OCC Revises Rule on State-Law Preemption After Treasury Rebuke
The U.S. agency that oversees national banks released rules governing when federal regulations should trump state law, revising language that was faulted for ignoring the aims of the Dodd-Frank Act.
The Office of the Comptroller of the Currency’s final rules aim to eliminate ambiguity by removing language calling for preemption of state laws that “obstruct, impair or condition” national bank powers, the agency said today in a statement. The measure also recognizes the authority of state officials to bring enforcement actions against national banks to enforce applicable laws, the OCC said.
An initial proposal released in May was criticized by state regulators and the U.S. Treasury Department, whose general counsel said the measure was “not centered on the key language of Dodd-Frank’s preemption standard and seeks to broaden the standard.” John “Buz” Gorman, general counsel for the Conference of State Bank Supervisors, said the changes announced today don’t go far enough.
“It is not clear that anything has changed to what they proposed in their initial proposal,” Gorman said today in an interview. By changing the language “I think they are willing to review their previous determinations; question is what standard are they going to use,” he said.
Congressional Democrats and consumer advocates pushed for curbs on the OCC’s power to preempt state laws amid claims that federal regulators were too lenient with national banks before the 2008 credit crisis. The Treasury Department said the OCC’s initial interpretation didn’t align with Dodd-Frank’s requirement that preemption questions be resolved on a case-by- case basis.
The OCC, which operates as an independent bureau within the Treasury Department, said it will consult with the new Consumer Financial Protection Bureau before deciding whether to preempt some state consumer laws. The agency, which officially takes over the operations of the Office of Thrift Supervision tomorrow, said it will apply the preemption standards to federal thrifts.
To contact the reporter on this story: Meera Louis in Washington at mlouis1@bloomberg.net
To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net
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