WASHINGTON -- The Office of the Comptroller of the Currency
has published a new paper on the dual banking system that discusses the
important roles played by both state and nationally chartered banks in
maintaining the health and vitality of the U.S. banking system as a whole.
The paper discusses the history of the dual banking system,
noting that some issues that are controversial today, including preemption of
state laws that attempt to restrain entities created under federal statute, are
governed by Constitutional principles and court cases that date back to the
earliest years of our nations history. Indeed, it was President Lincoln who
proposed the legislation that created the national banking system and the OCC.
Distinctions between the national banking system and the
state banking system are rooted deep in Constitutional principles and our
countrys formative history, the paper notes. These distinctions should be
encouraged and preserved, not blurred or undercut. Indeed differences that may be controversial today are at the
very heart of the dual character of the dual banking system and are
inextricably linked to the benefits and success we associate with the dual
system.
The paper observes that some commentators praise the state
banking system for the variety of activities allowed in different states, but
then criticize the other half of the system national banks for seeking
national standards of operation and supervision, consistent with the federal
character of their charter.
In this regard, the paper stresses that the characteristics
of both parts of the dual banking system are important. For example, many
observers have correctly argued that the states have, in the past, served as
laboratories of innovation that have fueled advances in bank powers and
consumer protections.
On the other hand, the national banking system is the venue
for testing and evaluating the efficiencies and benefits that flow from uniform
national standards, the paper observes. This takes on a new value as the
banking and financial marketplace evolves, increasingly oblivious to state
boundaries, as a result of enhanced technology and the growth of national
markets for loans, deposits and other financial products.
The OCC has pioneered advances not only in new bank
activities and supervisory techniques, but also in consumer protections. At the
same time, while states are free to take their own approaches to protecting
consumers, customers of national banks benefit from the ability of a national
regulator the OCC to take actions to protect their interests no matter what
state they happen to reside in.
The OCC is also republishing a speech that Comptroller of
the Currency John D. Hawke, Jr. gave September 9, 2003 to Women in Housing and
Finance, in which he discussed the dual banking system and the federal
character of the national bank charter.
Both papers can be found on the news release page of the OCC web site
by going to www.occ.treas.gov
and clicking on the news release button on the left side of the page. A single printed
copy of each publication can be ordered by writing to: Comptroller of the Currency,
Communications Division, ATTN: Felicia Belton, 250 E Street SW, Mail Stop 3-1, Washington,
DC 20219.
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The OCC charters, regulates
and examines approximately 2,100 national banks and 52 federal branches of
foreign banks in the U.S., accounting for more than 55 percent of the
nations banking assets. Its mission is to ensure a safe and sound and
competitive national banking system that supports the citizens, communities
and economy of the United States.
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