Taking power from federal regulators and giving it to the states is all the rage among Republicans these days.
But lawyers for big banks - a group not often associated with the Democratic Party - aren't opposed to giving more power to Washington bureaucrats, especially the bureaucrats at the Office of the Comptroller of the Currency.
That at least was what the lawyers seemed to be saying at the Practising Law Institute's "New Business of Banking" meeting last week in New York.
Panelists at the $995-a-head conference said state regulators are making nothing but trouble as banks try to cross state lines, sell insurance, and buy competitors. They weren't too complimentary of Congress, either. Even the Federal Reserve Board took some knocks for being unwilling to change with the times.
The lawyers had only kind words, however, for the Comptroller's office.
This shouldn't be too surprising. The agency is headed, after all, by longtime banking lawyer Eugene A. Ludwig. And his chief counsel, Julie L. Williams, happened to be presiding over the conference, together with Federal Reserve Bank of New York First Vice President Ernest T. Patrikis and lawyer Melanie L. Fein of Arnold & Porter in Washington.
But it was more than that. For lawyers trying to clear the way for banks to enter new realms, it's a lot easier to deal with a federal regulator aware of all the changes going on in the financial world than 50 state regulators who may not be so aware, or 535 members of Congress who for the most part don't care.
This is the case even when the Comptroller's office is not involved, as is evidenced by the situation in bank antitrust law, where the Justice Department and Federal Reserve Board prevail.
"I worry today much more about state attorneys general than about what goes on in Washington," said mergers-and-acquisitions guru H. Rodgin Cohen of Sullivan & Cromwell in New York. The states "have no standards," he said. "They just make it up as they go along."
Then there's interstate branching. The Comptroller's office has been doing to its best to help national banks take advantage of the Riegle-Neal Interstate Banking and Branching Efficiency Act - and even jump the gun on it using the once-obscure "30-mile rule." The lawyers have noticed.
"Post Riegle-Neal, some of the fun, if not all the fun, has gone out of the state charter," said Sara A. Kelsey, senior vice president and associate general counsel at Chemical Banking Corp.
Ms. Kelsey was especially taken with the quirky 30-mile rule, which lets national banks move their headquarters 30 miles, even if that means crossing into a state such as Texas that is opposed to interstate branching. She asked Ms. Williams if banks in neighboring states have been moving their headquarters near the Texas border in hopes of taking advantage of the rule.
The answer was yes, and Ms. Kelsey exclaimed: "That's what I love about being a banking lawyer. It's that you as a lawyer advise your client to do all these crazy things."
On a less whimsical note, Bank of America assistant general counsel John H. Huffstettler acknowledged that the Comptroller's office charges higher fees than state banking regulators. Nonetheless, he said, "We think uniformity of regulation is worth the extra examination and supervision costs."
Ms. Kelsey's torrent of praise for the Comptroller's office and the national bank charter was a surprise to some. Chemical, after all, has said it's planning to keep the New York state charter of its flagship bank after it merges with Chase Manhattan, a national bank.
"After hearing you, my only question is, why did you stay a state bank?" Mr. Cohen asked her.
"They didn't ask me," Ms. Kelsey responded.
