Congress Should Protect Consumers from Banking Industry Abuses

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We support reforms to the financial marketplace that protect consumers from unscrupulous banks and lenders.

By Consumers Union on Wednesday, March 17th, 2004

FOR IMMEDIATE RELEASE
Wednesday, March 17, 2004

CONTACT
Janell Mayo Duncan 202-462-6262 or
Gail Hillebrand 415-431-6747

CONSUMERS UNION URGES CONGRESS TO OVERTURN OCC RULE BLOCKING STATES FROM PROTECTING CONSUMERS FROM BANKING INDUSTRY ABUSES

New Federal Rule Exempts Nationally Chartered Banks From Many State Laws

WASHINGTON, D.C. – The Office of the Comptroller of the Currency (OCC) has adopted a broad new rule exempting nationally chartered banks from nearly all state consumer protection statutes. Janell Mayo Duncan, Legislative and Regulatory Counsel for Consumers Union, issued the following statement in support of efforts by Congress, State Attorneys General, and state bank supervisors to work to overturn OCC rules that would override important state consumer protections:

“The OCC rule would give cover to national banks that want to ignore many state consumer protection laws. The OCC rule exempts nationally chartered banks from state laws such 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.”

“With this rule, the OCC would prevent states from enforcing laws against abusive practices. At the same time, the OCC lacks adequate resources to fill the void left by the states’ inability to protect their residents. The loss of these state protections will harm U.S. consumers, make it likely that banking industry abuses will need to spread nationwide before they can be outlawed on the Federal level, place national banks at an unfair advantage over credit unions and state chartered banks, and reduce innovation in consumer protection at the state level.”

“Over the years, state governments have demonstrated that they are much better equipped to identify and respond to emerging consumer problems. Often, it’s long after states have begun to address abuses on the local level that such problems receive a Congressional response. U.S. consumers should not have to wait for a persistent, nationwide abuse by banks before a remedy or a preventative state law can be passed and enforced to protect them.”

Consumers Union filed comments with the OCC in opposition to the rule. Click here for the comments.

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