NCSL Condemns OCC Rules Exempting National Banks from Consumer Protection Laws

WASHINGTON – The National Conference of State Legislatures strongly condemned two new rules implemented Jan 7. by the Office of the Comptroller of the Currency to exempt national banks and their operating subsidiaries from state consumer protection laws and enforcement actions. Delaware State Representative Donna Stone, chair of the House Economic Development Committee in Delaware and chair of the NCSL Financial Services Committee said the OCC action “sweeps away virtually all state consumer protections and leaves banking consumers across the country vulnerable to deceptive trade practices.” She added that, “State lawmakers are dismayed that a federal regulator without a single congressional hearing, would unilaterally rewrite federal law to preempt state authority and concentrate power with himself.” The first OCC rule preempts almost all state laws that apply to the activities of national banks and their subsidiaries. The second rule gives the OCC the exclusive visitorial rights for national banks, bars states from identifying wrongdoing on the part of national banks and their subsidiaries, and keeps states from bringing enforcement actions in either state or federal court. According to the NCSL, state lawmakers are urging members of Congress to instruct the OCC to withdraw the rules and conduct hearings to thoroughly review the implications that would result from “such a radical change to the nation’s banking system.” In addition, the NCSL said it believes the OCC lacks the authority to unilaterally preempt state authority.