NCPA - National Center for Policy Analysis

What Role for the Comptroller of the Currency?

January 28, 2002

While many federal regulatory agencies take the consumers' side in disputes with businesses, the Office of the Comptroller of the Currency within the Treasury Department often can be found on the side of the banks it regulates. For example, it has defended the right of the federally chartered banks it oversees to set their own fees for the use of other banks' automated-teller-machines.

  • In addition, the OCC has recently supported banks in their efforts to kill a ban in Texas on certain check-cashing fees.
  • In Pennsylvania and Rhode Island, it has backed FleetBoston Financial Corp. against consumer allegations of improper increases in credit-card rates.
  • And in Michigan it has supported a push by banks making auto loans to curb a state law aimed at unscrupulous car dealers.

Banks can choose either a federal or state regulator. Since the OCC and state banking departments subsist entirely on fees paid by the institutions they regulate, they compete with one another in signing up banks. Consolidation has dropped the number of OCC-regulated banks 45 percent since 1990 to about 2,230. A few big banks provide the bulk of the OCC's $400 million annual budget -- including the salaries of its 2,900 employees.

While state banking authorities typically offer lower examination fees, the OCC promises federally chartered banks predictable, uniform rules and the likelihood it will protect banks against aggressive state regulations.

Agency officials contend that state efforts to stick up for customers often threaten to undermine the right of national banks under federal law to operate and charge fees as they see fit.

If a state law or action cramps banks' freedom to operate, they say, it must go.

Source: Jess Bravin and Paul Beckett, "Federal Regulator Often Helps Banks Fighting Consumer," Wall Street Journal, January 28, 2002.


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