Yesterday President Obama directed all federal departments and agencies to review the rules and regulations they have adopted over the past ten years and make sure that those regulations do not unjustifiably block higher state standards and protections for their own consumers and workers.

As the President’s memorandum stated,

Throughout our history, State and local governments have frequently protected health, safety, and the environment more aggressively than has the national Government.

So over the past decade, businesses and industries increasingly argued that federal regulations should block or preempt higher standards and protections found in states’ laws. (For examples, see here, here, here, and here.) These federal regulations, in turn, tended increasingly toward minimal standards and oversight, or even just voluntary self-regulation by the industry. Yesterday’s directive requires federal agencies to review these regulations across the board and take action to address any unjustified claims to preempt state protections.

Consider what may come from this one common-sense change in policy. Soon we may have better standards and oversight across the range of departments, such as agriculture, commerce, energy, health and human services, housing and urban development, labor, transportation; and the range of agencies, such as communications, environmental protection, food and drug safety, workplace safety, and financial services such as banking and credit.

Let’s consider that last one, banking and credit, for example. In 2004, the Office of the Comptroller of the Currency, a bureau within the Department of the Treasury, adopted regulations which preempted higher state standards in banking, credit, and real-estate loans. Instead of welcoming state help, the OCC often stood with banks against states and consumers seeking to enforce state consumer protection laws. One such astonishing case is now pending in the United States Supreme Court, where the OCC sued New York’s Attorney General in 2005 to prevent him from enforcing mortgage-lending protections and anti-discrimination laws against several national banks. (See Consumers Union's letter to Treasury Secretary Geithner and Attorney General Holder in February 2009.) Ending the OCC’s unjustified preemption regulations against state investigation, enforcement, and consumer protection, could go far toward ensuring that no more mortgage and financial crises occur again.

A previous blog on this case is here.