Hill Panel OKs State Banking Powers; Industry Balks at Myriad Laws
Byline: Sean Lengell, THE WASHINGTON TIMES
The House Financial Services Committee voted Wednesday to give states the power to regulate national banks on consumer-protection issues unless federal regulators intervene.
The measure, an amendment to a broader bill calling for the establishment of a new federal consumer protection agency, was approved by voice vote. It was opposed by the banking industry, which wants to avoid having to comply with myriad state laws.
Many Republicans criticized the provision, saying it would cause unnecessary costs and confusion for banks if they were required to adhere to dozens of state rules and regulations instead of a unified set of national laws.
The measure was offered by Democratic Reps. Melvin Watt of North Carolina and Dennis Moore of Kansas, who portrayed it as a compromise because it would allow federal regulators to exempt banks from state laws on a case-by-case basis.
The Obama administration and committee Chairman Rep. Barney Frank, Massachusetts Democrat, had pushed for stronger states' rights.
Rep. Melissa Bean, Illinois Democrat, had raised concerns about the prospect of giving states more rights in regulating national banks, but was absent from Wednesday's committee markup of the bill owing to a case of swine flu in her family.
I have consistently advocated for robust national standards that create a blueprint towards international cooperation, Mrs. Bean said Tuesday. Rolling back this 140-year-old precedent of federal rules to a system of 50 different state regimes increases costs for training and compliance, which gets passed to consumers. …