OCC Preemption Rule Prompts Controversy

The issuance by the Office of the Comptroller of the Currency (the "OCC") earlier this year of final rules further solidifying its position that the National Bank Act preempts state laws affecting the operations of national banks is the latest salvo in an ongoing debate among federal and state regulators, consumer groups, and the banking industry concerning the appropriate scope of federal preemption of state laws. Though the OCC has consistently asserted that its rules are needed to reduce regulatory duplication, state bank supervisors and consumer advocates have sharply criticized the new rules as impairing the ability of state regulators to act as consumer watchdogs.

Historically, the OCC has applied "conflict preemption" analysis to determine on a case-by-case basis whether a state law conflicts with federal law. In recent years, the OCC has issued a number of interpretive opinions concerning the applicability of state law to national banks and has with few exceptions