US financial institution regulator warns in opposition to ‘worrisome’ state legal guidelines focusing on banks

By Pete Schroeder

WASHINGTON (Reuters) – A high U.S. financial institution regulator warned on Wednesday the company might start pushing again in opposition to the “worrisome pattern” of states adopting legal guidelines meant to police nationwide financial institution actions on political grounds.

Michael Hsu, head of the Workplace of the Comptroller of the Forex (OCC), stated in a speech that such measures are pushing “better fragmentation” of the monetary system, and the OCC might start difficult these measures.

“More and more, banks are being requested by states to select a aspect in service of performative politics fairly than deliberative coverage. The OCC is a bulwark in opposition to this. Simply as the arrival of nationwide banking was in a position to assist unify a fragmented banking system within the late 1800s, it may possibly assist make sure that parochial overreach right this moment doesn’t splinter our banking system,” he stated, in response to ready remarks offered by the company.

Quite a few states have thought-about or handed laws geared toward policing financial institution insurance policies thought-about discriminatory on largely political grounds. A lot of these measures have superior in Republican-led states like Texas, which has enacted legal guidelines prohibiting banks from doing enterprise with the state if they’re deemed to discriminate in opposition to sure industries like fossil fuels or firearms.

Lately, Florida and Tennessee handed new legal guidelines that prohibited federally-chartered banks from denying providers to anybody on the premise of their political or spiritual beliefs, and permitting the state to analyze any discriminatory claims. Banks have lengthy maintained that they don’t discriminate in opposition to explicit industries or political views.

Hsu stated the OCC plans to “fortify and vigorously defend” federal preemption of state legal guidelines which are deemed to intervene with nationwide financial institution operations and regulation, with out naming particular states or legal guidelines. He stated that preemption authority is “central” to the nation’s banking system and has allowed it to thrive.

He added that security and soundness of nationwide banks, together with compliance with federal legal guidelines and rules, is “legally absolute and non-negotiable, and the OCC will act accordingly to defend that.”

(Reporting by Pete Schroeder; Enhancing by Nick Zieminski)