FDIC Schedules Hearing on Increasing State Bank Preemption

The FDIC published a notice (the "Notice") that it will hold a hearing on May 24, 2005 on a rulemaking process intended to preempt the application of certain state laws to interstate operations of insured state banks. The rulemaking would thereby establish greater parity between state and national banks with respect to interstate operations. The hearing is in response to a request for the rulemaking by a trade group, the Financial Services Roundtable (the "FSR").

As to the substance of the Notice, first it requests comment on the law applicable to activities conducted in a host state by a state bank that has an interstate branch in that state, with the FSR asserting that federal law amendments in the 1990s were intended to provide state banks with the same interstate preemption as federal banks. Second, the Notice requests comment on the applicability of preemption to activities in a state where a state bank does not have a branch, with the FSR asserting comparative preemption