OCC regulates Wells, but Calif. can limit interest
By MortgageDaily.com staff
8/15/2005

In the battle between the federal government and the states, a federal appeals court ruling lobbed one in favor of the feds. And the states.

The U.S. Court of Appeals of the 9th Circuit in San Francisco ruled Friday that operating units of nationally chartered banks can't be regulated by states in general, according to Reuters. But the same ruling said California can place limits on interest charged by these institutions.

The Office of the Comptroller of the Currency, or OCC, has been trying to assert sole regulatory authority over banks -- much to the chagrin of state figures such as New York Attorney General Eliot Spitzer. Spitzer, who plans to run for governor in 2006, has been investigating disparities in lending to minorities by some of the nation's biggest mortgage lenders.

OCC, as well as the banks it regulates, want to give the banks one set of national predatory lending rules to operate under instead of the patchwork of differing state regulations.

Friday's ruling involved a case between Wells Fargo Home Mortgage Inc. and the state of California in which the mortgage lender was accused of charging interest one day prior to recording mortgages. When the state's finance authority threatened to revoke Wells' license, it basically said the state's instruction was meaningless because it was only subject to federal regulation.

The judge concluded California's rules went too far, Reuters reported, noting in her 33-page opinion that the comptroller's office had "authority to displace contrary state regulation where the [National] Bank Act itself preempts contrary state regulation of national banks."

But the judge also said the Depository Institutions Deregulation and Monetary Control Act of 1980 did not preempt California's valid rules on per-diem mortgage fees, according to the story.

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