NU Online News Service, June 20, 11:15 a.m. – Massachusetts regulators have sued U.S. Comptroller of the Currency John D. Hawke over his agency’s move to preempt a state law governing the sale of insurance by banks.
“This action is based on the right of Massachusetts and every other state to not have an unelected federal bureaucracy overturn provisions designed to protect consumers,” Massachusetts Gov. Jane Swift said in announcing the suit.
Swift asked state Attorney General Thomas Reilly to file suit in the U.S. Court of Appeals for the 1st Circuit in Boston on behalf of Julianne M. Bowler, commissioner of insurance, and Thomas J. Curry, commissioner of banks.
The suit stems from a March 18 ruling by the Office of the Comptroller of the Currency preempting three Massachusetts statutes regulating insurance sales by banks.
The laws, passed in 1998, prohibit unlicensed bank personnel from referring customers to licensed agents unless a customer specifically asks about insurance; ban compensation for unlicensed employees for making such referrals; and prohibit banks from attempting to sell insurance to home-loan customers until after a mortgage is approved.
The OCC says the laws are preempted by the 1999 Gramm-Leach-Bliley Financial Services Modernization Act. of 1999