Forum Post: Preemption of state banking regulation

In complaining about the banks and repeal of Glass -Steagal, most people miss the Bush era preemption of the oversight of banks and mortgage lenders by the states. This effectively left them unregulated in their practices. Greenspan refused to have the Fed do it while acknowledging they had the authority.

In 2003, the OCC proposed regulations to preempt virtually all state banking and financial service s laws for national banks and their diverse range of non-bank, corporate operating subsidiaries.[1] Despite opposition from the National Conference of State Legislatures,[2] the OCC's regulations went into effect. In Watters v. Wachovia Bank, N.A. in 2007 the United States Supreme Court validated the preemption of state regulations by the OCC, ruling that the OCC, not the states, has the authority to subject national banks to "general supervision" and "oversight":

...State regulators cannot interfere with the business of banking by subjecting national 

banks or their OCC-licensed operating subsidiaries to multiple audits and surveillance under rival oversight regimes.[3]

And who would have lobbied to keep those states from exercising their "states rights?" The folks who were about to get caught doing what we now know they were doing,
And they got the Supreme Court to "interpret" them the power to do it.

For those who want to lay all of the blame on Fannie and Freddie, were you aware of this little gem?