A bipartisan coalition of 22 state attorneys general have come out and are blasting a proposal from the Office of the Comptroller of the Currency that would clarify the “valid when made” doctrine to ensure the terms of loans would remain valid after they are sold or transferred and address the Appeals Court ruling in the case of Madden v. Midland Funding.
The coalition, led by Xavier Becerra, the attorney general of California, Kwame Raoul, the attorney general of Illinois, and Letitia James, the attorney general of New York, made their feelings known in a comment letter to the OCC. Also signing the letter were the AGs of Colorado, the District of Columbia, Hawaii, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, South Dakota, Virginia, Washington, and Wisconsin.
“Contrary to these predictions, the sky has not fallen in the nearly five years since Madden was decided,” the AGs wrote in their comment. “The OCC testified to Congress in December 2019 that the U.S.’s current economic expansion is ‘the longest in U.S. history, which has benefited banks’ overall financial performance and banks have helped maintain that momentum.’ “
Republicans in Congress would disagree with the AGs’ assessment. More than two dozen Congressional Republicans sent the OCC a letter last year urging it to take action and deal with this situation.
While the AGs are definitely looking to protect their turf in an attempt to see that their laws are not pre-empted by the OCC, the letter lays out a number of arguments against the proposal, accusing the regulator of “unilaterally” trying to rewrite federal law “to suit its policy preferences.”