Oxley To Treasury: Rein In OCC!

However, Oxley says, in its determination, the OCC seeks to replace the GLB language with a standard that says a state law should be preempted if it "stands as an obstacle" to accomplishing the purposes of Congress.

The purpose of Congress, he says, is to use the "prevents or significantly interferes" standard, not the "stands as an obstacle" standard.

Moreover, Oxley says, Congress intended financial regulators to work out disagreements over state laws, not act unilaterally.

The OCC should have tried to work out any disagreements with the Massachusetts insurance regulator before issuing a determination, he says.

Even if the OCC could not reach an agreement, Oxley says GLB has a clear procedure for working out differences — an expedited dispute resolution system that does not give unequal deference to either side.

"Accordingly, to the extent the OCC has any legal authority to argue against a state law or regulation, it should seek to overturn the offensive state provision in court, not to urge noncompliance by banks through unilateral opinion letters," Oxley says.

Oxley is asking O'Neill to try to ensure that the OCC coordinates with the Massachusetts insurance regulator to resolve the issue.

In addition, he is asking that the Comptroller inform the House Financial Services Committee before issuing any further opinion letters preempting state insurance laws, including a description of his efforts to resolve the issue directly with the appropriate state insurance regulators.