FOR IMMEDIATE RELEASE
September 4, 2001

Contact: Stacy Mitchell
612-379-3815 or smitchell@ilsr.org

Rogue Federal Agencies Gut State Banking Laws

New issue of The New Rules examines the sordid history of two obscure federal agencies and their efforts to dismantle state laws.

MINNEAPOLIS - "The only reason you're not afraid of the Office of the Comptroller of Currency and the Office of Thrift Supervision is because you don't know what they do," says Stacy Mitchell in a penetrating article in the new issue of The New Rules.

Few Americans have heard of the Office of the Comptroller of Currency (OCC), the chief regulator of national banks, or its sister agency, the Office of Thrift Supervision (OTS), which regulates S&Ls. Yet these two unelected agencies---both are part of the Treasury Department and are led by presidential appointees---have overturned dozens of state laws that protect consumers, ensure fair lending, and maintain competition.

Working hand-in-hand with the nation's biggest banks, the OCC preempted a "lifeline" bank account law in New Jersey, tipped the scales in favor of Citibank when it was sued by credit card customers for violating a California law, and went to court to help Wells Fargo and Bank of America overturn an ATM surcharge ban enacted by San Francisco voters.

"National banks now routinely request cover from the OCC when they encounter a state law they don't like," says Mitchell. "The agency invariably obliges and has given national banks a green light to ignore all kinds of consumer protections."

In 1994, Congress reprimanded the OCC for its "inappropriately aggressive" attacks on state law. The agency, however, ignored federal lawmakers and has actually accelerated its preemption actions in the years since.

The piece-by-piece dismantling of state authority by the OCC and OTS has left state officials virtually powerless to protect their constituents from new consumer abuses. Predatory lending, payday loans, excessive bank fees, and other problems are now spreading like viruses through a weakened immune system. Payday loans topped $10 billion last year. Predatory home loans, rare a decade ago, now snare millions of families annually and have led to a sharp rise in foreclosures.

In the Fall 2001 issue of THE NEW RULES, Institute for Local Self-Reliance researcher Stacy Mitchell examines these two agencies' attacks on state banking law and the far-reaching implications for consumers and local decision-making. REVIEW COPIES are available to journalists by contacting info@ilsr.org.

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The New Rules is a critically acclaimed periodic magazine published by the Institute for Local Self-Reliance (ILSR), a national nonprofit organization providing research, analysis, and innovative policy solutions for building healthy communities and strong local economies. For more information about ILSR and The New Rules, visit http://www.newrules.org.