[Congressional Record (Bound Edition), Volume 151 (2005), Part 13]
[Extensions of Remarks]
[Page 18222]
[From the U.S. Government Publishing Office, www.gpo.gov]




   INTRODUCTION OF THE ``PRESERVATION OF FEDERALISM IN BANKING ACT''

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                         HON. LUIS V. GUTIERREZ

                              of illinois

                    in the house of representatives

                         Tuesday, July 26, 2005

  Mr. GUTIERREZ. Mr. Speaker, I am pleased to introduce legislation 
today that continues the long fight to maintain state consumer 
protections for customers of national banks. In January 2004, the 
Office of the Comptroller of the Currency (OCC), the primary regulator 
of national banks, introduced regulations to preempt the application of 
state laws and the authority of state officials over their regulated 
entities. Since that time, other banking regulators have joined this 
race to the bottom. My legislation will provide much-needed 
clarification in this area.
  Last year, USA Today, the nation's newspaper, condemned the OCC's 
preemption rules in an editorial, claiming that they threaten ``strong 
consumer protection laws that have been the responsibility of states 
for more than a century.'' The newspaper said the OCC rules will make 
``millions of consumers vulnerable'' to illegal loan practices. The 
OCC's Chief Counsel irreverently characterized these concerns as 
``baloney.''
  Over the last year, we have worked together as a broad bipartisan 
coalition who sees state consumer protection as a bread and butter 
issue, rather than ``baloney.''
  This legislation is merely the latest step to ensure that our states 
have the power to protect consumers.
  And to stop the OCC from eroding strong safeguards that have been 
used by the states for more than a century to enforce consumer 
protection laws.
  The preemption rules were a misguided, unprecedented, unchecked 
expansion of its authority, especially since the states, rather than 
the OCC, currently have the tools and resources to effectively enforce 
consumer protection and other important laws. This agency has 
repeatedly demonstrated that it is far more concerned with currying 
favor among the banks it regulates instead of fulfilling its regulatory 
responsibilities under the law.
  Last year, I passed an amendment to the Financial Services Committees 
Budget Views expressing concern regarding the budgetary effects of the 
OCC's preemption rules. The budget views put the Financial Services 
Committee on record that the OCC's preemption rules represent an 
unprecedented expansion of authority, one that was instituted without 
Congressional authorization. Subsequently, I introduced legislation to 
reverse the preemption rules, and then, toward the end of last 
Congress, Mr. Frank and I introduced a version of what we are again 
introducing today.
  Our bill ensures that national banks will be bound by state consumer 
protection laws, including predatory mortgage lending statutes. It also 
prohibits banks from benefiting from part of a state law while refusing 
to comply with a consumer-friendly portion of the same law. For 
example, a bank in Ohio is currently using the state law mechanism for 
foreclosing properties, but failing to abide by another provision in 
the statute, which limits fees for consumers. This legislation also 
allows state attorneys general to enforce laws and bring suit against 
banks when appropriate. As a former City Council member, I believe that 
the accountability of local officials is crucial. Few consumers can 
sort through the alphabet soup of regulators and figure out whom to 
contact if they have a problem with their bank. But almost every 
consumer knows that their attorney general is there to protect them, so 
we must ensure that they retain authority over banks.
  I am pleased to have been joined on this legislation by 
Representatives Frank, Lee and McCarthy as original cosponsors and I 
urge all of my colleagues to support this effort.

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