OCC Issues Interpretation Of Preemption Standards

The OCC issued a "comprehensive" interpretation of preemption standards and procedural requirements, which are codified in Section 25b ("State Law Preemption Standards for National Banks and Subsidiaries Clarified") of the National Banking Act.

Federal preemption, as described in the OCC Interpretive Letter, is "fundamental to the design" of the federal banking system because it permits federally chartered financial institutions that operate across state lines to be regulated under a single set of federal rules. To set forth a "consistent framework for compliance," the OCC provided the following guidance in connection with preemption actions.

1. The OCC evaluates whether the state law is a state consumer financial law as defined under Section 25b(a)(2). If the OCC determines the state law to be a state consumer financial law, the OCC assesses whether the state consumer financial law would be preempted under one or more of the preemption standards established in Sec