04.04
Federalism and Banking
So, not more than a day after I made the post on state’s rights (i.e. federalism), here comes an article over at American Thinkiner about how the state of Idaho is up in arms over the national government trying to interfere in Idaho’s own internal financial regulating. Lawrence Wasden, the Attorney General of Idaho, describes how the National Bank act is being used as justification for this regulatory trump card by Washington. Here’s what he said:
Recently, I joined the attorneys general of all the states in asking President Obama to reexamine actions by a federal agency permanently blocking states from enforcing their consumer protection laws with regard to certain financial institutions. I am also joining a brief asking the United States Supreme Court to hear a case that permitted this agency to block state enforcement of a state law against a national bank that was violating the state law.
…The OCC’s unprecedented seizure of regulatory authority prudently exercised by the states has contributed to the current financial crisis in our nation and run roughshod over constitutional principles of federalism.
To stop states from enforcing their own laws, the OCC relies upon the National Bank Act, which was enacted during the Civil War. Until recently, our nation has operated under and benefited from a system that various commentators, the Supreme Court, and even the OCC itself have described as a “dual banking system.” In fact, commentators attribute the dual banking system’s origins to the National Bank Act. It would thus come as a surprise today to the drafters of the National Bank Act to learn that the OCC, pursuant to new regulations it has promulgated, uses 100-year-old National Bank Act provisions as the justification for its assault on state law.
Basically, the OCC is stepping in to a state’s private affairs and blocking it from carrying out it’s own laws. If you read my last post you would know immediately why that is so bad. The federal government is given clearly defined, enumerated powers in the Constitution, and the 10th amendment makes that abundantly clear; as do the Federalist Papers describing the Founders’ intent. Even the most liberal rendering of the interstate commerce clause couldn’t be used to justify overturning a state law by Federal regulators. This is clearly a fight worth having.
Mr. Wasden goes on:
The OCC’s undermining of state authority, as a matter of law, is bad enough as a matter of state’s rights, but its unprecedented action has led to unnecessary loss and harm to our country, harm that could have been avoided had the OCC allowed states to enforce their own laws.
More than five years ago, state attorneys general warned the OCC of the problems of subprime loans. In fact, in 2003, state attorneys general traveled to Washington, D.C. to speak to the head of the OCC to warn him that lenders were pushing mortgages that were growing in risk. The attorneys general also asked the OCC for support to deal with exorbitant interest rates and fine print fees. The OCC dismissed these warnings and was steadfastly opposed to working with the attorneys general.
Federalism is not a new idea. It is as old as our republic. President Thomas Jefferson, in his inaugural address, emphasized that “the most competent administrations for our domestic concerns” are state governments. In New State Ice Co. v. Liebmann, 285 U.S. 262 (1932), Justice Louis Brandeis, in a famous dissent, noted the power of federalism and that states serve as valuable testing grounds where the people can apply social and economic policies to address individual concerns. Said he: “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” Id., at 311 (Brandeis, J., dissenting).
The OCC rejects this wisdom and experience.
Idaho’s Attorney General is clearly a man on the right side of this issue. Let’s hope and vote for more people who will hold state’s rights true and dear. A strong, decentralized system of sovereignty is, and has always been, the greatest weapon we have against tyranny and dictatorship. I’m going to send Mr. Wasden a letter of support. I hope you will do the same.
