Barney Frank: “this is a bill that was broadly supported in our committee that we believe will enhance the ability of the Federal bank…”

“this is a bill that was broadly supported in our committee that we believe will enhance the ability of the Federal bank authorities to provide consumer protection. It's a little bit of a complicated story. Congress passed an amendment to the Federal Trade Act that gave the Federal Reserve System the right to promulgate rules which defined what were unfair or deceptive practices engaged in by banks. The Federal Reserve has, for many years, declined to exercise that authority. The issue was first brought to my attention when I was ranking member of the committee by a very distinguished public official who, sadly, died earlier this year, Ned Gramlich, who was the Federal Reserve Board Governor in charge of, among other things, consumer protection. And here's how it played out. The Comptroller of the Currency and the Director of the Office of Thrift Supervision a few years ago promulgated very strict rules preempting State rules and State laws and regulations regarding the activities of national banks. As a result of that ruling, which was challenged but upheld by the courts, States have virtually no authority over the banking practices of national banks. Only the national bank regulators may regulate. The problem is that there were, in many, many States, most of the States from which we here come, consumer protection laws which were invalidated by that.”