October 6, 2003
The Honorable John D. Hawke, Jr.
Office of the Comptroller of the Currency
250 E Street, SW
Public Information Room, Mailstop 1-5
Washington, DC 20219
VIA EMAIL: firstname.lastname@example.org
Attention: Docket No. 03-16; Notice of Proposed Rulemaking, 68 Fed. Reg. 46119 (2003)
Dear Mr. Hawke:
The Division of Banks of the Commonwealth of Massachusetts (Division) hereby submits comments in opposition to the Office of the Comptroller of the Currency's (OCC) current preemption proposal, Notice of Proposed Rulemaking, 68 Fed. Reg. 46119, 2003, Docket No. 03-16.
The Division is the primary regulator of the Commonwealth's state-chartered banking system. Its regulatory responsibilities include the supervision and examination of nearly 300 state-chartered financial institutions with total combined assets of over $185 billion. The Division also licenses and is the primary regulator for over 4,000 non-bank licensees including mortgage lenders and brokers, finance companies, money service businesses, and collection agencies. The Division is a member of the Conference of State Bank Supervisors (CSBS), which filed comments pertaining to this proposal on September 26, 2003. The Division supports the views expressed by CSBS in its comment letter and also wants to comment further on the impact to consumers in the Commonwealth.
The OCC's proposed rule would radically rewrite the established standard for federal preemption as interpreted by the courts and intended by Congress. This sweeping proposal would preempt virtually all state banking laws for national banks and their operating subsidiaries essentially undermining the integrity of the recognized dual banking system.
The proposal as drafted will bar states from the licensing, examination or other regulation of independent state-chartered corporations that are subsidiaries of national banks. This effectively shields non-banking companies such as finance companies, securities firms, mortgage lenders and brokers, and collection agencies from state licensing and oversight that ensure professional conduct and protect consumers. The Division receives and investigates many hundreds of consumer complaints each year. For the years 2002 and 2003 to date, the Division has received and processed a total of 1,846 written complaints from consumers in the Commonwealth and was instrumental in obtaining restitution of approximately $5.8 million for consumers during that same time period. A significant portion of these complaints relate to non-bank licensees under the Division's regulatory jurisdiction. Additionally, the Division conducts examinations to identify unfair and deceptive practices and exercises its enforcement authority when such abusive practices including fraud are identified. To remove the resources of state regulators from the oversight of non-bank subsidiaries, with no comparable plan of oversight offered by the OCC, would have an enormous negative impact on consumers in the Commonwealth. In fact, the Comptroller has acknowledged in public statements that the proposal would create gaps in areas where state laws would be preempted without any federal regulation and consumer protections to fill the vacuum.
The potential impact on the OCC's proposal on the dual banking system and on the existing protections available to consumers is enormous. The Division concurs with CSBS in requesting that the proposal should be withdrawn until an investigation of its potential effects is carefully reviewed.
Very truly yours,
Thomas J. Curry
Commissioner of Banks
cc: Senator Edward M. Kennedy
Senator John Kerry
Congressman Barney Frank
Congressman Michael Capuano
Congressman Stephen F. Lynch
State Senator Andrea F. Nuciforo, Jr.
State Representative John F. Quinn