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Banks support proposal to reinterpret Barnett Bank case

Banks are supporting the Office of the Comptroller of the Currency’s proposal to reinterpret its role in exempting national financial institutions from state consumer protection laws.

A provision in the Dodd-Frank financial regulation reform bill is the codification of the Barnett Bank case as the legal standard for preemption. The provision gives state governments the power to apply their consumer protection laws to national banks.

The OCC proposal would preempt some state banking regulations on consumer protection.

Wayne Abernathy, an executive vice president for financial institution policy at the American Bankers Association, expressed support for the proposal in a letter to the OCC.

“Today’s world, markets for credit, deposits, and many other financial products and services are national and often international in scope,” Abernathy wrote. “The imposition of an overlay of fifty state and an indeterminate number of local government rules on top of federal requirements has a costly consequence that can materially affect national banks and their ability to serve consumers efficiently and effectively across the nation.”

The ABA letter also expressed support for the OCC’s efforts to add federal savings associations to the OCC schedule and methodology for assessments.

For the first two assessment cycles, the OCC will base savings association assessments on either the OCC assessment regulation or the former Office of Thrift Supervision assessment structure, whichever yields the lower assessment for that savings association.

In the letter, Abernathy recommended that during the transition period, the OCC report the assessment total under different methodologies to allow federal savings associations expecting to experience increased assessments to plan better for those increases.

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