[Congressional Record Volume 150, Number 128 (Saturday, October 9, 2004)]
[Senate]
[Pages S10988-S10989]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORZINE (for himself, Mrs. Boxer, Mrs. Murray, Mr. 
        Schumer, Mr. Lautenberg, and Mr. Leahy):
  S. 2973. A bill to clarify the applicability of State law to national 
banks, and for other purposes; to the Committee on Banking, Housing and 
Urban Affairs.
  Mr. CORZINE. Mr. President, I rise today to introduce legislation 
along with Senators Boxer, Murray, Schumer, Lautenberg, and Leahy the 
Preservation of Federalism in Banking Act, to clarify the relationship 
between state consumer protection laws and national banks.
  This legislation responds to a sweeping new rule issued by the Office 
of the Comptroller of the Currency, the agency that regulates national 
banks. The OCC's new rule gives the agency unprecedented authority to 
pre-empt State laws, thereby shielding national banks and their non-
bank and State-chartered bank affiliates from many important consumer 
protections. It also potentially limits the ability of States to 
enforce many related laws. The most important immediate consequence of 
the OCC rule has been the preemption of State anti-predatory lending 
laws.
  I feel strongly about the need to address predatory lending, which 
can trap people in endless cycles of debt and escalating fees. Many 
States, such as my own state of New Jersey, have enacted tough laws to 
deal with the problem. Unfortunately, the OCC's ruling substantially 
undermines these laws by regulatory fiat. That will leave many 
consumers unprotected, and it shifts too many responsibilities to a 
single agency here in Washington that is not equipped to handle them. 
After all, according to its own website, the OCC ``does not have the 
mandate to engage in consumer advocacy''.
  Although the OCC has a long and successful record of regulating for 
safety and soundness, it has little experience dealing with abusive 
local practices, such as predatory lending. Believe it or not, the OCC 
actually is proposing to handle all consumer complaints through a 
single 22-person call center in Houston. This is totally unrealistic. 
Each year, State officials receive thousands of related complaints, 
which usually are very local in nature. These officials are at the 
forefront of the enforcement effort, identifying and combating new 
practices as they arise. The OCC's system simply could not fill this 
role without major changes.
  The OCC rule also raises concerns about regulatory charter 
competition, the viability of a broad range of state laws, and the 
ability of consumers and state officials to seek remedies in court.
  The OCC rule has provoked strong opposition from governors, attorneys 
general, banking supervisors, and many consumer advocacy groups, not to 
mention the public. The OCC received over 2,600 letters in response to 
its rules, and more than 90 percent opposed them.
  The Preservation of Federalism in Banking Act is a limited and 
reasonable response to the OCC rule. The bill will clarify the state 
consumer protection laws with which banks and their

[[Page S10989]]

affiliates must comply. It also will protect financial institutions 
from overreaching state laws that seek to directly regulate the core 
activities of national banks.
  While the OCC has long had the statutory responsibility to regulate 
the activities of national banks, it has never denied the ability of 
states to protect their citizens. The OCC historically has used its 
authority under the National Bank Act in a reasonable way to shield 
national banks from state banking laws that intrude on the OCC's 
congressionally-granted powers. While we should continue to support the 
appropriate use of the agency's authority, it is important that we 
immediately intervene to reverse the OCC's regulatory overreach and 
prevent the agency from preempting all state consumer protection laws 
and state authority to enforce related laws.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2973

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Preservation of Federalism 
     in Banking Act''.

     SEC. 2. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS 
                   CLARIFIED.

       (a) In General.--Chapter 1 of title LXII of the Revised 
     Statutes of the United States (12 U.S.C. 21 et seq.) is 
     amended by inserting after section 5136B (12 U.S.C. 25a) the 
     following new section:

     ``SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL 
                   BANKS AND SUBSIDIARIES CLARIFIED.

       ``(a) State Consumer Laws of General Application.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law, any State consumer law of general application 
     (including any law relating to unfair or deceptive acts or 
     practices and any consumer fraud law) shall apply to any 
     national bank.
       ``(2) National bank defined.--For purposes of this section, 
     the term `national bank' includes any Federal branch 
     established in accordance with the International Banking Act 
     of 1978.
       ``(b) State Banking Laws Enacted Pursuant to Federal Law.--
       ``(1) In general.--Notwithstanding any other provision of 
     Federal law and except as provided in paragraph (2), any 
     State law that--
       ``(A) is applicable to State banks; and
       ``(B) was enacted pursuant to or in accordance with, and is 
     consistent with, an Act of Congress, including the Gramm-
     Leach-Bliley Act and the Consumer Credit Protection Act, that 
     permits States to exceed or supplement the requirements of 
     any comparable Federal law,
     shall apply to any national bank.
       ``(2) Exceptions.--Paragraph (1) shall not apply with 
     respect to any State law if--
       ``(A) the State law discriminates against national banks; 
     or
       ``(B) the State law is inconsistent with other provisions 
     of Federal law, but only to the extent of the inconsistency 
     (as determined in accordance with the other provision of 
     Federal law).
       ``(c) No Negative Implications for Applicability of Other 
     State Laws.--No provision of this section shall be construed 
     as altering or affecting the applicability, to national 
     banks, of any State law which is not described in subsection 
     (a) or (b).''.
       (b) Denial of Preemption Not a Deprivation of a Civil 
     Right.--The preemption of any provision of the laws of any 
     State with respect to any national bank shall not be treated 
     as a right, privilege, or immunity for purposes of section 
     1979 of the Revised Statutes of the United States (42 U.S.C. 
     1983).
       (c) Clerical Amendment.--The table of sections for chapter 
     1 of title LXII of the Revised Statutes of the United States, 
     is amended by inserting after the item relating to section 
     5136B the following new item:

``5136C. State law preemption standards for national banks and 
              subsidiaries clarified.''.

