Ten States Sue OCC Over Bank Escrow Interest Rules

A coalition of ten Democratic-led states, headed by Dan Rayfield and Letitia James, filed a lawsuit in the U.S. District Court in Portland against the Office of the Comptroller of the Currency (OCC). The legal action challenges two rules issued by the OCC in May 2026 that preempt state laws requiring national banks and federal savings associations to pay interest on homeowner escrow accounts.

The plaintiffs, which include California, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Rhode Island, and Vermont, argue that the rules violate the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Administrative Procedure Act. They contend the OCC exceeded its authority and failed to demonstrate that state laws substantially interfere with bank operations. The states claim the rules unfairly disadvantage state-chartered banks and will cost homeowners significant annual sums during a national affordability crisis.

The OCC asserted that the National Bank Act applies to these cases following conflicting circuit court rulings and an unresolved U.S. Supreme Court decision in Cantero v. Bank of America. The lawsuit is supported by the Conference of State Bank Supervisors and the Americans for Financial Reform Education Fund. The coalition is seeking a court order to declare the rules illegal and block their implementation to ensure homeowners receive interest on funds held for property taxes and insurance.