FDIC Wants State Banks to Party Like National Banks
Published Date: 9/22/2026
Proposed Rule
Summary
The FDIC wants to make sure out-of-State State banks get the same treatment as national banks when following host State laws while offering services outside their home State. This means if a national bank doesn’t have to follow certain State laws in a host State, then an out-of-State State bank won’t either. Banks and customers should watch for changes, and comments on this proposal are open until November 23, 2026.
Analyzed Economic Effects
6 provisions identified: 4 benefits, 0 costs, 2 mixed.
Estimated One‑Time and Annual Savings
The FDIC estimates that, by avoiding required system changes and other compliance actions tied to the Illinois law example, the proposed rule would yield about $308,368,000 in one-time avoided costs and about $6,676,804 in ongoing annual avoided costs. The FDIC annualized those avoided costs over five years to about $77 million at a 7% discount rate and about $72 million at a 3% discount rate.
Avoids Large Per‑Bank Upgrade Costs
The FDIC reports per-bank system upgrade cost estimates used in its analysis: acquirer banks that fully operate systems would incur $16 million each and partially operating acquirers $8 million each; issuer banks that fully operate systems $25 million each and partially operating issuers $12.5 million each. The FDIC identified small numbers of banks in these high-cost categories (for example, three acquirer State banks fully operate their own systems and five partially operate them).
Parity for Out‑of‑State State Banks
The FDIC proposes that when a host State law does not apply to an out-of-State national bank, that same host State law likewise would not apply to an out-of-State State bank providing services in that State with or without a branch. The rule says the law of the State where the bank is chartered would apply instead; the FDIC says this would affect State banks as defined in the FDI Act (there were 3,449 State banks as of December 31, 2025, and the FDIC identified 3,185 that may be affected).
Reduces Risk of Transaction Rejection and Penalties
The FDIC says the rule would reduce legal uncertainty that might otherwise lead State banks to reject payment card transactions in a host State or take other measures that disrupt merchants and consumers. The Illinois law example (IFPA) carries potential civil penalties of $1,000 per electronic payment transaction and has an effective date that the Illinois legislature delayed to July 1, 2027.
Eliminates Small Annual Transfer Between Banks and Merchants
Using the Illinois example, the FDIC estimates the baseline would create about $2,281,118 per year in transfers between affected State banks and merchants (about $2.214 million from credit-card taxes, $45,382 from debit-card taxes, $21,300 from credit-card tips, and $436 from debit-card tips). The proposed rule would eliminate that estimated transfer.
No Change to Loan Interest‑Rate Rules
The FDIC explicitly states the proposed rule would not affect the interest rates State banks may charge on loans; those rates remain governed by section 27 of the Federal Deposit Insurance Act (12 U.S.C. 1831d).
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Key Dates
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