From rural towns to our largest cities, more than 3,600 state-chartered banks across the nation are serving their communities, lending to small businesses and providing essential financial services to consumers. As state financial supervisors from North Dakota and Washington, we see every day why the dual-banking system — made up of both state-chartered and national banks — makes the United States economy the most vibrant in the world.
In the dual-banking system, both the states and the federal government have important roles to play in promoting the safety and soundness of financial institutions and ensuring consumer protection. Since our founding, the United States has rejected a centralized federal banking system. The dual-banking system allows each state to consider how best to support their local economies, protect their consumers and encourage diverse and innovative business models within their borders.
The bar for federal intrusion on the states' traditional chartering and supervisory authority is rightfully high. State banking laws that apply equally to state and national banks — particularly state consumer protection laws — should only be preempted by congressional action with clear justification and with defined limits on federal regulatory authority. Federal agencies, particularly the
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Some commenters are trying to use the Cantero-driven news cycle to relitigate the merits of the dual-banking system, arguing for more federalization and uniformity. Embedded in this argument is a presumption that regulation by federal agencies in Washington, D.C., is better for everyone, including consumers and financial institutions. That federal supervision is preferable to oversight by the states. That federal oversight is somehow resistant to political considerations.
We reject these notions.
The Consumer Financial Protection Bureau claims trade groups have no jurisdiction to file a lawsuit in Texas to stop the bureau's $8 credit card late fee rule, saying the plaintiffs engaged in "forum-shopping" to seek the most favorable outcome.
The federal government's record concerning the regulation and supervision of the financial system is far from perfect. Even a cursory glance at recent history shows that federal supervisors are not immune from costly mistakes with real-world consequences. Federal financial supervision and regulation are also affected by the same political polarization and pendulum swings impacting broader national policy debates. Greater federal standardization and uniformity in the banking system would create a "one-size-fits-all" approach and unduly favor national banks with no clear justification. In this centralized, homogenous system, federal mistakes would be amplified across all 50 states, exacerbating financial stability risks and stifling innovation.
The diversity and differences among the states are a benefit to consumers and a valuable component of the dual-banking system. State supervisors understand and appreciate local economies and local credit needs in a way that a federally dominated regulatory structure never will. Where some see lack of uniformity and inconvenience, we see opportunities for innovation and financial resilience. Moreover, state regulators are working together to improve prudential standards and consumer protections for financial services that cross state borders, coordinating on multistate supervision and enforcement actions, as well as proposing model laws for mortgage servicing, money transmission and data security.
State regulators are committed to a robust and substantive state-federal partnership. For every state-chartered bank, we share supervisory responsibility with our federal counterparts. We will continue to fight for a balanced system that respects the authority of the states. After all, the dual-banking system has produced a diverse and resilient United States economy that continues to provide consumers with abundant financial choices.
