WASHINGTON (CN) – States should be allowed to regulate banks in addition to any rules established by the federal government, the House Financial Services Committee decided Wednesday. The move would allow states like New York and California to act more quickly and more forcefully in the control of abuses by the financial sector.
But the measure, which was approved by a voice vote, would also allow the government to exempt national banks from state laws if considers the laws too restrictive.
The amendment is an answer to calls by Democrats for tough new regulatory measures after the recent economic crisis.
But Republicans are denouncing the measure. Ranking Member Spencer Bachus from Alabama said the amendment “falls far short in providing the uniform standards needed for the smooth functioning of our national credit markets.”
Even as the government outlines the rights of states to regulate banks, Congress is working towards enhancing federal regulations.
The measure is part of a more expansive bill that the House committee is expected to approve Thursday. The act would create a Consumer Financial Protection Agency to monitor credit cards, mortgages, and other financial products.
The amendment’s passage comes in spite of a vigorous lobbying campaign on behalf of the financial industry, which has contributed $53 million to lawmakers this year, $6 million of which has gone to members of the House financial committee, according to the Center for Responsive Politics, a watchdog group.
“Allowing 50 states and thousands of local governments to enact a patchwork of laws and ordinances that supersede federal law will dramatically increase costs for consumers, reduce consumer choice, and place U.S. companies at a competitive disadvantage,” Ranking Member Bachus said in a released statement.
Kansas Democrat Dennis Moore and North Carolina Democrat Melvin Watt introduced the amendment, but did not issue official statements on the measure’s passage.