October 22, 2009

The House Financial Services Committee voted Wednesday to give states the power to regulate national banks on consumer-protection issues unless federal regulators intervene.The measure, an amendment to a broader bill calling for the establishment of a new federal consumer protection agency, was approved by voice vote. It was opposed by the banking industry, which wants to avoid having to comply with myriad state laws.

Many Republicans criticized the provision, saying it would cause unnecessary costs and confusion for banks if they were required to adhere to dozens of state rules and regulations instead of a unified set of national laws.The measure was offered by Democratic Reps. Melvin Watt of North Carolina and Dennis Moore of Kansas, who portrayed it as a compromise because it would allow federal regulators to exempt banks from state laws on a case-by-case basis.