A demand to jettison regulations that pre-empt state consumer financial laws was denied Monday by the national bank regulator, who told a group of state supervisors that the national rule is compliant with federal law and Supreme Court precedent, the federal agency said in a letter.
In a response to the plea by the Conference of State Bank Supervisors (CSBS) – the group representing state banking regulatory agencies – Acting Comptroller of the Currency Rodney Hood rejected the claim of the states’ group that the Office of the Comptroller of the Currency’s (OCC) rules are unlawful and anti-competitive.
“The OCC has thoroughly considered the points you raised and, as set forth above [in Hood’s response], reaffirms that its preemption regulations are valid under applicable law and are critical to ensuring the continued strength of our Nation’s banking system,” Hood wrote.
CSBS contended in a May 8 letter that the agency should rescind its pre-emption rules considering President Donald Trump’s ( R) executive orders creating the so-called “Department of Government Efficient” (DOGE) and reducing “anti-competitive regulatory burdens.”
The regulator group argued that the pre-emption rules were unlawful because they are not consistent with the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank), and that the rules were anti-competitive.
But Hood turned back the bank regulators on both points. On the first, he said the OCC’s rules are consistent with Dodd-Frank and Supreme Court rulings. “For your awareness, the OCC reviewed its preemption regulations following Dodd–Frank’s enactment. The OCC considered the relevant statutory language, legislative history, and judicial precedent and concluded that Dodd–Frank codified the conflict preemption standard in Barnett Bank of Marion County, N.A. v. Nelson, including the antecedent cases it cited. This conclusion is consistent with the Supreme Court’s subsequent decision in Cantero v. Bank of America, N.A., which rejects arguments that Dodd–Frank created a new preemption standard and instead notes that “Dodd–Frank adopted Barnett” and that Barnett “was also the governing preemption standard before Dodd–Frank.”
On the latter point, OCC countered that the pre-emption rules are not anti-competitive.
“Federal preemption has proven to be a powerful enabler of local and national prosperity and growth,” Hood wrote. “As the Supreme Court noted at the beginning of the twentieth century, federal legislation and regulation ‘has in view the erection of a system extending throughout the country, and independent, so far as powers conferred are concerned, of state legislation which, if permitted to be applicable, might impose limitations and restrictions as various and as numerous as the states.”
He said national banks, operating across state lines, “may rely on preemption to remove barriers and achieve efficiencies associated with a uniform set of rules.”
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