Finance panel at odds over preemption
Wednesday, October 21, 2009
Members of the House Financial Services Committee on Tuesday continued to wrangle over a provision that would allow state governments to protect bank customers by imposing restrictions that go beyond existing federal laws.
The move, part of a debate over a proposed new agency to regulate mortgages, credit cards and other consumer financial products, would eliminate a doctrine called preemption that has allowed big banks to answer solely to federal regulators. The Obama administration has supported the change, but the nation's largest banks have vigorously opposed the idea, saying it would lead to a conflicting patchwork of regulation.
On Tuesday, two committee members -- Democratic Reps. Melvin Watt (N.C.) and Dennis Moore (Kan.) -- introduced an amendment to the legislation that seeks a middle ground on the contentious issue of preemption. It would dictate that national banks comply with state laws except when a state law has a "discriminatory effect" on national banks in comparison with state-chartered banks. Further, it would permit the Office of the Comptroller of the Currency to conclude whether a state law interferes with a national bank's business or if a particular state law is specifically preempted by federal law.
Rep. Ed Perlmutter (D-Colo.) offered and promptly withdrew a separate amendment on behalf of Rep. Melissa Bean (D-Ill.) that would have allowed federal preemption powers to remain where they are today. Rep. Jeb Hensarling (R-Tex.) then quickly offered the amendment again. It failed on a voice vote.
Final votes on the proposed new consumer agency are expected Wednesday.