Congress blocks federal rule that would strip state protections on bank escrow interest
S.J.Res. 203 — 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". · Filed by Jack Reed (D-RI) · Introduced Jul 29, 2026 · Referred to committee
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What it does
This resolution blocks a federal banking rule that would have preempted state laws requiring banks to pay interest on customer escrow accounts. By disapproving the rule, Congress preserves state authority to mandate that banks pay interest on money held in escrow (such as deposits held pending closing on a home purchase), preventing the federal banking regulator from overriding those state protections.
Why we flagged it
The resolution is a Congressional Review Act disapproval that restores state regulatory authority over bank escrow practices. It is a straightforward consumer-protection measure that prevents federal preemption of state interest-on-escrow requirements.
What the text implies
- Disapproval may trigger a procedural requirement under the CRA that the OCC cannot reissue a substantially similar rule without new congressional authorization, effectively locking in state authority unless Congress acts again.
- State interest-on-escrow laws vary widely; disapproval creates a patchwork of consumer protections depending on where a bank operates, potentially complicating compliance for multi-state lenders.
The full analysis lists 3 implications of this text.
Who stands to gain
consumers holding escrow deposits; state attorneys general (enforcement authority preserved)