FOR IMMEDIATE RELEASE: August 11, 2026
CONTACTS: Jarice Thompson, jarice@ourfinancialsecurity.org
States Sue to Block Big Bank Power Grab
State Attorneys General say the Trump administration’s banking regulators are blocking states from protecting consumers
Washington – Today, Oregon Attorney General Dan Rayfield and New York Attorney General Letitia James, joined by the AGs of California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Rhode Island, and Vermont filed a lawsuit to block a Trump banking regulator’s expansive override of state consumer protection laws. The lawsuit argues that the Office of the Comptroller of the Currency’s (OCC) move to preempt state laws on standards for mortgage escrow accounts in this instance, but using an approach with sweeping implications, overstepped its legal authority. If the OCC approach is allowed to stand, it would block state efforts to protect people from harmful financial practices and give huge national banks an unfair advantage over smaller state banks.
“As these state AGs point out, state governments have the authority to put in place a wide range of consumer financial protections, and there are fundamentally important limits on federal regulators ability to override them,” said Tom Feltner, associate director of consumer policy at Americans for Financial Reform Education Fund. “This lawsuit protects borrowers rights on escrow funds and is a vitally important step towards preserving those laws. It will also block the OCC from granting blanket immunity from other commonsense protections and pushes back against continued consolidation of Wall Street corporate power.”
In recent years, many states have passed new laws that require banks to pass on interest earned on borrowers’ funds destined to property tax and insurance payments that the banks require people to place in escrow accounts. Escrow accounts can often see balances in the thousands of dollars and are not part of a person’s mortgage or principal owed to the lender.
Last year the OCC finalized rules that would overrule these laws and other state mandates on escrow accounts. As part of that action, the OCC unlawfully attempted to revive prior efforts to provide national banks with blanket immunity from state financial protection rules that are permissible under federal law and have been repeatedly rejected by the Supreme Court.
The Trump administration is unlawfully trying to shield banks from state consumer protection rules and at the same time it is dismantling federal consumer protections at the Consumer Financial Protection Bureau,” said Caroline Nagy, associate director of housing policy at Americans for Financial Reform Education Fund. “The OCC”s action is a giveaway to Wall Street banks at the expense of people paying for their homes, and the AG lawsuit takes much-needed action to stop it.”
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Resources:
2026 Polling: Strong, Bipartisan Support for CFPB and Key Safeguards