SAN ANTONIO - The nation's state banking supervisors have unanimously approved a new plan for supervising banks that operate interstate.
The plan, approved by 45 state regulators at last week's annual meeting of the Conference of State Bank Supervisors, is meant to create a "seamless" system of bank regulation. The system is designed to compete with the federal regulatory structure by allaying bankers' fears that if they operate across borders under a state charter they will be examined by multiple regulators.
Under the plan, details of which have not been released, the regulation and examination of a state-chartered bank operating interstate would be coordinated by its home-state regulator. That agency would share information with regulators in other states where the bank operates, called "host" states. The home state would invite the host state regulators to participate in examinations.
The plan is meant to protect the interests of the host states while guaranteeing the banks a single point of contact for regulatory supervision.
"Multistate banking organizations will gain the advantages of a single regulator, but they will also continue to have the advantage of responsive, responsible, and local supervision," said James B. Watt, president and chief executive of the group, in a speech to bankers and state regulators.
Meanwhile, the trade group is threatening to sue the Comptroller of the Currency for approving national bank activities that it says violate state banking laws.
In particular, state regulators are concerned about the OCC's use of the so-called 30-mile rule to allow national banks to branch across state lines despite state laws barring interstate branching.
Mr. Watt said the OCC's actions "preempt state law and distort the balance of the dual banking system." His group and the states will try to work with the OCC, he said, but "if that is not possible, we will see them in court."
OCC officials defend their actions as consistent with existing law. "We don't see any place where we're overstepping our bounds," said spokesman Ed Alwood.
The seamless system is a response to assertions that banks will not choose a state charter because the regulatory framework is becoming cumbersome and confusing in the emerging world of interstate branching.
The trade group hopes to "maintain the state charter as the charter of choice," Mr. Watt said, noting that 71% of the nation's banks are currently state chartered.
State regulators say many banks have opted for state charters because state regulators are more accessible and understand the local business climate and community needs.
"Our major challenge is to design a supervisory structure that is as efficient as the national charter while capitalizing on the unique advantages of state regulation," Mr. Watt said.
States will also harmonize their laws and regulations and clearly explain to institutions what provisions and standards apply, Mr. Watt said.
"State regulation will never be a game of regulatory 'gotcha!'" Mr. Watt said. "We want to be sure everyone understands the rules in advance. And we want to print these in English, not bureaucratese."
The home state will still have the primary responsibility for safety and soundness under the plan, which also addresses the supervisory roles of the home and host states in compliance issues and other laws, applications, reports, antitrust matters, and fees.
Officials of the state regulators group expect to unveil details of the plan within two weeks.
