OCC ISSUES RULES PREEMPTING STATE CONSUMER-PROTECTION LAWS.

The Office of the Comptroller of the Currency issued two rules Jan. 7 giving it sole right to write regulations governing nationally chartered banks and sole right to enforce those regulations.

Comptroller John D. Hawke called the regulations necessary to promote uniformity in the laws with which nationally chartered banks have to comply, adding it was too costly and time-consuming to expect these banks to comply with different state laws.

Consumer groups and state regulators disagreed with Hawke, saying the uniformity the rules would create would come at the expense of consumer protection.

"Consumers residing in states with stronger protections than those provided under federal law - and there are many - will likely find themselves at greater risk of exposure to predatory lending and other abusive credit practices should they choose to borrow from OCC supervised institutions," Consumer Federation of America's Allen Fishbein said.

Hawke said the regulations, which are to go into effect in about 30 days, were necessary to "ensure that predatory lending does not gain a foothold in the national banking system."

Hawke said there was "scant evidence that regulated banks are engaged in abusive or predatory practices."

Fishbein said CFA recognized OCC "has a valuable role to fill in regulating national banks and discouraging predatory lending practices and other consumer credit abuses, but he was critical of OCC's decision to "go it alone" rather than continue following the traditional philosophy of both state and federal governments working together to protect borrowers.

New York State Attorney General Eliot Spitzer said the rules would have "a chilling effect on state laws" and were intended to encourage state-chartered banks to apply for a national charter.