Georgia lending law doesn't apply

January 23, 2003

Federal regulation trumps state law, OTS says


Inman News Features

Federal savings associations and operating subsidiaries needn't concern themselves with Georgia's controversial new Fair Lending Act because provisions of it are preempted by federal law, the Office of Thrift Supervision said today.

The new Georgia law imposes restrictions on so-called "predatory loans" based on the annual percentage interest rate and the amount of points and fees charged by the lender.

OTS Chief Counsel Carolyn Buck said the provisions of Georgia law's "purporting to regulate the terms of credit, loan-related fees, disclosures or the ability of a creditor to originate or refinance a loan" are preempted by federal law.

OTS' preemption is based on the Home Owners' Loan Act and OTS regulations that regulate federal savings associations' lending practices, according to the agency, which said the Georgia law conflicts with OTS regulations.

OTS Director James E. Gilleran said the agency is authorized to provide a uniform national regulatory environment for federal savings associations.

"This (uniformity) enables federal thrifts to provide low-cost credit safely and soundly. The Georgia law would require federal thrifts to treat customers in Georgia differently, imposing increased costs and undue regulatory burden," he said.

Copyright: Inman News Service