State Laws Seen Hinting at Wider Regulatory Trends

Article excerpt

WASHINGTON -- With all the focus on federal laws and regulations, it's easy to overlook banks' second source of compliance burden: the states.

But bankers should watch legislation in every state, according to Matthew Street, who tracks state legislation for the American Bankers Association. One state's laws can foreshadow legislation in other states and even at the national level, he noted.

The worst laws often arise because someone in power has had a bad personal experience at a bank, Mr. Street said.

For example, he said, New York's stringent automated teller machine laws were enacted after a city council member was mugged at an ATM.

Five other states -- California, Nevada, Georgia, Washington, and Oregon -- have similar statutes, but none are as strict as New York's.

The city's rules cover a wide range of matters, including vestibule access, security cameras, rear-view mirrors, and sophisticated door locks.

Lien Laws

The ABA official predicted lien laws will be the next active area in state legislatures, which are beginning new sessions this month.

A lien is a creditor's claim against property to secure repayment of a debt.

"This is a dim little comer of banking but it's important for banks to know about," Mr. Street said. "There's real money involved here."

While many states are tinkering with their lien laws, Mr. Street said, he expects those dependent on agriculture to chum out the most complicated statutes.

That could be bad news for bankers.

Right now, most lien laws put lenders ahead of suppliers and other creditors. But some states are considering changes that would Make it harder for banks to get their money back. …