Story summarized from American Banker
WASHINGTON — February 27, 2004 — The House Financial Services Committee has voted to censure the Office of the Comptroller of the Currency for its new federal regulations strengthening the immunity of national banks from state predatory lending laws. The action has no legal force, but in a 34-to-28 vote on February 25th, the panel chastised the OCC for issuing the new rules without congressional authorization and without clear plans to provide funds or personnel for increased enforcement.
What surprised observers was the apparent reversal in the committee’s stance. Less than a month ago the committee's chairman, Michael G. Oxley, opined that the OCC’s new rules were "thoughtful.”
Now, in an amendment tacked onto its "views and estimates" of the fiscal 2005 budget "The committee is concerned that the OCC will be forced to utilize funds designated for other purposes to engage in consumer law enforcement activities that typically have been undertaken by the states."
The reason the censure won’t have teeth is that the OCC is funded from assessments of national banks, not by appropriation.
A committee member who supported the amendment, Rep. Carolyn B. Maloney, D-N.Y., said, "It's rare for an agency to receive such a clear rebuke."
Those who don’t like the OCC’s new rules say the panel’s vote will get considerable attention; supporters of the rules shrugged it off.
In an interview the day after the vote, Rep. Barney Frank of Massachusetts, the panel's chief Democrat, said, "It is an indication there is significant unhappiness on the committee" [with the OCC rules]. "Though it has no legal effect, it was a good opportunity to give the expression of the sentiment on the committee that it is strongly against this, even more so than I thought. That is a harbinger for future forums which can have some legal effect."
Eight Republican members whose votes might have defeated the amendment abstained. Three Republicans — Reps. Peter King of New York, Sue Kelly of New York, and Ron Paul of Texas — joined 31 Democrats in approving the measure. Two Democrats — Reps. Ken Lucas of Kentucky and Joseph Crowley of New York — voted against it.
Predatory lending a core concern
Edward L. Yingling, executive vice president for the American Bankers Association, said, "The vote and debate on this was very misleading. It's not a clear proxy for what a vote would be on the OCC preemption issue. ... I don't think the committee intends to legislate on the rule, but it does show many members of the committee want to make sure the OCC has an aggressive consumer protection effort, particularly in the area of predatory lending."
A spokesman for the Comptroller's Office said problematic statistics distorted the debate, referring to statements made by sponsors of the amendment, Reps. Luis Gutierrez, D-Ill., and Ron Paul, R-Tex., in which they claimed that the states have upwards of 700 examiners and attorneys who monitor and enforce the compliance of national banks with consumer protection laws, while the OCC has only 40 people to handle consumer complaints.
The OCC disputed these figures. "Our resources go well beyond the customer assistance group," a spokesman said. "For the approximately 2,200 national banks in the national banking system, we have nearly 1,700 examiners, including compliance specialists, in addition to dozens of attorneys and consumer compliance specialists ... all engaged in consumer protection."
The significance of the committee’s vote on the amendment is not clear. Rep. Spencer Bachus, Alabama Republican and chair of the subcommittee for financial institutions, said, "there is nothing approximating a consensus among members of the committee on the OCC's regulations."
But Rep. Joseph Crowley of New York, one of the two Democrats who voted
against the amendment, says "It's going to force the committee to begin
deliberation and consideration of the greater issue, which is a tough national
standard in respect to predatory lending and legislation to protect the subprime
market," ____________________________________________
Original story for American Banker by
Michele Heller