Diana McMonagle


OCC, Final Rule 2004, predatory lending, subprime mortgage, bank loans, mortgage


In order to combat the escalating problem of predatory lending, the Office of the Comptroller of the Currency (“OCC”), a federal regulator of the national banking industry, issued a Final Rule in 2004 which sets forth a uniform federal standard to guide banking policies on predatory practices and to aid regulator’s identification of predatory loans. The anti-predatory standard states that “a national bank shall not make a consumer loan . . . based predominantly on the bank’s realization of the foreclosure or liquidation value of the borrower’s collateral, without regard to the borrower’s ability to repay the loan according to its terms” (“the Standard”). This Comment analyzes the potential ineffectiveness and possible consequences of the OCC’s anti-predatory lending standard. The author concludes that the OCC’s preemption of state anti-predatory lending laws and substitution of a single anti-predatory lending standard cannot reasonably be justified by the OCC’s policy reasons for adopting the Standard. Moreover, the Standard places an unjustifiable restriction on the ability of banks to extend loans to low-income individuals. As such, the author proposes that the OCC should interpret the Standard so that it does not prohibit banks from extending loans to all low-income borrowers, and prohibits only those loans extended with an intent to foreclose on the borrowers collateral.



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