FDIC advances state bank parity rule for interstate banking services
The Federal Deposit Insurance Corporation is moving to align how state banks and national banks are treated when providing services across state lines. The proposal would clarify that certain host state laws do not apply to out-of-state state banks when those same laws do not apply to national banks.
Highlights
- The FDIC board approved a proposed rule aligning state bank and national bank treatment for host state laws in interstate services, per section 24(j) of the Federal Deposit Insurance Act.
- State banks' permissible loan interest rates remain governed by section 27 of the Federal Deposit Insurance Act, with no changes proposed in this rulemaking.
- Comments on the proposed regulation are due within 60 days following its publication in the Federal Register, impacting interstate banking operations.
Proposed rule sets interstate standards
As reported by Federal Deposit Insurance Corporation, the agency's board today approved a notice of proposed rulemaking to amend its regulations and promote parity between state banks and national banks.Under the proposal, if host state laws do not apply to a national bank, those laws also would not apply to an out-of-state state bank providing services in that host state, regardless of whether the state bank has a branch there. In line with section 24(j) of the Federal Deposit Insurance Act, the law of the state bank's chartering state would apply.
Industry implications and comment timeline
The proposed rule keeps unchanged the interest rates that state banks are permitted to charge on their loans. Those rates remain governed by section 27 of the Federal Deposit Insurance Act.The move is relevant for interstate banking operations because it seeks to reduce regulatory differences between state-chartered and national institutions when they serve customers outside their home states. Comments on the proposal are due within 60 days after publication in the Federal Register.
Brian Johnson’s CFPB director nomination advanced out of the Senate Banking Committee on a party-line vote, setting up the next stage toward a full Senate confirmation. Our earlier article noted that his pending confirmation has become a key variable for the bureau’s staffing plans and the future direction of consumer-finance supervision and enforcement.
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