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Public Hearing on the Financial Services Roundtable's Petition For Rulemaking to Preempt Certain State Laws
May 24, 2005

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Proceedings - 8:47 A.M.

DIRECTOR CURRY: Good morning. It's my pleasure to open up this public hearing on the Financial Services Roundtable's Petition for Rulemaking to Preempt Certain State Laws.

We're very pleased that the FDIC Chairman, Don Powell, has agreed to hold this important hearing. At this point, I'd like to welcome FDIC Chairman Don Powell.

CHAIRMAN POWELL: Thank you, Director Curry. Good morning. Why we're here today: In March of this year, the Financial Services Roundtable petitioned the FDIC to adopt rules establishing which state laws apply to the interstate activities of state banks and their subsidiaries.

Specifically, the roundtable asked that the FDIC issue a regulation providing that a state bank's home state law governs its interstate activities and those of its subsidiaries to the same extent that the National Bank Act governs the national banks' interstate business.

In making this request, the roundtable asserted that such a rule would create parity between state chartered banks and national banks with interstate activities and operations.

The roundtable's request raises important and complex questions of law and policy affecting the dual banking system, consumer protection and the role of the FDIC vis--vis Congress and the states. It impacts banks, consumers and state regulation.

We are here today to obtain the public's views on the roundtable's petition. We believe the participation of today's presenters will provide valuable insight into the issues raised by the petition and will assist the FDIC in responding to the rulemaking request.

What do we hope to accomplish with this hearing? We hope to get important input from a cross-section of our stakeholders and, from the looks of today's agenda, that's exactly what we will get.

I'm pleased to note that the presenters today consist of trade group representatives, state banking commissioners, representatives of consumer groups and, of course, bankers. We also have received, and certainly will consider statements from others who were not able to appear today.

The FDIC is unique in having different roles in the banking industry. We insure banks. Along with the states we regulate state non-member banks and we serve as receiver of failed banks.

The roles of the OCC and the OTS are somewhat different. In addition to their roles as federal supervisors, they charter banks and savings associations and grant powers to those entities. Among other comments, we look forward to the views on if and how the FDIC, given its unique status, should be involved in prescribing the laws applicable to interstate activities of state banks.

Now, with today's activities. Let me turn things over to the presiding officer and FDIC General Counsel, Bill Kroener, who will introduce his fellow hearing officers.

MR. KROENER: Thank you, Chairman Powell. Our hearing today -- we have presiding, for a couple of sessions anyway, one of our directors, Tom Curry. We also have John Bovenzi, the Chief Operating Officer of the FDIC, Mike Zamorski, the Director of Supervision, Consumer Compliance, Art Murton, the Director of the Division of Insurance and myself as General Counsel.

We will be serving as hearing officers and presiding, trying to keep things on schedule and asking questions of the panelists.

As Chairman Powell said, our purpose here today is to hear testimony on the petition from the Financial Services Roundtable, which seeks an FDIC rulemaking in the area, generally, of interstate activities of state chartered banking institutions.

The petition raises a range of significant policy issues and requires consideration of some unresolved legal questions. The purpose of today's hearing is to develop a record on these matters so that the FDIC staff is in a better position to develop a recommendation to the board on an appropriate response by the FDIC to the petition.

The hearing is structured as a series of panels. Those of you that are here have an agenda and a synopsis of the testimony. Each panel member will have up to 15 minutes for an initial presentation. You don't have to take your entire 15 minutes.

When all members of the panel have completed their testimony, the hearing officers will have an opportunity to ask questions of the panelists, both individually and as a group, as they prefer.

The times are approximations, but we are going to try to keep the schedule on track since we have a very full day of testimony today.

The full testimony is available outside the room. In addition, it has been posted on the FDIC's external website. We are also keeping a transcript of the hearing and that transcript will be publicly available and, indeed, if there's enough interest in it, we can post that on our website as well in the near future.

In addition to the testimony we're hearing today, we have received a number of written comments from others on the roundtable petition who are not testifying, didn't ask to testify. All of those comments have been posted on our website.

We do have one change of speaker on the afternoon panel. It's the panel -- the last panel -- Panel 5 beginning at 3:30. Mr. Furlong, the President of Marshall & Isley, had a personal emergency develop. So the speaker is going to be John Presley, the Senior Vice President and CFO of Marshall & Isley, rather than Mr. Furlong. I will try to remind people of that when we start that session again.

The presiding officer for our initial panel will be FDIC Director Tom Curry. At this stage, I will turn the proceedings over to him and ask the first panelists to come forward, please.

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Last Updated 7/15/2005

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