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Financial Services Law Insights and Observations

House votes to repeal OCC’s “true lender” rule

Federal Issues OCC True Lender U.S. House U.S. Senate Congressional Review Act Fintech Agency Rule-Making & Guidance

Federal Issues

On June 24, the U.S. House passed S.J. Res. 15 by a vote of 218 - 208 to repeal the OCC’s “true lender” rule. As previously covered by InfoBytes, the U.S. Senate passed S.J. Res. 15 last month by vote of 52-47 to invoke the Congressional Review Act and provide for congressional disapproval and invalidation of the final rule. The measure now heads to President Biden who is expected to sign it. Issued last year, the final rule amended 12 CFR Part 7 to state that a bank makes a loan when, as of the date of origination, it either (i) is named as the lender in the loan agreement, or (ii) funds the loan. The final rule also clarified that if “one bank is named as the lender in the loan agreement and another bank funds the loan, the bank that is named as the lender in the loan agreement makes the loan.” (Covered by InfoBytes here.) Acting Comptroller of the Currency Michael Hsu issued a statement after the vote saying the OCC respects Congress’ role in reviewing regulations under the Congressional Review Act. He reaffirmed the OCC’s position that predatory lending has no place in the federal banking system and noted that moving forward the OCC “will consider policy options, consistent with the Congressional Review Act, that protect consumers while expanding financial inclusion.”

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