Wednesday, April 9, 2008

WASHINGTON & BANKS USING FISCAL CRISIS TO LIMIT STATE REGULATORY ROLE

STATELINE Some state officials see the federal government’s plan to overhaul the country’s financial regulatory systems as an intrusion on their powers to enforce state laws, and state regulators warn that it could carry grave consequences for consumers. Insurance rates could climb, efforts to fix the mortgage industry mess could be stalled and a grassroots banking system that paved the way for innovations such as interest-paying checking accounts would be threatened, they predict. "There’s no room for state law," said John Ryan, the executive vice president of the Conference of State Bank Supervisors, which represents state bank regulators. "This has been Wall Street’s and a handful of big banks’ dream to get away from the states.". . .

One plan would establish a federal mortgage commission that would set minimum licensing standards for brokers, although states are already working with Congress to establish such standards. Another proposal would increase federal oversight of state-chartered banks, which make up about 70 percent of all banks. And another recommendation is to create an optional federal insurance charter, which could infringe on state powers to set rates, inspect policies and require coverage for those whom insurance companies would otherwise exclude. . .

Another Treasury proposal would bring all banks under federal control. For now, the department is calling for only a study on this, but opponents charge that in the long term, such a move would lead to a consolidated industry, reduce banking choices for consumers and destroy community banks.

It could also stifle banking innovations, since state-chartered banks have been the pioneers of financial inventions such as checking accounts, interest-bearing checking accounts and home-equity loans - all services later copied by federal banks.

1 Comments:

At April 10, 2008 12:06 AM, Anonymous Anonymous said...

Amusing argument, because for the most part, many states have been derelict with regards to attempting any kind of regulatory enforcement. Missouri, ranking number six in the nation with mortgage fraud, is a classic example.
Why so?
Let us consider.
Matt Blunt is the darling of Libertarians and the CATO Institute ranks him tops among governors in the nation. Under his regime regulation in all areas of concern is nonexistent.
Some federal intervention would be a good thing.

 

Post a Comment

<< Home