OCC Preempts Georgia Law

The OCC has published its conclusion that national banks are not subject to the Georgia Fair Lending Act (GFLA"). The GFLA contains strong measures designed to prevent predatory lending. However, these measures also have the effect of limiting actions that national banks are specifically allowed to take.

Drawing on a long line of preemption cases, the Comptroller concluded that the Georgia law does not apply to national banks. The announcement also pointed out that abusive lending practices are generally not being found in banks and that there are a series of regulatory requirements already targeting predatory lending. But the Comptroller doesn't stop there. The OCC has proposed a regulation designed to keep abusive lending practices out of the national banking system. The rationale for the proposal (see page 3) is that many state predatory lending laws would limit activities that national banks are specifically empowered to undertake.

Copyright © 2003 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 10, 10/03