§25b State Law Preemption Standards for National Banks and Subsidiaries Clarified

Summary

Says when a state consumer finance law can be overridden for national banks. National bank means a bank chartered under U.S. law or a federal branch. A state consumer financial law means a state rule that treats national banks the same as state banks and that directly controls how consumer financial transactions or accounts work. Other words like "affiliate" and "subsidiary" use their usual federal definitions. A state law can be overridden only in three cases: if it treats national banks worse than state-chartered banks, if it clearly blocks or heavily interferes with a national bank using its powers (under the Supreme Court standard from Barnett Bank), or if a different federal law already overrides it. State rules still apply to a national bank’s subsidiaries and affiliates the same way they apply to other businesses, unless those affiliates are themselves national banks. The federal bank regulator (the Comptroller of the Currency) can decide on preemption for specific state laws, but the Comptroller must make the decision personally, must consult the Consumer Financial Protection Bureau when comparing other States’ laws, and must have substantial evidence on the record to support any override. The Comptroller must review any override within five years and at least every five years after that, report to Congress, and publish a quarterly list of active overrides. State attorneys general can still sue national banks to enforce state laws, and private parties can bring their own court cases even if the Comptroller brings enforcement actions.