The Checkout

Pick Your Regulator, Any Regulator

Okay. So I know pre-emption isn't the most exciting topic. Or at least the number of comments drops precipitously whenever I start talking about attempts to overrule state consumer protection laws with weaker federal regulation. But I'm going to take another stab at it today because there's a Supreme Court case worth keeping an eye on.

(Remember, broccoli is good for you.)

The case is Watters v. Wachovia Bank. Ostensibly, it's about the mortgage-lending business, but depending on how the Supremes rule, it could have far reaching implications for business regulation, period.

States, after all, have regulations on everything from auto emissions to product safety.

My colleague Kirstin Downey recently broke down the details of the case like so:

For more than two decades, states have regulated the mortgage-lending practices of state-chartered subsidiaries of national banks. The parent national banks are regulated by a federal agency, the Office of the Comptroller of the Currency. In 2001, the OCC ruled that state regulation was improper, saying that under federal law those lenders should be overseen by the federal government.
In 2003, Charlotte-based Wachovia Bank decided that it wanted to be regulated solely by the OCC. It told the states where it runs mortgage lending companies that those firms would no longer register with state officials or abide by local rules. Other banks have also announced their intention to seek regulation by the OCC alone.

That's right. Pick your regulator, folks. Any regulator. Especially ones that don't have laws against predatory lending.

To take the banks' side for a second, state and local regulation of lending varies widely. Though well-meaning, the mishmosh of rules makes it harder to develop uniform business practices, which makes it more expensive to process mortgage loans, and in turn, more expensive for consumers.

Wachovia has the support of major banking industry trade groups and the U.S. Chamber of Commerce.

On the other side, you have the attorneys general of all 50 states, the District of Columbia, and Puerto Rico.

So far, Wachovia has prevailed in the lower courts. The fact that the Supremes decided to hear the appeal has many people wondering if they're planning on reversing those rulings.

Earlier this week, the AGs made their case. Chief Justice John G. Roberts Jr. seemed sympathetic, expressing concern about the banks' apparent effort to get around state regulations. Other justices, meanwhile, seemed more sympathetic to the notion that banks face excessive regulation.

Wireless carriers have made the same arguments about state laws that regulate the terms and conditions of wireless contracts. And food manufacturers sing a similar tune about state labeling requirements.

In each of these cases, two consumer interests are seemingly pitted against one another: consumer protection and cost.

Given how upset consumers get these days over things such as poor treatment and hidden fees, no matter what the cost of the product or service, I would hazard to guess that many consumers would value the former a little more. But I don't know.

Better yet, why don't you tell me. Which way do you think the Supremes should rule?

By Annys Shin |  December 1, 2006; 10:00 AM ET Consumer News
Previous: The Latest on Gift Cards | Next: Get a Human, Get an A. Get a Machine, Get an F

Comments

Please email us to report offensive comments.



The Supreme Court needs to rule in favor of standardization. If every state can regulate the banks this will just bring a world a problems, especially when you travel from one state to the next. If the rules are standardized across the board the same rules will apply to every bank, including on-line only banks. One standard, one set of rules for playing.

Posted by: Mike | December 1, 2006 10:22 AM

They always say that inconsistent state rules drive up costs, but I'm not sure that matters much to the consumer, because when these industries find new efficiencies, they don't pass the benefit onto consumers. Financial services fees are higher than before passage of Gramm-Leach-Bliley (the last thing they wanted to eliminate inefficiency), and these fees remain high, despite the fact that banks are more profitable than ever.

If we had standardization in the world of privacy, we would never have had security breach notification laws, video voyeurism laws, and credit reporting laws. These are all products of state legislators. You see, there is enough money to buy all of congress, but the FIs can't buy all the state legislators in the country.

Posted by: Chris Hoofnagle | December 1, 2006 10:51 AM


For uncensored news please bookmark:

otherside123.blogspot.com
www.wsws.org
www.onlinejournal.com
www.takingaim.info

http://www.prisonplanet.com/articles/december2006/011206Eminem.htm

New Eminem Track References Wire Tapping, Political Assassinations, and 9/11

9/11 Blogger
Friday, December 1, 2006

Eminem - Public Enemy #1 - 2.4mb MP3

A track entitled 'Public Enemy #1' on Eminem's upcoming mixtape The Re-up caught my ear this afternoon. The track features a simple almost militant style beat somewhat similar in tone to his last politically motivated track Mosh. While Mosh (which New York magazine called "the most important piece of mainstream dissent since the 60s") alluded to 9/11 via caricatures of Bush reading 'My Pet Goat' and newspaper clippings on 9/11 (including the infamous 'Bush Knew' New York Post article), this new track goes into much darker subjects.

