the OCC doesn't think states can protect their citizens from unfair affiliate sharing, but in a disappointing move, the usually pro-privacy, usually pro-state authority Federal trade Commission signed on, too. The district court opinion by U.S. Judge Morrison England is here. It fully agrees with the position long set forth by the state and consumer groups that the Fair Credit Reporting Act exempts affiliate sharing from its regulatory scheme. FCRA preemption means states cannot change that and regulate affiliate sharing under the FCRA. But the Gramm Leach Bliley Financial Modernization Act is a comprehensive, albeit weak, financial privacy law, and it clearly gives states the right to enact stronger laws, such as SB1, championed by State Senator Jackie Speier, to regulate affiliate sharing (as well as third-party sharing, not a subject of the litigation). 28 July 04 Federal judge rules that case against Bank of America for failing to inform employers of liability regarding check-cashing fees can be heard in state court. Bank of America had claimed all lawsuits against national banks were completely preempted. Press release from attorney for class action plaintiffs here. January, 2004 the OCC issued two related and sweeping rules, one preempting nearly all state and local consumer laws (the "preemption rule") [69 Fed. Reg. 1904 (2004)] and the other restricting nearly all enforcement powers of state regulators and attorneys general (the "visitorial powers rule.") [69 Fed. Reg. 1895 (2004)] over national banks, and incredibly, their state-licensed operating subsidiaries, which are not banks. Link to House Financial Services Committee Oversight Subcommitte hearing. Link to Senate Banking Committee Oversight Hearing. 8 April 03 EPIC and USPIRG file comments opposing OCC's proposed visitorial rule change preempting all state enforcement of consumer protection and privacy laws against national banks and their subsidiaries. 4 April 03 USPIRG, CFA, National Consumer Law Center and National Association of Consumer Advocates join AARP brief to Supreme Court urging court to to uphold 11th Circuit ruling that state law claims against payday lenders and other predatory lenders are not preempted by National Bank Act. OCC, of course, on other side. On 2 June 03, the Court ruled that claims aginst these predatory lenders could be removed to federal court. 31 January 03 OCC (link to press release) seeks to broaden preemption authority by amending so-called Visitorial Powers in rule change proposal out for comment for 60 days: "The proposal also provides clarification of the OCC's current regulation concerning the scope of the agency's "visitorial powers" over national banks. "Visitorial powers" refers to the authority to examine, supervise, regulate, require information from and take enforcement action against a bank. Addressing questions that have arisen concerning the scope of this exclusive authority, the rule provides that the OCC's visitorial powers over national banks are exclusive with respect to activities that are expressly authorized or recognized as permissible for national banks under Federal law, including the OCC's regulations and interpretations. The proposed rule also provides that, while courts can exercise visitorial powers by issuing orders or writs compelling the production of information or witnesses, this exception cannot be used by the states as a means of inspecting, regulating or supervising national bank activities." Back to Top See November 02 advisory from OCC to national banks advising them of sweeping nature of OCC authority and urging them to contact the OCC before responding to any inquiries or requests from state officials. In at least one news story, OCC Chief Counsel Julie Williams referred to the sweeping letter, which broadly asserts OCC authority and attempts to minimize states' rights, as nothing more than a "gentle reminder" to the state officials who seek to enforce their stronger laws. Most observers believe that the letter was a direct response to an information request that California State Senator Jackie Speier, Chair of the Senate's Insurance Committee and a leading consumer privacy champion, had sent this fall to a number of national banks, seeking information about their privacy practices. The banks have also been carping to the OCC about aggressive enforcement actions by state Attorney Generals when national banks or their affiliates or operating subsidiaries have been found in violation of state or federal predatory lending, deceptive practices or other laws. See, for example, 27 state settlement with Citibank over privacy violations. Back to Top State Authority Over National Bank Mortgage Subsidiary Back to Top 2001 Much of the battle over national bank power has been over the OCC's power grabs seeking to give national bank preemption to all entities owned by banks despite significant jurisprudence and Congressional action to the contrary. For example, OCC seeks to prevent states from enforcing laws of general applicability against non-banks (subsidiaries, affiliates) owned by banks, despite clear language in both the Gramm-Leach-Bliley Act's Section 133 and a recent federal court decision in favor of the state of Minnesota [Minnesota v. Fleet Mortgage Corp., 181 F. Supp. 2d 995 (D. Minn. 2001) (noting that the applicable definition