OCC-PREEMPTION AND VISITORIAL POWERS (NATIONAL BANKS AND FEDERAL THRIFTS)

The Office of the Comptroller of the Currency has issued a final rule implementing several provisions of the Dodd-Frank Act, including revisions to the OCC’s rules on preemption and visitorial powers.  The final rule contains changes to the OCC’s regulations necessary to implement certain revisions to the banking laws that took effect on the enactment of the Dodd-Frank Act.  These changes include amendments to OCC rules pertaining to preemption and visitorial powers.

The preemption and visitorial-powers amendments:

  • Eliminate preemption for operating subsidiaries of national banks and operating subsidiaries of federal savings associations;

  • Apply to federal thrifts the same preemption standard – that is, a conflict preemption standard and not an occupation of the field standard – as applies to national banks, and apply to federal thrifts the visitorial powers standards applicable to national banks;

  • Eliminate ambiguity concerning the preemption standards in OCC regulations by removing language from OCC rules that provides that state laws that “obstruct, impair, or condition” a national bank’s powers are preempted; and

  • Revise the OCC’s visitorial powers rule to conform the Supreme Court’s Cuomo decision, recognizing the ability of state attorneys general to bring enforcement actions in court to enforce applicable laws against national banks as authorized by such laws.

The text of the preemption and visitorial powers amendments also:

  • Add language to clarify that, going forward, federal savings associations will be subject to the same preemption standards that apply to national banks.

  • Clarify the definition of “visitorial powers” to include direct investigations of national banks, such as through requests for documents or testimony directed to the bank to ascertain the bank’s compliance with law through mechanisms not otherwise authorized under the rule.
  • This definition would not include collecting information from other sources, or from the bank through actions that do not constitute visitations, or as authorized under federal law.
  • Specifically provides that “[i]n accordance with the decision of the Supreme Court in Cuomo . . ., an action against a national bank in a court of appropriate jurisdiction brought by a state attorney general (or other chief law enforcement officer) to enforce an applicable law against a national bank and to seek relief as authorized by such law is not an exercise of visitorial powers.”

The preamble to the final rule expands the discussion of the preemption and visitorial powers provisions and notes that the OCC has reconsidered its position concerning precedent that relied on the “obstructs, impairs, or conditions” standard.  To the extent that an existing preemption precedent relies exclusively on the phrase “obstructs, impairs, or conditions” as the basis for a preemption determination, the preamble states that the validity of the precedent would need to be reexamined to ascertain whether the determination is consistent with the Barnett conflict preemption analysis.

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