The FDIC and its staff should be commended for inviting comments on the Financial Services Roundtable's Petition. The Roundtable did not undertake preparation of its Petition lightly, and the matters addressed are critical to the continued existence of the dual banking system in this country. Regions believes preservation of the dual banking system is a significant objective for the FDIC and one that is both authorized and mandated by Congress. Regions believes it is important to have a real choice of regulatory regimes under which to operate an interstate banking business. Regions believes our participation in the interstate marketplace as a state chartered institution may be threatened unless the FDIC acts to restore parity in the banking regulations.
History of Regions Financial Corporation and Regions Bank
Regions is one of the 15 largest financial services companies in the country with over $84.4 billion in assets, providing services in all aspects of the financial services industry. Regions Bank presently serve some 5 million customers throughout our 15-state geographic footprint through a network of over 1,300 branches and 1,600 ATM locations. We have grown and plan to continue operating as a state chartered bank headquartered in Alabama.
Regions Bank closely examined the opportunities, benefits and costs of operating under a federal or a state charter before electing go forward under our Alabama charter. We believe the federal charter has no more true value to our present business model than a state charter because Congress has mandated parity for national and state banks under the traditional dual banking system. However, the recent OCC regulatory action serves promotes the interests of national banks to the potential detriment of state chartered banks, thereby creating a preference for the federal charter for banks seeking to compete nationwide. We believe the proposed rules outlined in the Roundtable's Petition preserve the necessary competitive balance between national and state chartered banks, and would set standards for state chartered banks operating in interstate commerce with similar clarity and certainty as the OCC rules provide for national banks. Accordingly, the adoption of the rules proposed in the Petition by the FDIC is necessary to maintain the balance of the dual banking system.
Key Points from Comments on the Petition
First, the goal of the Petition is not to seek preemption of state law. Host state law would continue to apply to all areas of our services to the same extent as host state law would apply to national banks. Where federal law applies solely to national banks, home state law would apply equally to state chartered banks in those same areas.
Second, this proposed rule promotes competition among banks and enhances consumer choice. Customers should be indifferent whether they are doing business with a state bank or a national bank. Lack of parity in the application of the home state law or in federal rules provides an unfair competitive advantage to national banks which effectively reduces consumer choice.
Third, the preservation of the dual banking system protects consumers. Congress has spoken on this issue and any FDIC rules would give regulatory meaning to existing federal law. If current regulatory trends are not reversed, the national banking system will not be dual, but instead two separate and unequal systems. Duality requires parity. Parity promotes competition by getting properly priced products into the market in real time, and competition promotes maximum consumer benefit through choice.
Fourth, States cooperate under a national compact and through a series of individual agreements to resolve potential conflicts. These agreements create controlling host state law. Yet, the willingness of a particular state regulator to rely on assurances of their out-of-state counterpart is, in many respects, dependent on relationships between long-serving individuals in their respective states that may not survive if those individuals leave.
Finally, operating a multi-state bank business is not the same as operating a nationwide bank under a uniform interstate plan. Banks structured like Regions Bank do have a choice of charters under which to operate. That choice should be available to the bank based on its business needs and not made simply because an unbalanced regulatory regime exists that unduly favors one charter over another.
Regulatory tension between federal regulators and the various states interested in fostering a competitive climate for their state chartered banks providing interstate banking services is appropriate.
Preservation and maintenance of the historic dual banking system is the best means available to ensure banks remain competitive on a local and national basis, and that consumer choice is preserved.