House Democrats Urge OCC to Seek More Comment on Preemption Rule
U.S. House Democrats are asking the regulator overseeing national banks to seek additional comment on rules governing when state consumer-protection laws can be trumped by federal powers amid criticism of an initial proposal.
Five members of the House Financial Services Committee, led by Representative Barney Frank of Massachusetts, made the request in a letter to Acting Comptroller of the Currency John Walsh after the U.S. Treasury Department said the OCC’s plan ignored the will of Congress expressed in the Dodd-Frank Act.
“The original comment period, which closed on June 27, was for only 30 days, which we strongly believe was insufficient to foster a meaningful and balanced exchange of views between the OCC and other interested parties,” the lawmakers wrote, urging Walsh to extend the comment period by at least 60 days. The OCC had no immediate comment on the letter.
Congress directed the OCC to propose new rules after state officials said federal regulators used preemption to let banks escape tougher oversight before the 2008 credit crisis. In a June 28 comment letter, Treasury General Counsel George Madison faulted the OCC’s new interpretation of its role, calling it “inconsistent” and contrary to the intent of Dodd-Frank.
“The OCC’s proposed rule is not centered on the key language of Dodd-Frank’s preemption standard and seeks to broaden the standard,” Madison wrote to the OCC, an independent agency within the Treasury Department.
The Conference of State Bank Supervisors, which sought a 60-day extension of the comment period in a letter this week, has said that Dodd-Frank granted them new power over national banks for consumer protection laws.
The OCC said in its proposal that preemption remains largely intact, and that the agency would make decisions in consultation with the new Consumer Financial Protection Bureau.
To contact the reporters on this story: Cheyenne Hopkins in Washington at Chopkins19@bloomberg.net