#2021-16, May 14, 2021

Senate Approves Resolution Repealing OCC “True Lender” Rule

Earlier this week, the US Senate yesterday voted 52 to 47 in favor of a Congressional Review Act (CRA) resolution that would repeal the Office of the Comptroller of the Currency’s (OCC) “true lender” rule.  The rule, which the OCC finalized late last year, establishes a test to determine when a bank is considered the true lender on a loan made in a partnership with a nonbank firm.

Under the CRA, resolutions receiving simple majority votes in the House and Senate and are signed by the president overturn regulations finalized within the previous 60 days that Congress is in session.  CRA resolutions also prohibit the agency that promulgated the rule from issuing a substantially similar one in the future.

As we reported last week, MBA and other lending trade associations have expressed concerns with the True Lender rule; however, repealing it could eliminate legal certainty for borrowers, lenders and investors and leave the interpretation up to courts in various jurisdictions.  The CRA resolution now moves to the House for consideration.

Fed Proposes Changes to Durbin Amendment Network Provisions

Late last week, the Federal Reserve issued a proposed rule reopening the Durbin Amendment provisions in Regulation II.  The proposal mandates that the requirement that debit card transactions can be processed on at least two unaffiliated payment card networks to card-not-present transactions, which have grown from 10 percent of debit purchases in 2009 to 23 percent in 2019.

According to the Fed proposal, when Reg II was first issued, “the market had not developed solutions to broadly support multiple networks over which merchants could choose to route [CNP] transactions.”  The proposal notes that technology has since evolved to address these issues.  The proposal also clarifies that the debit card issuer is responsible for ensuring at least two unaffiliated networks have been enabled and standardizes and clarifies certain terms and phrases in the Fed’s Reg II commentary. Comments are due 60 days after the rule is published in the Federal Register.

The Association is strongly opposed to any efforts to reopen the Durbin Amendment rulemaking and we will be analyzing the Fed proposal and preparing comments in opposition.

To read more, click here.

Secretary Yellen Appoints New Acting Comptroller

Treasury Secretary Janet Yellen recently announced that she is appointing Michael Hsu to serve as first deputy comptroller of the currency.  In this role, he will also serve as acting comptroller until a new comptroller is appointed by the president and confirmed by the Senate. Blake Paulson, who has served in the acting comptroller role since January, will return to his role as senior deputy comptroller and chief operating officer at the OCC.

Hsu was formerly the associate director of the Federal Reserve’s division of supervision and regulation and he has held positions at the International Monetary Fund, the Treasury Department and the Securities and Exchange Commission.