Banks Petition OCC to Abandon State-Level Regulation

U.S. banks are reportedly lobbying for national standards that would limit the ability of states to make their own rules for the industry.

Advocates of this effort say the changes would prevent states from disrupting banks’ operations and would make it easier for financial institutions to operate, Reuters reported Friday (Aug. 22).

The Bank Policy Institute told Reuters, per the report: “We strongly support national preemption and believe federal fair access legislation or regulation would be a prudent move to address account closures in a consistent way across all states.”

Some state officials and others have argued in the past that having banking regulators at both the state and federal levels is necessary to tailor rules to meet the needs of local communities, per the report.

Banks were encouraged to launch this drive for national standards by some recent successes on related issues, including regulators making changes favored by the industry to stress tests and capital requires and the Supreme Court ruling in 2024 that in cases involving national banks, federal law takes precedence over state law, according to the report.

It was reported in May that federal banking regulators were preparing to loosen banking restrictions imposed following the 2008 financial crisis.

The Politico report quoted Ed Mills, a Washington policy analyst at Raymond James, as saying: “The 2024 election ushered in the largest turnover among federal financial officials in the history of our country, and that’s starting to bear fruit,” adding that big banks were “back in the driver’s seat.”

In April, it was reported that the Treasury Department was taking the lead in the Trump administration’s efforts to streamline oversight and ease regulation in the banking sector and that Treasury Secretary Scott Bessent had been holding private meetings with bank agencies over the previous month.

In March, Bessent reportedly said that his department would work to see that financial regulators focus on material financial risks; that he agreed with the banking industry that federal regulators’ bank supervision is opaque, subjective and needlessly restrictive; and that he would not consolidate the federal banking agencies.