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OCC Objects to Ban on Preemptions, Criticizes Administration Plan to Back States

After a decade of declaring state insurance laws preempted based only on its say-so, the Office of the Comptroller of the Currency (OCC) is objecting...
September 29, 2009

After a decade of declaring state insurance laws preempted based only on its say-so, the Office of the Comptroller of the Currency (OCC) is objecting strenuously to the fact that it may no longer be allowed to do so.

Comptroller of the Currency John C. Dugan focused his criticism on parts of the Obama administration's proposal for a new consumer protection agency that would effectively repeal the National Bank Act's preemption of state laws. As initially proposed, the Consumer Financial Protection Agency (CFPA) would allow states to enforce their own consumer protection laws even against federal chartered institutions. However, this and other provisions are being vigorously opposed by banks.

Dugan warned against stripping consumer protection regulatory authority from existing bank regulators, saying "I believe the current system has worked well." He did not address the May 20 memo by President Obama to the heads of federal agencies that placed broad restrictions on federal actions to preempt state law. That directive marked a significant and far-reaching reversal of what had been going on for a decade, with federal agencies preempting state insurance laws. The OCC was the agency that most aggressively engaged in such preemption actions.

What It Means to Agents:  While PIA has joined with an industry coalition in specifically opposing the inclusion of insurance in the mandate for a Consumer Financial Protection Agency, PIA opposes the preemption of state insurance laws.