Frames referencing 9/11 in Eminem's 'Mosh' music video

The track makes references to his phones being tapped, how an FBI van might pull up and he might just disappear, or maybe get taken out by a sniper one day. He goes on to say how he is focused on writing as many tracks as he can just incase something happens, and takes it one step further saying that he has already accepted he would be killed and then painted negatively for his actions. This is the point where the track briefly references 9/11 (after mentioning tremendous tremors) before going on to talk about 2 Pac predicting his death, and JFK's assasination - an allusion to them both being killed for being 'public enemy #1' in the past.

(more after the break..)

Here is a rough set of lyrics:

I sense someone's tapping into my phones why do...
I got this feeling in my bones I might die soon...
The F.B.I might be tryin to pull my file soon...
I might be walking blind fold into a typhoon...
I might be seeing rockets light up the night sky...
Right outside of the window of my living room...
And if they do you can say goodnight and bye bye to my tunes...
If I don't try to record as much before I do...
The plan is to have as many in the can as I can...
As I stand before you in this booth a walking deadman...
Blank stare, dead pan look as my face as I gaze into space...
As I wait to be scooped up in that van...
Mysteriously disappear into thin air...
And they gon' say a sniper just appeared out of no where...
And I'll go down in the history as the blood sucking leech...
Who hid behind the freedom of speech...
Tried to take the fifth amendment use it, twist it and bend it...
(???)
The business way to end this...
I can feel the tremors tremendous...
In remembrance of September 11...
Flash back to September 7th...
When Tupac was murdered in Vegas...
He said that he predicted his own death...
Let us never forget it or should we ever live to regret it...
Like the day John F Kennedy was assassinated in broad day...
By a craze lunatic with a gun...
Who just happened to work on the same block in a library book depository...
Where the President would go for a little Friday stroll...
Shots fired from the grassy knoll...
But they don't know or do they?...
Who's they? Touché...
We're all vulnerable and it's spooky...
This is about as kooky as I've ever felt now...
Count down to Nuclear Meltdown...
7, 6, 5, 4, 3, 2, 1...
You can run you can do what you want to...
But you know you ain't gonna do nuttin...
When its time its your time...
You are the prime target...
You have become Public Enemy Number 1...

While Eminem is not known for being a 9/11 skeptic, and he has not overtly stated that he is one, there is plenty to suggest that he is at least a questioner of the official story. Not only does this track and the Mosh track reference 9/11, but his former DJ - Green Lantern - had the track 'Bin Laden' by Immortal Technique (featuring Mos Def) alongside tracks by Eminem and other members of Shady Records. There are other past references to 9/11 as well such as a mockery of Bin Laden speaking to a camera, and having the backdrop fall down and reveal Dick Cheney and other members of the Bush administration. Most of these references have been scattered about so far, but perhaps that will change soon.

This is not Eminem's new album, it is a mix tape for his label Shady Records, but it may give an idea as to what direction Eminem will go in his next solo album - or at least we can hope. One thing is for certain, if he did go down this direction further in the future he most assuredly would become 'public enemy #1'.

Check out the song, post some thoughts, and check out our large 9/11 related hip-hop section on 911podcasts.com.

Posted by: che | December 1, 2006 11:18 AM

State regulators are more in tune with the requirements for their local constituents. Federal representatives (usually) have more weighty issues on their plate. If the banks don't like the local regulations then they don't have to do business there. As I recall, congress is supposed to regulate interstate commerce. If the bank were doing business in the state with members out of state, in my mind then the federal regulations would apply.

Posted by: Daytonian | December 1, 2006 11:44 AM

Daytonian

Name one bank in the US that does not have as least some ties to interstate commerce. They wouldn't be in business if they didn't have some interests outside of their localities.
Affiliations, business partnerships, ventures.

We have enough federal regulation in this country, but when it comes to people's money, the feds should be the ones to regulate it. The first time some (apparently) local bank charges you $8.00 to use an ATM, your going to cry.