     SEC. 3. VISITORIAL STANDARDS.

       Section 5136C of the Revised Statutes of the United States 
     (as added by section 2(a) of this Act) is amended by adding 
     at the end the following new subsection:
       ``(d) Visitorial Powers.--No provision of this title which 
     relates to visitorial powers or otherwise limits or restricts 
     the supervisory, examination, or regulatory authority to 
     which any national bank is subject shall be construed as 
     limiting or restricting the authority of any attorney general 
     (or other chief law enforcement officer) of any State to 
     bring any action in any court of appropriate jurisdiction--
       ``(1) to enforce any applicable Federal or State law, as 
     authorized by such law; or
       ``(2) on behalf of residents of such State, to enforce any 
     applicable provision of any Federal or State law against a 
     national bank, as authorized by such law, or to seek relief 
     and recover damages for such residents from any violation of 
     any such law by any national bank.''.

     SEC. 4. CLARIFICATION OF LAW APPLICABLE TO STATE-CHARTERED 
                   NONDEPOSITORY INSTITUTION SUBSIDIARIES.

       Section 5136C of the Revised Statutes of the United States 
     (as added and amended by this Act) is amended by adding at 
     the end the following new subsection:
       ``(e) Clarification of Law Applicable to Nondepository 
     Institution Subsidiaries of National Banks.--
       ``(1) In general.--No provision of this title shall be 
     construed as preempting the applicability of State law to any 
     State-chartered nondepository institution subsidiary of a 
     national bank, except to the extent that the preemption is 
     explicitly provided by an Act of Congress.
       ``(2) Definitions.--For purposes of this subsection, the 
     terms `depository institution' and `subsidiary' have the same 
     meanings as in section 3 of the Federal Deposit Insurance 
     Act.''.

     SEC. 5. DATA COLLECTION AND REPORTING.

       (a) Collecting and Monitoring Consumer Complaints.--
       (1) In general.--The Comptroller of the Currency shall 
     record and monitor each complaint received directly or 
     indirectly from a consumer regarding a national bank or any 
     subsidiary of a national bank and record the resolution of 
     the complaint.
       (2) Factors to be included.--In carrying out the 
     requirements of paragraph (1), the Comptroller of the 
     Currency shall include--
       (A) the date on which the consumer complaint was received;
       (B) the nature of the complaint;
       (C) when and how the complaint was resolved, including a 
     brief description of the extent, and the results, of the 
     investigation made by the Comptroller into the complaint, a 
     brief description of any notices given and inquiries made to 
     any other Federal or State officer or agency in the course of 
     the investigation or resolution of the complaint, a summary 
     of the enforcement action taken upon completion of the 
     investigation, and a summary of the results of subsequent 
     periodic reviews by the Comptroller of the extent and nature 
     of compliance by such national bank or subsidiary with the 
     enforcement action; and
       (D) if the complaint involves any alleged violation of a 
     State law (whether or not Federal law preempts the 
     application of such State law to such national bank) by such 
     bank, a cite to and a description of the State law that 
     formed the basis of the complaint.
       (b) Report to the Congress.--
       (1) Periodic reports required.--The Comptroller of the 
     Currency shall submit a report semi-annually to the Congress 
     on the consumer protection efforts of the Office of the 
     Comptroller of the Currency.
       (2) Contents of report.--Each report submitted under 
     paragraph (1) shall include the following:
       (A) The total number of consumer complaints received by the 
     Comptroller during the period covered by the report with 
     respect to alleged violations of consumer protection laws by 
     national banks and subsidiaries of national banks.
       (B) The total number of consumer complaints received during 
     the reporting period that are based on each of the following:
       (i) Each title of the Consumer Credit Protection Act 
     (reported as a separate aggregate number for each such 
     title).
       (ii) The Truth in Savings Act.
       (iii) The Right to Financial Privacy Act of 1978.
       (iv) The Expedited Funds Availability Act.
       (v) The Community Reinvestment Act of 1977.
       (vi) The Bank Protection Act of 1968.
       (vii) Title LXII of the Revised Statutes of the United 
     States.
       (viii) The Federal Deposit Insurance Act.
       (ix) The Real Estate Settlement Procedures Act of 1974
       (x) The Home Mortgage Disclosure Act of 1975.
       (xi) Any other Federal law.
       (xii) State consumer protection laws (reported as a 
     separate aggregate number for each State and each State 
     consumer protection law).
       (xiii) Any other State law (reported separately for each 
     State and each State law).
       (C) A summary description of the resolution efforts by the 
     Comptroller for complaints received during the period 
     covered, including--
       (i) the average amount of time to resolve each complaint;
       (ii) the median period of time to resolve each complaint;
       (iii) the average and median time to resolve complaints in 
     each category of complaints described in each clause of 
     subparagraph (B); and
       (iv) a summary description of the longest outstanding 
     complaint during the reporting period and the reason for the 
     difficulty in resolving such complaint in a more timely 
     fashion.
       (3) Disclosure of report on occ website.--Each report 
     submitted to the Congress under this subsection shall be 
     posted by the Comptroller of the Currency in a timely 
     fashion, and maintained on the website of the Office of the 
     Comptroller of the Currency on the World Wide Web.




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