To the Editor:

The analogy between Gramm-Leach-Bliley Act state regulatory authority and the effect of disparate state consumer protection laws under a Consumer Financial Protection Agency is specious, one might even say unfair and deceptive ["Preemption Fight Suffers From History," Oct. 19].

There are already hundreds of disparate state laws in existence affecting loan pricing, repayment terms, disclosures and billing requirements that have not applied to federally chartered institutions in the past. If CFPA's preemption repeal passes, they would suddenly all become applicable to national banks and federal thrifts, crippling their multistate business. This is not a question of future restraint by state regulators and legislators. It is a question of exhuming hundreds of moribund and often arcane rules that have been ignored for decades.

CFPA would truly balkanize the interstate delivery of financial products. This balkanization caused Congress to give state-chartered banks similar interstate "export" powers in 1980 and 1982, allowing banks to follow their home state's laws in interstate loan transactions. Oddly, congressman Frank proposes to take those powers away from federally chartered institutions but does not propose to repeal those powers for state banks. This leads one to question whether the proponents of CFPA have read the history of the disintermediation of the early 1980s, whether they realize they are tearing down a structure that Congress itself intentionally created to remedy a lending freeze.

Rick P. Hackett
Partner. Pierce Atwood LLP
Portland, Maine

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.