States are increasingly seeking to regulate activities that have historically fallen within the domain of federal supervision, and that threatens the regulatory clarity the nation’s dual banking system has long provided, two former comptrollers of the currency write in a new op-ed for American Banker.
Earlier this month, a federal judge struck down most of the Illinois Interchange Fee Prohibition Act, which would have established state restrictions on the collection of interchange fees. More recently, Colorado Gov. Jared Polis vetoed a similar proposed law in his state. Former Comptrollers Eugene Ludwig and John Dungan said both are part of a larger pattern of states seeking to engage in regulatory activities that have historically fallen within the domain of federal banking law and federal supervision.
“Some have expanded regulatory authority in ways that reach beyond state-chartered institutions and into the operations of national banks,” they wrote. “Others have sought to redefine what constitutes an ‘unsafe or unsound’ banking practice, creating the possibility that national banks could face competing directives from multiple states and their federal regulator.”
The former comptrollers urged the Office of the Comptroller of the Currency to continue to provide clear guidance on the scope of federally granted banking powers.
“The national bank charter has been one of the great institutional successes of the American economy,” they wrote. “Preserving its integrity is not merely a legal question but an economic imperative.”
