This is, in short, the situation enjoyed by credit card companies. Clearly, it makes no sense for credit cards to be only valid in one state. But the regulation of credit cards is left up to states, for the most part. What did that result in? A race to the bottom in regulation, by states competing for the high-paying jobs brought by the credit card industry. South Dakota is a case study in how this happened. Frontline has the story. Money quote:
With bipartisan support and backing from South Dakota's banking association, [former SD Gov.] Janklow proposed a special "emergency'' bill. "Citibank actually drafted the legislation,'' he said. "Literally we introduced it, and it passed our legislature in one day.''
Do we really want Blue Cross writing insurance laws?