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ABA: The American Bankers Association
Letter to Congress & Regulators

State Bankers Association Letter to OCC re: National Bank Preemption

  • Published May 9, 2024

RE: National Bank Preemption
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Dear Mr. Dowd:

Competition among state-chartered and national banks is vital to the American economy. The roots of our country’s dual-chartering framework for banks can be traced back to the U.S. Constitution, and it steadily spurs innovation and ensures consumers and businesses across the country and economic spectrum have meaningful access to high-quality financial products and services. Yet, however strong and storied our dual-chartering framework may be, its continued viability depends in large part upon the Office of the Comptroller of the Currency (OCC) defending its nearly exclusive national bank visitorial powers against encroachment by state authorities and otherwise preserving the essential powers of national banks amid a range of harmful and often conflicting state laws.

12 U.S.C. §25b, as added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), provides that a state consumer financial law is generally preempted as to national banks if: (1) the law’s application has a greater discriminatory effect on a national bank than on banks chartered in that state; (2) the OCC or a court determines, in accordance with the Supreme Court’s Barnett decision, the law "prevents or significantly interferes" with a national bank’s exercise of federally recognized powers; or (3) the law is preempted by a provision of federal law other than title 62 of the Revised Statutes.

Furthermore, even where application of a state law to national banks is not preempted, under 12 U.S.C. §484, national bank visitorial powers are reserved almost exclusively to the OCC.1 Except in limited circumstances expressly detailed in federal law, state officials may not conduct national bank examinations, inspect or require the production of a national bank's books or records, or prosecute enforcement actions against a national bank. State officials otherwise seeking production of a national bank’s books or records must instead follow normal judicial procedures.

Download the letter to read the full text.

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