Acting Comptroller Hsu Says No Plans to Review Valid When Made Rule

Michael Hsu, Acting Comptroller of the Currency, recently said the Office of the Comptroller of the Currency (OCC) will not review the “valid when made” rule initially implemented during the Trump administration. The rule fortified the legal principle that a bank loan is “valid when made,” according to American Banker.

This comes as Congress is attempting to unwind another OCC rule—”True Lender”—that facilitates banks’ partnering with fintech firms, but Hsu indicated that the “valid when made” rule is safe for the time being.

In May, the Senate voted to nullify the “true lender” rule under the Congressional Review Act, and the House is expected to take up the resolution in the coming weeks. The rule establishes a bank as the true lender when partnering with a fintech firm to service the loan, maintaining the bank’s authority to export interest rates.

Critics of the “true lender” rule stated that it allowed fintech firms to participate in so called “rent-a-bank” schemes. Though it was blocked in the Senate and its future in the House is uncertain, Congress has missed the legislative window to block the “valid when made” rule.

Hsu suggested that the OCC has no plans to unwind the rule, but that could change when a permanent OCC head is appointed.