WASHINGTON - Julie L. Williams, First Senior Deputy
Comptroller and Chief Counsel for the Office of the Comptroller of the
Currency, told a House panel today that new regulations regarding preemption
and the OCCs exclusive visitorial powers to regulate and supervise national
banks are firmly grounded in Federal law, judicial precedent and the U.S.
Constitution.
In testimony before the House Financial Services
subcommittee on oversight and investigations, Ms. Williams added that the OCC
has zero tolerance for lending that is unfair, abusive, deceptive or predatory.
We know its tragic consequences, Ms. Williams said. We
rigorously supervise national banks and their lending subsidiaries and there is
scant evidence that they are the source of the predatory lending problem in
this country. Our track record demonstrates
that we will act vigorously if problems arise.
Ms. Williams told the congressional panel that the OCCs new
regulations have been the subject of numerous misperceptions and
mischaracterizations. The preemption rule, she said, clarifies that a state law
does not apply to a national bank if the state law obstructs, impairs, or
conditions the banks ability to exercise a power granted to it under Federal
law, by Congress, unless Congress has provided that the state law does apply.
The rule, she added, does not authorize new powers for
national banks and it does not make changes in the OCCs regulations on
operating subsidiaries. It does not preempt anti-discrimination laws or
immunize national banks from complying with state laws in areas such as
contract law, tort law or tax law.
This approach reflects fundamental, Constitutional,
Supremacy Clause doctrine, Ms. Williams said, noting that the OCC followed
Supreme Court standards that go back more than 130 years.
The visitorial powers rule clarified that the scope of the
OCCs exclusive authority focuses on
the content and conduct of the banking business authorized
under Federal law, and provided that
a part of the statute referring to powers of courts of
justice does not grant state officials any additional authority, beyond what
they may otherwise possess, to examine, supervise or regulate the banking
business of national banks.
Ms. Williams said it was necessary to issue the two rules
because of the unprecedented number and variety of state and local enactments
intended to limit and control the ability of national banks to engage in
banking activities authorized for them by Congress.
These laws, many with laudable goals, also have real,
practical, daily consequences, she said. They have unsettled mortgage markets,
reduced the availability of legitimate subprime loans to some consumers,
increased regulatory burden, added operational costs, and created unpredictable
standards of operation and uncertain risk exposures.
Ms. Williams said the OCC developed the new rules over a
period dating back almost two years, briefing House and Senate members and
their staffs from the onset and consulting widely with representatives of the
financial industry, public interest groups, other regulatory agencies, and
state officials. The OCC acted as circumstances became compelling, she said.