Trust Updates Archive

OCC Preemption--Spitzer Threatens Legal Action

(Jan. 9, 2004, Chicago, IL)--New York Attorney General Eliot Spitzer says
he will take legal action against New York banks deemed to be in
violation of state laws regardless of the OCC's position on preemption.

The Office of the Comptroller of the Currency this week issued two final
rules on its right to preempt state laws and its exclusive right to
examine national banks. The primary focus of the preemption ruling is
the lending authority of national banks. However, the ruling addresses
"other national banking operations"--such as fiduciary activities--in
its revision to 12 C.F.R. 7.4009. Specific references to fiduciary
activity are limited to footnotes.

Critics say the OCC is ignoring the objections of Congress and state
regulators. Leaders of the Conference of State Banking Supervisors
(CSBS) said they are "stunned that the OCC would adopt the far-reaching
preemption proposal in the face of widespread opposition." NYAG Spitzer,
who has aggressively prosecuted mutual fund violations, voiced equally
strong criticism. "These regulations would result in an unprecedented
expansion of the OCC's power . . . at the expense of consumers. . . . I
will not allow these regulations to deter my office from taking legal
action against deceptive or illegal conduct engaged in by national banks
in New York."

OCC Comptroller John Hawke argues that national banks need "uniform,
consistent, and reliable" standards to avoid the high cost of ensuring
compliance in each state. The American Bankers Association agrees with
the OCC, calling the new rules a "win for banks and their customers."
State regulators dispute Hawke's statement, noting that the CSBS has
been working on developing uniform models for states to adopt.

For more coverage, see the upcoming January issue of TRN.

-- Copyright 2004 A.M. Publishing, Inc., Trust Regulatory News

No statement in this issue is offered as or should
be construed as legal opinion or advice.

For more information see the upcoming
issue of Trust Regulatory News
or call Bernard Garbo at 800-404-2116
or e-mail him at

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