White House fights back against Carper amendment to Wall Street reform bill

The White House said Thursday it would fight efforts under the Wall Street bill to limit states from pursuing tougher consumer regulations than the federal government.

Diana Farrell, deputy director of the National Economic Council, said the administration opposes amendments – including one backed by Sen. Tom Carper (D-Del.) – that would restrict state attorneys general.

“We intend to fight those and oppose those,” Farrell said on a conference call with the Iowa and Connecticut attorneys general.

ADVERTISEMENT
“We just don’t think those are welcome additions to the bill,” Farrell said, referring to legislation shepherded by Senate Banking Committee Chairman Chris Dodd (D-Conn.). “We have a very strong hope that the senators will make the right choice.”

Carper is the main sponsor of an amendment that is backed by 10 other centrist Democrats and Republicans. The question of how much power the federal government should have to preempt state officials is at the heart of efforts to set up a new consumer financial protection regulator.

The administration, most Democrats and consumer advocates have pushed for more than a year to give greater power to the states to pursue tougher standards than the new federal consumer regulator. They argue that in recent years, particularly since 2004, the federal government has too often overridden state law.

Republicans have resisted those efforts and have favored retaining current law on preemption.

The financial industry argues in favor of keeping current law and says greater powers for state attorneys general would hurt consumers by forcing banks to comply with myriad state rules.

“We’re not asking for any reduction in power granted to state attorneys general,” said Richard Hunt, president of the Consumer Bankers Association.

Hunt said the White House’s push “tells me that the administration has so little confidence in their new consumer agency."

“They are requesting additional enforcement authority from the states,” he said.

The Carper amendment would seek to limit state regulators from enforcing consumer regulations on national banks and their subsidiaries. Carper’s amendment would also remove a requirement in the pending Senate legislation that would require the Office of the Comptroller of the Currency to find in federal law a “substantive standard” on the type of regulation before the office moves to preempt.

"Carper's amendment is designed like Darth Vader's Deathstar, to destroy consumer protection," said Ed Mierzwinski, of U.S. Public Interest Research Group.

Carper is joined by a bipartisan group of senators, including Sens. Lamar Alexander (R-Tenn.), Evan Bayh (D-Ind.), Saxby Chambliss (R-Ga.), Bob Corker (R-Tenn.), John Ensign (R-Nev.), Michael Enzi (R-Wyo.), Johnny Isakson (R-Ga.), Tim Johnson (D-S.D.), John Thune (R-S.D.), George Voinovich (R-Ohio) and Mark Warner (D-Va.).