On May 8, 2025, the Conference of State Bank Supervisors (“CSBS”) asked the Office of the Comptroller of the Currency (“OCC”) to comply with Executive Orders 14129 and 14267 by reversing its regulations governing national bank preemption.[1] Executive Order 14129 directed federal agencies to rescind unlawful regulations,[2] and Executive Order 14267 directed federal agencies to reduce anti-competitive regulatory barriers.[3] If the OCC had adopted the position advocated by the CSBS, it could have opened the door to state-level oversight of national banks and federal savings associations, likely resulting in a more fragmented regulatory landscape, where national banks face varying rules across different states. But the OCC refused to change course. The federal government has recently pursued deregulatory policies on multiple fronts, and the OCC’s position on preemption effectively limits state banking regulators that might otherwise seek to apply stricter regulatory requirements on national banks and federal savings associations.
Laws and Regulations on Preemption
Under the National Bank Act, 12 U.S.C. § 25b, state consumer financial laws are preempted when they (1) would have a discriminatory effect on national banks not felt by a state chartered bank (the “discriminatory effect” standard);[4] (2) are preempted by a provision of federal law other than those that regulate national bank powers (“other federal law” standard);[5] or (3) “prevent[] or significantly interfere[]” with the exercise by the national bank of its powers under the standard set out in Barnett Bank of Marion Cty., N.A. v. Nelson (often referred to as the Barnett standard).[6] There is also an additional avenue for preemption by OCC regulation or order on a “case-by-case basis.”
Under 12 U.S.C. § 25b, the OCC promulgated 12 C.F.R. §§ 7.4007 & 7.4008, which allow national banks to engage in certain activities related to deposit-taking powers and non-real estate lending without regard to state limitations. These activities include but are not limited to dormant accounts, checking accounts, disclosure requirements for deposits, funds availability, non-real estate loan creditor licensing, escrow accounts, and security property.
OCC’s Response Reaffirming that its Preemption Regulations are Lawful
On June 9, in response to the CSBS’s request, the OCC reaffirmed it will continue to “vigorously support and defend federal preemption.”[7] The OCC said that it applied the Barnett standard when it identified certain preempted and non-preempted state laws. It also denied the CSBS’s allegation that the regulations were anti-competitive. Rather, it asserted that federal preemption was the “cornerstone of the dual banking system, under which federally and state-chartered banks operate alongside one another.”
The Significance of Federal Preemption
The OCC regulation preempting certain state consumer financial laws is important to national banks, which usually operate or intend to operate in multiple states. For preempted activities, the national banks need to comply with only the federal regulatory framework instead of following each state’s idiosyncratic laws. If national banks had to deal with state-by-state compliance, they might have to offer customers different products or terms in different states, presenting problems for national services and even marketing.
Under federal preemption, national banks are also immune to state visitorial powers. Under the National Bank Act, “no national bank shall be subject to any visitorial powers except as authorized by federal law [or] vested in the courts of justice.”[8] As a result, national banks are subject to only the OCC and Consumer Financial Protection Bureau’s[9] visitorial powers but not to those of state officials. Visitorial powers include examination of a bank, regulation and supervision of activities authorized under federal banking law, and enforcement of banking laws.[10] This means that state officials cannot request non-public information or examine national banks to ensure legal compliance.
Accordingly, national banks are not obliged to comply with preempted state consumer financial laws. Neither are they subject to state officials’ examination or request to provide non-public information that would support a national bank’s compliance with state or federal regulations, which can be costly and time consuming.
State officials have not always respected these federal preemptions. They have requested national banks to provide non-public information or attempted to bring enforcement for violating preempted state law.[11] McGuireWoods has a team of attorneys who advise national banks on preemption and how to respond to state officials’ request.[12] For any questions on national bank visitorial powers and federal preemption, please contact the authors or your McGuireWoods contact.
[1] CSBS, Comment Letter – Rescission of OCC Preemption Regulations (May 8, 2025).
[2] Exec. Order No. 14219, Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative, 90 Fed. Reg. 10583 (Feb. 19, 2025).
[3] Exec. Order No. 14267, Reducing Anti-Competitive Regulatory Barriers, 90 Fed. Reg. 15629 (Apr. 9, 2025).
[4] 12 U.S.C. § 25b(b)(1)(A); OCC, The OCC Interpretive Letter #1173, OCC Chief Counsel’s Interpretation: 12 U.S.C. § 25b (Dec. 18, 2020).
[5] This standard applies to federal consumer financial laws, which generally have their own specific preemption standard, and real estate loan activities under 12 U.S.C. § 371. See 12 U.S.C. § 25b(b)(1)(C).
[6] 517 U.S. 25, 31 (1996); 12 U.S.C. § 25b(b)(1)(B).
[7] OCC, Subject: Preemption (June 9, 2025).
[8] 12 U.S.C. § 484.
[9] Banks are subject to the Consumer Financial Protection Bureau’s supervision only if they have over $10 billion in assets. 12 U.S.C. § 5515(a)(1).
[10] 12 C.F.R. § 7.4000.
[11] Cuomo v. Clearing House Ass’n, L.L.C., 557 U.S. 519, 522 (2009) (Attorney General for the State of New York requested national banks to provide certain non-public information about their lending practice); Cap. One Bank (USA), N.A. v. McGraw, 563 F. Supp. 2d 613, 616 (S.D. W. Va. 2008) (West Virginia Attorney General attempted to investigate consumer complaints regarding the activities of a national bank); Wells Fargo Bank of Texas NA v. James, 321 F.3d 488, 489 (5th Cir. 2003) (Texas Banking Commissioner attempted to enforce Texas par value statute, which prohibits banks in Texas from charging fees for cashing check, against a national bank).
[12] State consumer financial laws that are not preempted under 12 C.F.R. §§ 7.4007 & 7.4008 could still be preempted under 12 U.S.C. § 25b.