A joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Office of the Comptroller of the Currency relating to "Preemption Determination: State Interest-on-Escrow Laws".
- Sponsor
- Sen. Reed, Jack [D-RI]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Jul 29, 2026
Bottom line
This resolution aims to block a federal banking regulator's rule concerning the preemption of state laws that mandate interest payments on mortgage escrow accounts.
What it actually does
This joint resolution, introduced under the Congressional Review Act (CRA), seeks to nullify a final rule issued by the Office of the Comptroller of the Currency (OCC). The OCC rule in question pertains to "Preemption Determination: State Interest-on-Escrow Laws," which likely clarifies or expands the circumstances under which federal law preempts state laws requiring interest payments on mortgage escrow accounts. By disapproving this rule, the resolution would prevent it from taking effect, thereby maintaining the status quo regarding the OCC's stance on state interest-on-escrow laws.
Proponents argue
Proponents of this resolution argue that the OCC's rule oversteps federal authority by preempting state laws designed to protect consumers. They contend that state interest-on-escrow laws ensure homeowners receive a return on funds held in escrow for taxes and insurance, and that the OCC's rule undermines these consumer protections, potentially allowing banks to profit from these funds without compensating homeowners. They believe states should retain the power to regulate these aspects of banking to better serve their residents.
Opponents contend
Opponents of this resolution (and thus proponents of the OCC rule) would argue that the OCC's rule provides necessary regulatory clarity and uniformity for national banks, preventing a patchwork of differing state laws that can complicate compliance and increase operational costs. They might assert that federal preemption is essential for the efficient functioning of the national banking system and that state-mandated interest on escrow accounts can impose undue burdens on banks, potentially leading to higher costs for consumers in other areas or reduced availability of certain financial products.
The bill text is extremely short and straightforward, allowing for immediate comprehension of its direct action.
Section 1
Congressional Disapproval of OCC Rule
This provision explicitly states that Congress disapproves of the rule submitted by the Office of the Comptroller of the Currency (OCC) titled "Preemption Determination: State Interest-on-Escrow Laws," which was published in the Federal Register on May 19, 2026 (91 Fed. Reg. 29350). By disapproving the rule, the resolution dictates that the OCC's rule will not take effect and will have no legal standing. This effectively prevents the OCC from implementing its policy regarding the preemption of state laws concerning interest on mortgage escrow accounts.
Supporters argue
Supporters of this provision argue that it is crucial for protecting consumer interests by ensuring that state laws requiring interest on mortgage escrow accounts remain effective. They contend that allowing the OCC rule to stand would undermine states' rights to regulate financial services for their residents and could lead to banks holding escrow funds without compensating homeowners for their use.
Critics contend
Opponents of this provision (and supporters of the OCC rule) would argue that it creates regulatory uncertainty and a fragmented legal landscape for national banks. They believe that the OCC rule provides necessary uniformity and reduces compliance costs for federally chartered institutions, which ultimately benefits the broader financial system and potentially consumers through more efficient services.
Tradeoffs
The provision navigates the tension between federal regulatory uniformity for national banks and the preservation of state-level consumer protection laws. It also highlights the balance between bank operational efficiency and the financial benefits for homeowners from interest-bearing escrow accounts.