Capital One strongly supports the petition filed by the Financial Services Roundtable and urges the FDIC to adopt the Roundtable’s proposed rule. Capital One believes that such rulemaking will provide state chartered banks with vital parity to compete with their national bank counterparts and thereby offer consumers greater choice, competition and innovation in the supply of consumer financial services.
Continuing development of the regulatory regime applicable to national banks under the National Bank Act has given national banks a significant advantage in operating multistate and national scale lending businesses. The unintended result is a destabilizing competitive imbalance in our dual banking system which threatens the highly successful system that has been built and nurtured for well over a century. The proposed rule does not represent a unilateral extension of the preemption rights of state banks. Instead, it is responsive solely to the rights currently enjoyed by national banks and is foremost about parity, certainty and uniformity of regulation.
State banks must contend with national banks not only from a competitive business standpoint, but must also contend with an extensive patchwork of additional state and local laws and regulations in crafting any national lending program or even a modest cross border program. The application of these laws and regulations is often unclear and frequently contradictory and creates significant additional complexity and expense to implement.
Over the past decade the number of state bank charters has steadily decreased, a trend that will only accelerate given the current state of our regulatory framework. Many state banks that have spent decades developing productive relationships with their regulators will now be forced to consider abandoning those relationships and surrendering their charters simply to remain competitive. Capital One does not believe that a banking system in which large banks have only one realistic choice of charter is in the best interests of the banking system, the individual states, or their consumers.
The diversity of regulatory approaches has spurred significant innovation for all banks, including national banks.
The proposed rulemaking represents an urgently needed equitable solution to the competitive challenge presented by the rights and powers of national banks under the regulatory regime as currently interpreted. Capital One believes that Congress has long intended to put state banks in a position of parity with national banks, and Congress has repeatedly intervened over the past quarter century to restore the competitive equilibrium of the dual banking system. Most recently, Congress has provided a strong basis for banking parity with the 1997 amendments to Riegle-Neal as well as the important parity provisions in the Gramm-Leach-Bliley Act of 1999.
Capital One believes that the FDIC has clear regulatory authority to adopt the proposed rules and implement the historic Congressional mandate for banking parity. Capital One urges the FDIC to exercise its authority to adopt rules for state banks that parallel the rights of national banks and restore the historic equilibrium in our dual banking system.