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FDIC Federal Register Citations

State of Wisconsin

November 23, 2005 

Robert E. Feldman, Executive Secretary
Attention: Comments/Executive Secretary Section
Federal Deposit Insurance Corporation
550 -17th Street, N W.
Washington, D.C. 20429


Re: FDIC Rulemaking on parity for state chartered banks 

Dear Mr. Feldman: 

Thank you for the opportunity to comment. Our Department is strongly in support of the Federal Deposit
Insurance Corporation's proposed rulemaking in response to the petition from the Financial Services 
Roundtable. While we are not generally in support of state pre-emption, the OCC' s pre-emption in 2004 
has caused us to reconsider our position on a case by case basis. Therefore, we are requesting that the 
FDIC proceed with the rulemaking so that parity is restored between national banks and state-chartered 
banks which operate across state lines. 

State-chartered financial institutions are a strong part of Wisconsin's economy and we are proud of the 
work they do in our communities There are 272 banks in our state, and 231 of those are state-chartered 
This speaks to the high-quality of service these banks receive from our staff at the Department of 
Financial Institutions. 

Our state testified in favor of the petition at the FDIC hearing on May 24, 2005. Extensive preemption of 
our state laws has occurred for national banks. This threatens our oversight and undermines the integrity 
of the dual banking system. Charter choice for banks serves as an important check and balance system 
that ensures the regulatory approaches at both the state and federal levels are reasonable. 

Given the importance of a competitive dual banking system and the increasing reality of broad federal 
preemption, we urge the FDIC to adopt rules to provide parity between state-chartered banks and national 
banks conducting interstate activities. These rules are necessary to maintain the competitiveness of the 
state charter and ensure that a competitive equality, which is deemed necessary by Congress when they 
passed Riegle-Neal II in 1997, is in force. 

It is our understanding that the implementation of the proposed rule would be helpful to the public and the 
industry. We are fortunate in Wisconsin to have a long and progressive tradition of consumer protection 
that balances the business needs of financial institutions while protecting Wisconsin's consumers. One of 
those unique laws is the Wisconsin Consumer Act, which governs consumer credit transactions under 
$25,000. This law has benefited Wisconsin consumers and our economy for over 30 years. 
Allowing Wisconsin state-chartered banks to operate under Wisconsin laws will serve to benefit all of the 
customers they serve around the country. 

There may be concerns that if the FDIC does adopt the proposed rule, this will precipitate a race to the 
bottom and possibly weaken innovative consumer protection laws like Wisconsin's Consumer Act. We 
do not agree. First and foremost, state regulators and state legislators are in the business of protecting the 
citizens of their states. This is why state regulators and attorneys general have fought federal preemption 
so vigorously. 

State consumer protection laws apply to a multitude of financial service providers and not only to banks. 
These consumer protection laws are not going to be stripped away at a whim on the unrealistic hope of 
some state becoming a banking Mecca. Examples that you may hear on the notion of a race to the bottom, 
such as credit card banks and others, are just too narrow to be analogous here. Considerations that are 
important to the efficient and profitable operations of these organizations will determine where banks will 
be located, not which state has lax consumer protection laws. 

One of the main points of the Financial Services Roundtable petition was to allow state-chartered banks 
the ability to operate with a single set of laws as is allowed for national banks. If home state consumer 
protection laws will be the single platform for our Wisconsin banks and for their customers in other states, 
we support this application of parity 

One of the main benefits of the dual banking system is that the states, given separate regulatory powers, 
have been able to act as laboratories of innovation for the financial institutions they regulate. It is much 
easier to try a new concept out on a smaller scale than to attempt to work out the details for 50 states. 
Therefore, we have been able to innovate and implement new ideas more quickly on our smaller 
platforms. Oftentimes, these ideas migrate across the country. 

One great and recent example of this, that we are especially proud of in Wisconsin, is the creation of a 
Universal Bank certification. Universal Bank certification is a gateway to opportunity for Wisconsin's 
financial institutions. The creation of the Universal Bank certification was so important because it was a 
recognition on the part of the Wisconsin Legislature that there needed to be competitive parity for 
commercial banks, savings banks, and savings and loan associations for the health and vitality of the 
industry as a whole in the state. 

Without large and strong state-chartered institutions, there will be no good impetus for state innovation. 
This would be a loss to the industry as a whole. 

The purpose of rulemaking would be to allow state-chartered multi-state banks to operate on a uniform 
platform of laws and regulations with one regulator to serve as a single point of contact. The hope is that 
by creating a uniform platform, we can provide seamless regulation to our financial institutions, thereby 
fulfilling the Congressional intent of Riegle-Neal and maintaining a competitive dual banking system. 

In conclusion, the Wisconsin Department of Financial Institutions strongly supports the protection of the 
dual banking system by supporting the FDIC's rulemaking to ensure state chartered banks with multi-
state locations have parity with their nationally chartered counterparts. 

Again, we would like to thank the FDIC for issuing the notice of proposed rulemaking to continue 
dialogue on this issue. We look forward to continuing to work with you to ensure the strength of our dual 
banking system. 

Sincerely, 
Lorrie Keating Heinemann
Cabinet Secretary
Department of Financial Institutions
Michael Mach
Administrator
Division of Banking




      





Last Updated 12/07/2005 Regs@fdic.gov

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