SAN ANTONIO Julie L. Williams, Chief Counsel and First
Senior Deputy Comptroller for the Office of the Comptroller of the Currency,
described the OCCs recently issued preemption regulations in a speech today,
and emphasized the importance of continuing cooperation between the states and
the OCC in furthering consumer protection with respect to the institutions they
regulate.
Our jurisdiction over national banks and their subsidiaries
should not and does not deprive State regulators of a role in protecting
consumers in their States, and we would like to work cooperatively with them to
further that goal, Ms. Williams said in a speech before a conference of bank
lawyers sponsored by the Independent Bankers Association of Texas and the Texas
Savings and Community Bankers Association.
Already, she said, the OCC and the states are cooperating in
a number of ways, such as sharing information about consumer complaints and
referring them to the appropriate regulator.
Personally, I continue to hope that we can move beyond the
rhetoric of the current controversy and leverage off these existing cooperative
processes to put our collective resources to work to maximize their coverage,
she said, alluding to recently issued rules pertaining to preemption and the OCCs
exclusive authority to supervise national banks.
Those rules have been misunderstood in some quarters, Ms.
Williams said. For example, the preemption regulation applies to lending,
deposit-taking and other national bank activities, but it does not grant
national banks new powers, such as real estate brokerage, nor does it insulate
banks from complying with anti-discrimination laws or state laws in such areas
as contracts, torts, taxes or generally applicable criminal statutes.
While the regulation also puts in place tough standards to
combat predatory lending and other abusive practices, Ms. Williams noted that
some have asked if it would not be better to also apply state and local laws to
national banks on the grounds that more regulation and more regulators will
produce a better result.
That approach would only be justified, she said, if there
has been a failure of the current
regulatory regime, but that is not the case with national
banks.
Clearly predatory lending is a problem in this country, but
national banks and their subsidiaries are not where those practices are
festering, she said, noting that national banks and their subsidiaries are
highly regulated and closely supervised. Additional layers of regulation would
bring added costs, which could lead to higher prices for consumers and
diminished credit availability.
Adding additional regulators also has serious implications
for consumer protection, Ms. Williams said. State Attorneys General have
responsibilities for prosecuting Medicaid fraud, organized crime, environmental
law violations and a whole range of criminal activity and abuses that have
nothing to do with banking. State bank departments supervise not just banks,
but finance companies, credit unions, industrial loan companies, mortgage
brokers, pawnshops and a host of other types of financial institutions.
Setting aside for the moment the issue of whether State
officials have the legal authority to take actions against national
banks and their subsidiaries, when State authorities insist on trying to put a
State cop on the national bank beat, especially in todays financially
challenged environment, thats probably one less State cop available to protect
the States consumers in connection with all the other potential sources of
problems those consumers face, she said.
This is one reason why I regret that the most conspicuous
response to our new regulations by State officials has been to assert that they
will still try to employ their resources to take actions directly against
national banks and their subsidiaries, even with respect to core banking
activities, such as lending, Ms. Williams added. The net result, I think, is
unfortunate because it diminishes the availability of precious resources to
protect consumers in other areas other areas where there is evidence
of predatory lending other areas that are not as highly regulated as the
banking business.
Ms. Williams said national banks must also recognize that
the benefits of being able to operate under uniform, consistent and predictable
standards creates obligations on their part.
With preemption also comes responsibility, and this is a
timely opportunity for national banks as well as State banks to recommit to the
highest standards of customer service, integrity, and fair play in their
business, she said.
The very best way to counter the controversies that
I have just discussed and preserve the benefits of preemption for the banking
business as a whole is for bankers to be leaders in responsible corporate
behavior and exemplary customer treatment, she added.
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The OCC charters, regulates
and examines approximately 2,100 national banks and 52 federal branches of
foreign banks in the U.S., accounting for more than 55 percent of the
nations banking assets. Its mission is to ensure a safe and sound and
competitive national banking system that supports the citizens, communities
and economy of the United States.
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