under the Federal Deposit Insurance Act (``FDIA'') is ``any national bank, State bank, District Bank, and any Federal branch and insured branch'' citing FDIA, 12 U.S.C. 1813(a)(1)(A))] at strong odds with the OCC's views. See OCC's brief amicus curiae in opposition to Minnesota Attorney General's lawsuit against Fleet Mortgage-- an operating subsidiary of a national bank. For a different view on the law -- in particular Section 133 of the Gramm-Leach-Bliley Act -- but see the Federal Trade Commission's brief in support of the state of Minnesota. Attorney General Mike Hatch had sued Fleet Mortgage for hiring telemarketers to trick its customers into purchasing costly and useless add-on products for their mortgages (roadside assistance, travel plans, credit report protection, etc.). Cynical consumers expect this distasteful conduct from their credit card company, but from their mortgage company? The court, when it denied Fleet's motion to dismiss in December 2001, was one of the few courts that actually took the time to read the National Bank Act and understand that, in fact, that the OCC had vastly over-stated its authority. Fleet and the Minnesota Attorney General settled this case in the summer of 2002. Back to Top From the District Court decision denying Fleet Mortgage's
second motion to dismiss (December 2001):. Predatory Mortgage Lending Back to Top 21 February 2003 OCC announces intent to preempt Georgia predatory mortgage lending law. Poses Q&A. Issues advisory letter to banks and supervisory guidance on predatory practices. Text of 26 page proposed preemption notice for comment. Back to Top January 2003 OTS preempts new PIRG-backed New York (1/30/03) and Georgia (1/22/03) laws reining in unfair and predatory mortgage practices by national banks, their affiliates and subsidiaries. State Credit Card Disclosure Laws Back to Top December 2002 -- See U.S. District Court decision preempting a new PIRG-backed California law requiring credit card companies to disclose the number of months and years it would take to pay off credit c if you only make the minimum payment. Here is the consumer coalition amicus brief from CALPIRG, Consumers Union, U.S. PIRG and others supporting the state. 8 Nov 2002 Here are copies of OCC's friend of the court brief (June 2002) and supplemental brief amicus curiae (November 2002) in support of the national banks seeking an injunction to stop the credit card disclosure law. More on "months to pay" problem at PIRG's Truthaboutcredit site. Back to Top Financial Privacy Back to Top April 2004 Banks file lawsuit to overturn SB 1, California financial privacy law. Consumers Union press release. July 2003 District court overturns local financial privacy ordinances enacted in California's Daly City and San Mateo County, and then, San Francisco at request of banks. OCC backs banks. An archive of legal materials on the cases, including the banks' legal complaint, is maintained by the Fenwick law firm. Privacy champion Mike Nevin, San Mateo Supervisor who spearheads local efforts, maintains a privacy page also. So does the Association of Bay Area Governments. Both these pages focus on the local ordinance fights but have info on the Speier bill (SB1) also. Cashing On-Us Checks Back to Top April 2002 OCC brief amicus curiae to 5th Circuit Court of Appeals in support of national bank efforts to block the appeal of a district court ruling preempting a Texas law limiting fees banks impose on non-customers to cash the banks' own "on-us) checks. ATM Fees Back to Top 25 Oct 02 9th Circuit Backs Banks Over Cities: -- 9th Circuit affirms (link to court decision) lower court's rejection of PIRG-backed ATM surcharge fee bans in San Francisco and Santa Monica. This disappointing decision holds that cities (and states) have no right to regulate unfair fees if imposed by "national" banks. Banks were aided and abetted by Office of Comptroller of Currency, the nation's chief bank regulator, which has dual promotional role that often gets in the way of its analysis of what is good public policy. See the consumer groups' brief in the California cities' appeal for an explanation of the numerous flaws in OCC's arguments. (29 March 01). See USPIRG's comment letter condemning proposed rule change by Office of Comptroller of the Currency (OCC) intended to undermine attempts by cities of Santa Monica and San Francisco to reinstate their ATM surcharge bans. March 2001 See OCC's outrageous opinion letter #906 to the New York City Council, which is considering enacting an ATM surcharge ban. The letter is a transparent attempt by OCC to chill the Council from even enacting a ban and then challenging OCC in court. (letter of 19 Jan 01 posted to OCC website March 2001). Background Reports and Letters Back to Top An 8 February 2000 report [slow, 737k pdf file]of the US General Accounting Office to House Banking Committee Chairman James Leach (R-IA) describing how the OCC, and its sister regulator, the Office of Thrift Supervision, interpret their preemption authority, including dissenting views from state regulators. The report lists recent preemption determinations by the OCC and OTS. Payday Lending: The Exception That Proves The Rule? Back to Top Following years of organizing by community groups, the OCC has grudgingly taken a narrow position supporting some state efforts to