National banks would have to comply with state consumer laws unless they get an exemption from their federal regulator, as a result of an amendment approved yesterday by the House Financial Services Committee. There could be a residual effect on federal credit unions.
Under the amendment, which was attached to a bill establishing the Consumer Financial Protection Agency, national banks would have to comply with state laws, even if they are tougher than federal laws and regulations, unless their federal regulator deems it a competitive disadvantage.
The NCUA has previously preempted state lending requirements for federal credit unions. Although the amendment doesn't mention federal credit unions, it could result in changes in how much leeway all federally regulated financial institutions have in complying with state regulations.
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Reps. Melvin Watt (D-N.C.) and Dennis Moore (D-Kan.) sponsored the amendment, which was a compromise between those who wanted to have no appeal process for complying with state rules, including the Obama administration and House Financial Committee Chairman Barney Frank (D-Mass.) and financial institutions, which opposed compliance with state consumer laws.
The panel is scheduled to vote today on whether to send the bill to the House floor.
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