Democrats offer bill to back state consumer laws
WASHINGTON (Reuters) – Three U.S. Democrats on Tuesday said
they introduced legislation to force national banks to comply
with consumer protection laws enacted by state governments, a
move to prevent federal pre-emption of tougher state
anti-predatory lending and privacy laws.
Sen. John Corzine of New Jersey, Rep. Barney Frank of
Massachusetts and Rep. Luis Gutierrez of Illinois said their
bill was a response to recent actions by the Office of the
Comptroller of the Currency. The federal banking regulator has
fought New York Attorney General Eliot Spitzer’s attempts to
crack down on potential abuses in lending.
The lawmakers said the OCC has issued regulations and
interfered with state court proceedings in a manner that may
permit national banks to ignore state consumer protection laws
and attorneys general.
“The effect of recent actions by the OCC is a substantial
reduction in consumer protection,” Frank said in a prepared
statement. “This has created a race to the bottom in bank
regulation. National banks are being encouraged to ignore
legitimate state regulatory efforts.”
The lawmakers said their bill would clarify the
relationship between state regulators and national banks and
federal thrifts, and show where those regulators may properly
enforce their states’ consumer protection laws.
Spitzer has publicly sparred with Julie Williams, the
acting comptroller of the currency, over whether federal
agencies are doing enough to protect consumers. But Williams
has said Spitzer’s interference might impede her attempts to
crack down on discriminatory lending.
In June, a New York federal judge handed Spitzer a victory
when he refused a request by a bank trade group, backed by the
OCC, to stop the attorney general from investigating large
banks’ lending practices to minorities.