FDIC
Federal Register Citations
Florida Office of Financial Regulation
From: Gigi Price [mailto:Gigi.Price@fldfs.com]
On Behalf Of Don Saxon
Sent: Tuesday, May 24, 2005 9:11 AM
To: Comments
Subject: Rulemaking to Preempt Certain State
Laws from the Financial Services Roundtable (Roundtable)
Mr. Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS, Room 3060
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
Re: Public Hearing on the Petition for
Rulemaking to Preempt Certain State Laws from the Financial
Services Roundtable (Roundtable)
Dear Mr. Feldman:
Thank you for the opportunity to comment on
the Roundtable’s request to the FDIC to issue unprecedented
and sweeping new rules that would provide that the home state
law for a state chartered bank will govern its interstate
activities and those of its subsidiaries to the same extent
that the National Bank Act governs a national bank's
interstate business. In its request, the Roundtable indicated
its belief that such rules would create parity between
state-chartered banks and national banks with interstate
activities and operations. We vigorously disagree with the
Roundtable’s position and request.
The Florida Office of Financial Regulation
(Office) is dedicated to safeguarding the private financial
interests of the public by licensing, chartering, examining
and regulating financial institutions and financial service
companies in the State of Florida. The Office also strives to
protect consumers from illegal financial activities of
depository and non-depository institutions and companies,
while preserving the integrity of Florida's markets and
financial service industries. We are responsible for
licensing, chartering and regulating more than 350 financial
institutions with assets in excess of $84 billion, including
state chartered commercial banks, savings banks, credit
unions, non-deposit trust companies and branches, agencies,
representative offices and administrative offices of foreign
banks. In addition, the Office licenses and regulates
collection agencies, consumer finance companies, mortgage
broker businesses, lenders and branches, and mortgage broker
individuals, retail installment sellers and sales finance
companies, securities dealers and agents, and securities
offerings. The Office has a long and close working
relationship with the FDIC concerning the regulatory
supervision of Florida financial institutions to ensure the
public confidence in the safety and soundness of the banking
system.
The Office is opposed to the FDIC issuing
the requested rules preempting state laws otherwise applicable
to the interstate activities of a state bank and its
subsidiaries. We offer the following comments:
Consumer Protection May Be Immediately
Weakened: This regulation would on its face have a
potential negative impact on consumers in states with
stronger consumer protections than available in the bank's
home state. Further, Florida consumers would be subjected to
the confusing array of 50-plus consumer protection acts and
agencies.
Race to the Bottom for Consumer
Protection: This regulation would eliminate the dual
banking system, as we know it, by essentially creating
competing federal systems for multi-state operations. States
with banking laws that are perceived as the least burdensome
would become the home states of choice for the multi-state
banks. The states would be able to compete only by
abolishing consumer protections and granting state banks
more expansive powers, all with less vigorous regulatory
oversight and fees. This will be to the detriment of
consumers and businesses residing in states with strong
consumer protections, decrease the stability of the deposit
insurance fund, and jeopardize the safety and soundness of
the entire banking system.
Undermining of State Regulatory
Authority: This regulation shows a disregard for
federalism principles by indiscriminately overriding host
state policies.
Undermining of State Legislative and
Judicial Authority: This regulation could prevent the
Florida Legislature from implementing current and future
consumer protection legislation.
Facilitation of Industry Consolidation:
This regulation would erode regulatory barriers which will
encourage increased industry concentration, reduce
competition, and provide fewer consumer choices by
concentrating bank charters in fewer states via the ability
to choose a more favorable state framework than the laws of
the home state.
Abuse of Authority by the FDIC:
The FDIC does not have the legal authority to perform what
is properly a legislative function. Congress, not regulatory
agencies, should be responsible for (a) making changes that
could result in a dramatic restructuring of the dual banking
system, and (b) loosening the policy against mixing banking
and commerce (which Congress reaffirmed in the Gramm-Leach-Bliley
Act).
Overburden the FDIC and State
Regulatory Agencies: The limited financial and personnel
resources of the FDIC and each state regulatory agency would
become severely strained as each would need to be responsive
to examination and consumer issues dealing with every
state’s law and in every location of a bank’s or
subsidiary’s operations.
The petition to the FDIC seeks
implementation of rules that will result in Florida citizens
being forced to depend on the regulatory efforts of other
distant states to protect them from unscrupulous practices by
banks and subsidiaries here. I believe that neither individual
states nor the federal government have the resources to
adequately protect and appropriately respond to consumers of
financial services under this concept. The proposed preemption
rules would also create an unnecessary adversarial
relationship between the FDIC and the state authorities,
disrupting the history of successful cooperation that has
ensured a safe and sound banking system. The end result will
be a tragic loss of public confidence in the banking system.
As such, we ask that you unequivocally reject the preemption
request of the Roundtable.
