By Nupur Anand
NEW YORK (Reuters) -U.S. banks are petitioning the Office of the Comptroller of the Currency to seek national standards for providing banking services that would override state-imposed rules, three sources familiar with the matter said. Large banks, in particular, are lobbying for uniform U.S. regulations outlining how they can make loans, issue bonds or provide investment banking services, or assess anti-money laundering risks while curbing state powers over their operations, said the sources,
who declined to be identified while discussing private talks. The renewed push for national standards, which is being reported by Reuters for the first time, is part of a sweeping effort by the banking industry to lock in more favorable rules under U.S. President Donald Trump's administration. The changes would make it easier for lenders to operate, the sources said. They would also curtail states' power to disrupt banks' operations with rules on so-called "debanking," a practice in which banks allegedly deny services to customers based on political or religious beliefs. Individual states have previously punished banks and barred them from doing business based on lenders' policies on guns, climate change, diversity and other social issues.
The debate around national standards came into focus in a lawsuit involving Bank of America. In a 2024 decision, the U.S. Supreme Court ruled that federal law takes precedence for national banks over state laws, a concept known as preemption.Large banks have focused on lobbying to defend themselves against accusations of debanking this year, citing unclear rules. Trump passed an executive order on debanking this month that aims to make the rules more uniform. Emboldened lenders are now focused on preemption after getting regulators to water down stress tests and capital requirements, one of the sources said. Banks plan to ramp up lobbying efforts after meeting with the OCC earlier this year to press the issue, the three sources said. The OCC declined to comment.
“We strongly support national preemption and believe federal fair access legislation or regulation would be a prudent move to address account closures in a consistent way across all states,” the Bank Policy Institute, an industry association, said in a statement. The American Bankers Association previously has said that an increasing number of states are considering laws that disregard the existing federal laws. The proposals would give state regulators authority over basic operations of a national bank, including decisions about deposit taking, lending, and risk management, which the ABA has opposed. The ABA also called on regulators to vigorously defend the principle of national bank preemption. It did not immediately respond to a request seeking comment on this story. “We support a national standard that expressly prohibits political or religious discrimination in banking," a JPMorgan spokesperson said. Citigroup, Wells Fargo, Bank of America and Morgan Stanley declined to comment, while Goldman Sachs did not respond to requests seeking comment. Some lenders argue that national standards will streamline rules and demolish a decades-old system of dual regulators at the federal and state levels. Federal regulators, in particular the OCC that oversees national banks, have the authority to preempt state laws if they are deemed to interfere with national bank operations and oversight. CONTROVERSIAL RULES Banks have faced challenges from policymakers who accused them of taking stances on controversial issues. For instance, in Texas, JPMorgan Chase, Bank of America and Goldman Sachs were sidelined from the municipal bond market in 2021. The state barred companies from doing new business if they avoided financing energy or firearms companies.
Separate diktats in Florida, California, Tennessee also created compliance headaches and business disruptions, the three sources said. Republican Attorneys General Association and Democratic Attorneys General Association and Conference of State Bank Supervisors (CSBS) did not immediately respond to requests seeking comment. Some state officials say that bank oversight is necessary to tailor rules to local communities and protect consumers. The CSBS has earlier argued that a dual structure is of paramount importance for safety and soundness, consumer protection, and competitive markets and having just a federal structure could challenge that. State-specific pronouncements have made it harder for financial firms to operate in some places and prompted changes to internal policies. National standards would do away with such challenges, the sources said.
Financial institutions often draw political criticism because of their role in the economy and their stances on financing industries such as fossil fuel and firearms companies. States have accused banks of making political decisions that deprive legitimate businesses of capital.
Lenders have argued that they should be allowed to make their own banking and lending decisions based on their business models and risk tolerance.
(Reporting by Nupur Anand in New York, additional reporting by Pete Schroeder, editing by Lananh Nguyen and Diane Craft)