block payday lending. Apparently, even the OCC finds that predatory payday lending steps over the line as a national bank practice and that banks shouldn't "partner" with or "rent" their charters to predatory payday lenders. OTS and FDIC have also followed OCC's lead. Below are some of our efforts to force them to take their narrow pro-consumer view: September 1999 letter to Congress from consumer groups and Ralph Nader urging hearings on the OCC to investigate its abusive preemption rulings and failure to protect consumers from rising bank fees. August 1999 letter from consumer groups to Comptroller Hawke concerning payday lending. See the February 2000 report on payday lending by PIRG and CFA, Show Me The Money, for extensive quotes from Comptroller Hawke's reply letter, in which he calls for consumer education as the solution to payday lending, because he doesn't think his agency has the authority to regulate it! The report details the way that lax OCC supervision of national banks is allowing payday lenders to subvert state laws prohibiting their triple digit "legalized loan sharking" practices. Basically, OCC is allowing national banks to partner with payday lenders, who are using national bank charters as "immunity shields" against strong state consumer protection laws. The national banks, of course, argue that they don't have to comply with state laws, even when those state laws are protecting consumers from paying interest rates as high as 780% APR or more for two week loans of $100 or so. See also the followup report: Rent-A-Bank-Payday Lending, from PIRG and CFA.Back to Top 4 April 2003 However, although OCC has had this high profile against banks partnering with payday lenders, it has asked the Supreme Court to overturn the 11th Circuit in an important case on predatory lending and National Bank Act preemption. PIRG, CFA, National Consumer Law Center and National Association of Consumer Advocates join AARP brief to Supreme Court urging court to to uphold 11th Circuit ruling that state law claims against payday lenders and other predatory lenders are not preempted by National Bank Act. Is the OCC complying with the 1994 Riegle-Neal Act? Back to Top In 1992, the OCC preempted a New Jersey statute requiring banks to offer low-cost lifeline bank accounts, even though no federal law requires similar accounts. In response, in 1994, Congress called the agency's preemption determinations "overly-aggressive" and enacted an amendment stipulating that the agency must grant greater deference to state consumer laws, which it has ignored. In the enactment of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, the Congress clarified and restated the balance between federal regulation and the states’ authority to protect the interests of their citizens. The OCC's actions are in defiance of that law's clear Congressional intent that it narrowly construe and carefully consider the preemption of state laws concerning community reinvestment, consumer protection, fair lending, and establishment of intrastate branches. In the conference report (See pages 6-9 of this version on "Applicable State Law") accompanying the 1994 Riegle-Neal Interstate Banking and Branching Efficiency Act, Congress scolded the agency's "inappropriately-aggressive" preemption of state consumer laws and ordered the agency not to preempt without going through a detailed preemption procedure. The OCC has ignored the law's requirements. Here is an excerpt from the Conference Report:
An OCC 1996 Federal Register notice [61 FR 25, Feb 6, 1996 Notices, Page 4515-4516] is available here [notice] requesting comments on a petition from the New Jersey Banking Commissioner urging that the agency rescind its 1992 preemption determination that the New Jersey lifeline checking law was preempted. To our knowledge, issuance of this one notice has been OCC's only recognition of the Riegle-Neal Act's limits on its authority, which it has otherwise ignored. After issuing this notice, it took no further action. Excerpt:
Agencies Rely On Fee Income, Skewing Public Policy: The lawyers at OCC and OTS are fond of arguments that they have a manifest destiny to resist state efforts that is somehow more important as a matter of public policy than whether or not their regulated institutions are breaking or ignoring local, state or federal consumer laws. One reason they make this convoluted argument that has not been adequately examined (and one we have not yet examined) is that these agencies receive fee income from their regulated banks and thrifts. The more regulated banks under national charter, the more revenue received by OCC. If enough large banks and thrifts were to convert to state charters (because the OCC and OTS, for example, were to start strictly enforcing the laws), then the well-heeled bureaucrats at the heads of these agencies might lose face, lose staffing, etc. So, to protect their revenue stream, the regulators adopt a laissez-faire attitude toward their own enforcement. At the same time, they vigorously seek to expand the reach of their own authority, while preventing other state and local officials from enforcing the laws. Get the OCC's own views at its website. Check recent speeches by Comptroller Hawke and General Counsel Counsel Julie Williams. Back to Top
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