Scandalous Measures States might lose controls on corporate crooks
The Bush administration is quietly seeking to roll back oversight of the banking business and the scandal-riddled securities market through two pending proposals-a planned rule change for the banking industry and a house bill-that diminish the ability of states to police banks and stock brokers.
The plans are worrisome because the federal government has been largely MIA when it comes to cracking down on corporate crooks in the post-Enron era. While the feds have grabbed headlines with a few high-profile indictments, state law enforcers-most notably New York Attorney General Eliot Spitzer-are taking a far more active role in purging Wall Street of con artists and thieves.
Formulated by the Office of the Comptroller of the Currency, the shakeup would nullify state banking laws stricter than federal regulations. Headed by John D. Hawke, Jr., a K-Street player who's worked for Democrats and Republicans, the OCC is a little-known regulatory backwater but it wields a vast amount of power over the nation's financial institutions.
According to a notice in the Federal Register the new rules could wipe out state civil and criminal statutes covering lending, deposit-taking, credit cards, checking accounts, escrow accounts and "all [other] powers
authorized" by federal law.
In early October, officials from numerous states issued a stream of scathing critiques of the proposed rule changes.
"This sweeping proposal would preempt virtually all state banking laws for national banks and their operating subsidiaries, essentially undermining the integrity of the recognized dual banking system," wrote Thomas Curry, Massachusetts Commissioner of Banks, in a letter to the OCC.
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Quis custodiet istos custodes?
"Who will watch the watchers?" ~ "Who is to guard [us from] the guards themselves?"
-- Juvenal's Satires, VI. 347, circa 110 AD