New acting comptroller vows review of ‘regulatory standards’

(May 14, 2021) The OCC has – once again – a new leader, who said this week he would soon conduct a review of “regulatory standards” at the agency.

Michael J. Hsu was named acting comptroller of the currency late last week by Treasury Secretary Janet Yellen, who has the power to designate an acting leader of the agency until one is confirmed by the Senate. The Biden Administration has not yet nominated anyone for a full, five-year term as comptroller.

Hsu, a former Federal Reserve regulator who oversaw supervision of “global systemically important banks” (G-SIBs), becomes the fifth leader of the national bank regulator since 2017 – and the fourth “acting comptroller” over that time span. He succeeded Blake Paulson, who had been serving in an acting capacity since January (Paulson has resumed his former post of chief operating officer of the agency).

In a statement to OCC staffers on his first day on the job (Monday, May 10), Hsu said he will be announcing a “review of key regulatory standards, as well as various matters that are pending before the agency,” with the review, he said, considering a full range of views inside and outside of the agency.

Meanwhile, also this week, the Senate voted to repeal the so-called “true lender” rule, an action taken by one of Hsu’s recent “acting comptroller” predecessors. The House is expected to vote soon; President Joe Biden (D) has said he would sign the repeal measure.

Adopted by the OCC in October (and which took effect Dec. 29) by then-Acting Comptroller Brian P. Brooks (after being initially proposed in July), the rule determines when a bank is a “true lender” within the context of a partnership between it and a third party. According to the OCC, the rule specifies that a bank makes a loan and is the true lender if, as of the date of origination, it: first, is named as the lender in the loan agreement, or; second, funds the loan.

Consumer groups and others (including CSBS) have criticized the rule, saying it amounts to an “end-run” around state laws meant to prohibit predatory lending practices, such as leaving customers vulnerable to “rent-a-bank” schemes, in which an agreement is made between a bank and a third party to advance the loan – but then the bank takes over the loan once the transaction is completed.

Michael J. Hsu Statement to Agency Employees on Becoming Acting Comptroller of the Currency

CSBS statement on Senate passage of the CRA joint resolution to strike down OCC true lender rule