(Bloomberg) -- A group of states led by New York sued to block a Trump administration rule they claim would permit predatory lenders to avoid state consumer protection laws and charge excessive interest rates.
Seven states and the District of Columbia sued the Office of the Comptroller of the Currency seeking to invalidate the “true lender rule,” saying it allows nonbank lenders to partner with national banks, which are heavily regulated at the federal level, to avoid state usury laws. They called the rule “unprecedented and ill-conceived” in a lawsuit filed Tuesday in federal court in Manhattan.
“The rule seeks to preempt state usury law, infringe on the states' historical police powers and facilitate predatory lending by purporting to halt the ability of the states and courts to apply well-established principles for determining whether a national bank actually fulfills the role of lender when loans are offered through a purported partnership between a national bank and a non-bank,” the states said in the suit.
Besides New York and DC, the plaintiffs are California, Colorado, Massachusetts, Minnesota, New Jersey and North Carolina.
The OCC declined to comment on the suit.
The case is People of the State of New York v. Office of Comptroller of the Currency, 21-cv-00057, U.S. District Court, Southern District of New York (Manhattan).
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