States Challenge OCC Rule on Bank Loans Sold to Fintechs (1)

California, Illinois and New York filed a lawsuit against the OCC’s “valid-when-made” rule on bank loan transfers, alleging it prevents them from enforcing state interest rate limits against non-bank lenders .

The Office of the Comptroller of the Currency’s rule violates the Administrative Procedure Act and “would facilitate predatory lending through sham ‘rent-a-bank’ partnerships designed to evade state law,” according to the lawsuit filed Wednesday in the U.S. District Court for the Northern District Of California

Many banks and fintech lenders rely on the “valid-when-made” doctrine as a core part of their business models. It allows the interest rates attached ...