On May 8, 2025, the Conference of State Bank Supervisors (“CSBS”) asked the Office of the Comptroller of the Currency (“OCC”) to comply with Executive Orders 14129 and 14267 by reversing its regulations governing national bank preemption.[1] Executive Order 14129 directed federal agencies to rescind unlawful regulations,[2] and Executive Order 14267 directed federal agencies to reduce anti-competitive regulatory barriers.[3] If the OCC had adopted the position advocated by the CSBS, it could have opened the door to state-level oversight of national banks and federal savings associations, likely resulting in a more fragmented regulatory landscape, where national banks face varying rules across different states. But the OCC refused to change course. The federal government has recently pursued deregulatory policies on multiple fronts, and the OCC’s position on preemption effectively limits state banking regulators that might otherwise seek to apply stricter regulatory requirements on national banks and federal savings associations.
Laws and Regulations on Preemption
Under the National Bank Act, 12 U.S.C. § 25b, state consumer financial laws are preempted when they (1) would have a discriminatory effect on national banks not felt by a state chartered bank (the “discriminatory effect” standard);[4] (2) are preempted by a provision of federal law other than those that regulate national bank powers (“other federal law” standard);[5] or (3) “prevent[] or significantly interfere[]” with the exercise by the national bank of its powers under the standard set out in Barnett Bank of Marion Cty., N.A. v. Nelson (often referred to as the Barnett standard).[6] There is also an additional avenue for preemption by OCC regulation or order on a “case-by-case basis.”
Under 12 U.S.C. § 25b, the OCC promulgated 12 C.F.R. §§ 7.4007 & 7.4008, which allow national banks to engage in certain activities related to deposit-taking powers and non-real estate lending without regard to state limitations. These activities include but are not limited to dormant accounts, checking accounts, disclosure requirements for deposits, funds availability, non-real estate loan creditor licensing, escrow accounts, and security property.
OCC’s Response Reaffirming that its Preemption Regulations are Lawful
On June 9, in response to the CSBS’s request, the OCC reaffirmed it will continue to “vigorously support and defend federal preemption.”[7] The OCC said that it applied the Barnett standard when it identified certain preempted and non-preempted state laws. It also denied the CSBS’s allegation that the regulations were anti-competitive. Rather, it asserted that federal preemption was the “cornerstone of the dual banking system, under which federally and state-chartered banks operate alongside one another.”
The Significance of...
