OCC Preemption Rules: OCC Should Further Clarify the Applicability of State Consumer Protection Laws to National Banks
Highlights
In January 2004, the Office of the Comptroller of the Currency (OCC)--the federal supervisor of federally chartered or "national" banks--issued two final rules referred to jointly as the preemption rules. The "bank activities" rule addressed the applicability of state laws to national banking activities, while the "visitorial powers" rule set forth OCC's view of its authority to inspect, examine, supervise, and regulate national banks and their operating subsidiaries. The rules raised concerns among some state officials and consumer advocates. GAO examined (1) how the rules clarify the applicability of state laws to national banks, (2) how the rules have affected state-level consumer protection efforts, (3) the rules' potential effects on banks' choices of a federal or state charter, and (4) measures that could address states' concerns regarding consumer protection.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of the Comptroller of the Currency | The Comptroller of the Currency should undertake an initiative to clarify the characteristics of state consumer protection laws that would make them subject to federal preemption. Such an initiative could serve as an opportunity for dialogue between OCC and the states on consumer protection matters. For example, OCC could hold forums where consumer protection issues related to federal and state laws could be discussed with state officials and consumer advocates. This could improve communication and coordination between OCC and state officials with respect to the impact of the preemption rules on the applicability of state consumer protection laws and could also assist both OCC and the states in their consumer protection efforts. |
Closed – Implemented
OCC analyzed a Supreme Court decision regarding preemption and has discussed the decision and the principles OCC applies to case-by-case preemption determinations at meetings with state officials and consumer groups. Also, in June 13, 2007 congressional testimony, the Comptroller of the Currency described four steps OCC has taken to maximize consumer protection benefits for bank customers: (1)executing memoranda of understanding between OCC and state bank supervisors to share information about consumer complaints, (2)creating an electronic complaint sharing process to help transfer misdirected complaints and referrals between OCC and other federal and state banking regulators, (3) creating a new website for customers to use as a reference in determining which agency regulates their banking institution and what consumer protections are afforded them, and (4) conducting parallel examinations with state bank supervisors in instances where a national bank that is regulated by OCC uses an independent mortgage broker that is regulated by the state.
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