The Federal Deposit Insurance Corp. will be soliciting public input on a proposal by an industry group to simplify the compliance burden on state-chartered banks that conduct interstate operations.The Financial Services Roundtable contends that a state bank should be able to conduct interstate operations based on the laws and regulations of its home state, and the FDIC has the authority to implement such a rule under a 1997 banking law. In a petition to the FDIC, the trade group, which represents 100 of the largest U.S. financial services companies, urges the agency to promulgate a rule. "Such an action would ensure the continued vitality of the dual banking system," the FSR says. In response, the FDIC has decided to hold a public hearing on May 24 to solicit testimony. "The FDIC believes that public participation will provide valuable insight into the issues presented by the petition and will assist FDIC in responding to the rulemaking request," the regulator said. Currently, the branches and operating subsidiaries of state banks with interstate activities have to follow the laws and regulations of the host state, which places state banks at a competitive disadvantage to national banks. This disparity has resulted in an "unprecedented mass migration of assets to the national banking systems," the FSR says in its petition.
