U.S. Agency Clarifies States’ Role in Banking

National banks should take action when state regulators pass along consumer complaints, federal regulators said Monday, clarifying their previous assertion that the federal government has dominance over state banking rules.

The banks and their subsidiaries above all must “do the right thing for their customers,” said Julie L. Williams, general counsel of the Office of the Comptroller of the Currency, the chief regulator of nationally chartered banks.

That means addressing customers’ complaints regardless of the source, she said.

In a January policy statement, the OCC said that only it -- and not states -- could regulate national banks on core practices such as lending and deposit taking.

It reasserted the claim Monday but said it was appropriate for state officials to forward complaints, saying that would not be considered meddling improperly in the affairs of banks with federal charters.

The California retail market is dominated by national banks, including those operated by Bank of America Corp., Wells Fargo & Co. and Citigroup Inc.

Consumer groups and state officials contend that consumers are better protected with state financial regulators on the job as well as federal officials.

One outspoken critic, New York Atty. Gen. Elliot Spitzer, said last week that a bank had rejected his office’s efforts to settle a consumer’s mortgage lending complaint, citing federal jurisdiction.

Spitzer said the OCC’s statement Monday was “a step in the right direction,” but called its assertion of sole regulatory authority over national banks legally flawed.

Tom Dresslar, a spokesman for California Atty. Gen. Bill Lockyer, accused the OCC of arrogance and said it was seeking “to relegate the states largely to the role of complaint intake units.”