Posted by: Mike C | December 1, 2006 11:59 AM

From the founding father approach you can argue for free trade, and less government involvement... However, the pendulum has swung far enough that the people need the federal government to step in to protect them. This applies to ALL sorts of consumer advocacy, not just in banking regulation. As I'm always saying, we the consumer always get the burden if something is done wrong to us by a company. We fight forever to get someone to hear our problem, paying for a company's mistake in so many ways. Where is the regulation on how these companies treat their customers. Yes, free trade would dictate the customer can take their business elsewhere, but when everyone else is just as corrupt, what do you do? This is why there is a government in the first place- to protect people from exploitation. However, government seems more interested in lining industry's pockets than regulating them.

Posted by: Chris | December 1, 2006 12:06 PM

This is yet another case of state's rights vs. federal regulations. In decisions like these, I always side with the regulator closer to the consumer - the state. Who would agree that the federal government is in any way reactive to consumers, the "little guys"? But you can bet that state legislators will be listening, especially when they come up for re-election. Banking regulations, food labeling, etc. should be formulated at the state level. Not every state has the same needs, challenges nor population for a blanket federal policy - which would prove to mostly enable the conglomerates to reap higher profits. The "poor, overburdened" corporations will push whatever costs they can onto the consumer anyway.

Posted by: arlingtonva | December 1, 2006 1:22 PM

I'm unsure what the current federal law is regarding this but the way its reported above the federal agency ruling to extend its own oversight seems overreaching and almost without due consideration. In my personal opinion, the federal government should play a major role in establishing standardized rules anywhere interstate commerce could be impacted but I also think the executive branch shouldn't be allowed to extend its own dominance at will - were that to be the case, with a simple shift in policy the OCC could just as quickly remove itself from oversight again. It seems reasonable to me to expect a shift in policy of this magnitude to require the authority and specificity of law and that would involve the legislature. Absent a federal law specifically establishing the executive and/or the OCC as the sole regulator of these transactions, I think the authority for such rightfully falls to the individual states to establish.

Posted by: T.R. | December 1, 2006 1:55 PM

It is easy to say (and believe) that the state regulation should be preferred because it is 'closer to the people'. I think that is too simplistic. What happens when the county government, or the city council, want to make rules that override the feds and the state? Should your homeowner's association have a say, too?

Posted by: Al | December 1, 2006 2:15 PM

What the banks aren't saying is that they also "shop" states for the most lenient or favorable laws for them.
Take Delaware.
1. Lots of banks declare them as the State of origin for their credit cards, thus bypassing more restrictive rules in other states on the maximum interest and other fees that can be charged.
2. Lots of companies incorporate in Delaware because of the favorable laws and tax rates for corporations.
If the Fed i s going to take over the regulation, are they going to do it with enough staffing and fore-thought to do it right?

See also no sales tax on Internet commerce - is that really needed to allow those companies to thrive, or just a tax dodge and unfair advantage over the brick and mortar stores? Is there a way to set a Federal standard or minimum, and allow the States some flexibility to make transactions more consumer friendly?
See also Vehicle emmission rules. Somehow car manufactorers are dealing with the California rules, and with the rest of the world.

Posted by: the rest of the story | December 1, 2006 3:14 PM

Federal regulation is a euphemism for no regulation.

Posted by: Dave | December 1, 2006 4:19 PM

Thanks for bringing up this important topic! The same conservatives who talk about how important states rights are when states provide few rights then support federal regulation when states provide lots of rights. I don't think it matters too much who regulates, as long as they actually regulate. But the banks want the OCC to regulate because they won't do much.

Posted by: Rob | December 4, 2006 2:47 PM

Justice Stevens asked a great question in the oral argument for this case when he queried the lawyer representing the OCC: "How many additional personnel did the OCC employ when it took over this area [of regulation] for 48 states?"

The OCC's lawyer had no answer, but the implication was that the agency saw no growth even after taking on regulation of state-chartered bank subsidiaries all over the U.S. As Dave said above, federal regulation often just means no regulation at all.

Posted by: Iced Tea | December 5, 2006 10:09 AM

One has only to review OCC performance or non-performance in the consumer arena to understand the Bank$ preference for Federal oversight. I'll take the NY State Attorney Generals office anytime over diluted Federal regulation bought and paid for by those being regulated. In no case that I can recall has preemptive Federal regulation done more for the consumer than state oversight. It is also easier for a consumer to initiate action through a state AG than at the Federal level.

Posted by: Zephod00 | December 8, 2006 1:09 PM

The comments to this entry are closed.

 
 

© 2010 The Washington Post Company