The Text of the Dodd-Frank Act
International Association of
Risk and Compliance Professionals (IARCP)
Dodd Frank Act Section 1044
SEC. 1044. STATE LAW PREEMPTION STANDARDS
FOR NATIONAL BANKS AND SUBSIDIARIES CLARIFIED.
GENERAL.—Chapter one of title LXII of the Revised Statutes
of the United States (12 U.S.C. 21 et seq.) is amended by
inserting after section 5136B the following new section:
‘‘SEC. 5136C. STATE LAW PREEMPTION STANDARDS
FOR NATIONAL BANKS AND SUBSIDIARIES CLARIFIED.
DEFINITIONS.—For purposes of this section, the following
definitions shall apply:
NATIONAL BANK.—The term ‘national bank’ includes—
‘‘(A) any bank organized under the laws of the United States; and
‘‘(B) any Federal branch established in accordance with the
International Banking Act of 1978.
STATE CONSUMER FINANCIAL LAWS.—The
term ‘State consumer financial law’ means a State law that does
not directly or indirectly discriminate against national banks and
that directly and specifically regulates the manner, content, or
terms and conditions of any financial transaction (as may be
authorized for national banks to engage in), or any account
related thereto, with respect to a consumer.
OTHER DEFINITIONS.—The terms
‘includes’, and ‘including’ have
the same meanings as in section 3 of the Federal Deposit Insurance
‘‘(b) PREEMPTION STANDARD.—
‘‘(1) IN GENERAL.—State consumer financial laws are
preempted, only if—
‘‘(A) application of a State consumer
financial law would have a discriminatory effect on national
banks, in comparison with the effect of the law on a bank
chartered by that State;
‘‘(B) in accordance with the legal
standard for preemption in the decision of the Supreme Court of
the United States in Barnett Bank of Marion County, N. A. v.
Nelson, Florida Insurance Commissioner, et al., 517 U.S. 25
(1996), the State consumer financial law prevents or significantly
interferes with the exercise by the national bank of its powers;
and any preemption determination under this subparagraph may be
made by a court, or by regulation or order of the Comptroller of
the Currency on a caseby- case basis, in accordance with
applicable law; or
‘‘(C) the State consumer financial law
is preempted by a provision of Federal law other than this title.
‘‘(2) SAVINGS CLAUSE.—This title
and section 24 of the Federal Reserve Act (12 U.S.C. 371) do not
preempt, annul, or affect the applicability of any State law to
any subsidiary or affiliate of a national bank (other than a
subsidiary or affiliate that is chartered as a national bank).
‘‘(3) CASE-BY-CASE BASIS.—
‘‘(A) DEFINITION.—As used in this
section the term ‘case-by-case basis’ refers to a determination
pursuant to this section made by the Comptroller concerning the
impact of a particular State consumer financial law on any
national bank that is subject to that law, or the law of any other
State with substantively equivalent terms.
CONSULTATION.—When making a
determination on a case-by-case basis that a State consumer
financial law of another State has substantively equivalent terms
as one that the Comptroller is preempting, the Comptroller shall
first consult with the Bureau of Consumer Financial Protection and
shall take the views of the Bureau into account when making the
‘‘(4) RULE OF
CONSTRUCTION.—This title does not occupy the field in any
area of State law.
‘‘(5) STANDARDS OF
‘‘(A) PREEMPTION.—A court reviewing any
determinations made by the Comptroller regarding preemption of a
State law by this title or section 24 of the Federal Reserve Act
(12 U.S.C. 371) shall assess the validity of such determinations,
depending upon the thoroughness evident in the consideration of
the agency, the validity of the reasoning of the agency, the
consistency with other valid determinations made by the agency,
and other factors which the court finds persuasive and relevant to
‘‘(B) SAVINGS CLAUSE.—Except
as provided in subparagraph (A), nothing in this section shall
affect the deference that a court may afford to the Comptroller in
making determinations regarding the meaning or interpretation of
title LXII of the Revised Statutes of the United States or other
DETERMINATION NOT DELEGABLE.—Any regulation, order, or
determination made by the Comptroller of the Currency under
paragraph (1)(B) shall be made by the Comptroller, and shall not
be delegable to another officer or employee of the Comptroller of
EVIDENCE.—No regulation or order of the Comptroller of the
Currency prescribed under subsection (b)(1)(B), shall be
interpreted or applied so as to invalidate, or otherwise declare
inapplicable to a national bank, the provision of the State
consumer financial law, unless substantial evidence, made on the
record of the proceeding, supports the specific finding regarding
the preemption of such provision in accordance with the legal
standard of the decision of the Supreme Court of the United States
in Barnett Bank of Marion County, N.A. v. Nelson, Florida
Insurance Commissioner, et al., 517 U.S. 25 (1996).
PERIODIC REVIEW OF PREEMPTION
‘‘(1) IN GENERAL.—The Comptroller
of the Currency shall periodically conduct a review, through
notice and public comment, of each determination that a provision
of Federal law preempts a State consumer financial law. The agency
shall conduct such review within the 5-year period after
prescribing or otherwise issuing such determination, and at least
once during each 5-year period thereafter.
conducting the review of, and inspecting the comments made on, the
determination, the agency shall publish a notice in the Federal
Register announcing the decision to continue or rescind the
determination or a proposal to amend the determination.
Any such notice of a proposal to amend a determination and the
subsequent resolution of such proposal shall comply with the
procedures set forth in subsections (a) and (b) of section 5244 of
the Revised Statutes of the United States (12 U.S.C. 43 (a), (b)).
‘‘(2) REPORTS TO CONGRESS.—At the
time of issuing a review conducted under paragraph (1), the
Comptroller of the Currency shall submit a report regarding such
review to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate.
The report submitted to the
respective committees shall address whether the agency intends to
continue, rescind, or propose to amend any determination that a
provision of Federal law preempts a State consumer financial law,
and the reasons therefor.
APPLICATION OF STATE CONSUMER FINANCIAL LAW TO SUBSIDIARIES AND
AFFILIATES.—Notwithstanding any provision of this title or
section 24 of Federal Reserve Act (12 U.S.C. 371), a State
consumer financial law shall apply to a subsidiary or affiliate of
a national bank (other than a subsidiary or affiliate that is
chartered as a national bank) to the same extent that the State
consumer financial law applies to any person, corporation, or
other entity subject to such State law.
PRESERVATION OF POWERS RELATED TO CHARGING
INTEREST.—No provision of this title shall be construed as
altering or otherwise affecting the authority conferred by section
5197 of the Revised Statutes of the United States (12 U.S.C. 85)
for the charging of interest by a national bank at the rate
allowed by the laws of the State, territory, or district where the
bank is located, including with respect to the meaning of
‘interest’ under such provision.
TRANSPARENCY OF OCC PREEMPTION
The Comptroller of the Currency
shall publish and update no less frequently than quarterly, a list
of preemption determinations by the Comptroller of the Currency
then in effect that identifies the
activities and practices
covered by each determination and the requirements and constraints
determined to be preempted.’’.
CLERICAL AMENDMENT.—The table of sections for chapter one
of title LXII of the Revised Statutes of the United States is
amended by inserting after the item relating to section 5136B the
following new item: ‘‘Sec. 5136C. State law preemption standards
for national banks and subsidiaries clarified.’’.
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