OCC Preemption of State Law Subject of Discussion at SFRR Roundtable

WASHINGTON – Federal preemption of state law is a hot button among state regulatory associations, legislators and attorneys generals, and members of the State Financial Regulators Roundtable (SFRR) had the opportunity to address the issue and exchange perspectives at a recent roundtable discussion. The March 26th meeting was facilitated by George Latham, Deputy Commissioner of Financial Institutions for the Virginia Bureau of Financial Institutions and a former NASCUS Chairman. SFRR was organized in 2000 to provide a forum for communication, coordination and cooperation among state regulatory associations in the promotion of effective regulatory oversight of financial services providers. SFRR members include: NASCUS; the North American Securities Administrators Association (NASAA); the National Association of Insurance Commissioners (NAIC); the Money Transmitters Regulators Association (MTAA); the Conference of State Bank Supervisors (CSBS), and the American Council of State Savings Supervisors (ACSSS). NASCUS is the 2004 chairman of SFRR, and NASCUS President/CEO Mary Martha Fortney is the liaison to the group. At the March 26 roundtable discussion which attracted about 15 parcipants from the SFRR membership, Latham said the group spent a lot of time going over the OCC’s preemption initiative and discussing how CSBS has responded to it. “Opposition to federal preemption has come out of the state banking arena, but it has also become a very public issue and drawn the attention of Congress to work against the OCC preemptive issue,” Latham told Credit Union Times. “Everyone at the roundtable was supportive of avoiding preemption and of efforts to impede preemption by federal regulators.” In January, NASCUS Chairman Roger Little, deputy commissioner, Credit Union Division for the Michigan Office of Insurance and Financial Services submitted testimony to the House Financial Services Subcommittee on Oversight and Investigations, urging Congress to protect the principles of the dual chartering system. In his testimony Little wrote that “NASCUS does not take public positions on matters that only affect the commercial banking industry, but we are concerned about the `contagion impact’ on the credit union dual chartering system if the powers of the state banking regulators were significantly curtailed by these actions of the OCC.” In discussing the potential impact of an OCC preemption rule on the credit union dual chartering system, Little stated that the rules, left unchanged, “would create an uneven playing field for state-chartered financial institutions and for customers of state-chartered depository institutions.” Little added that, “That would be unfortunate because the states, in recent years, have served as laboratories for more effective protections against consumer lending abuses.” In addition, he wrote, “if the OCC rules remain unchallenged, they may serve as an incentive or `roadmap’ for the regulators of other federal depository institutions.thus the OCC rule is not an academic regulatory issue that only affects a few parties.” -