OCC Vies for Top Billing as Policeman for National Banks.(Office of the Comptroller of the Currency)

Over the past few years, state agencies have been active in enforcing laws that protect consumers against predatory lending, yet the Office of the Comptroller of the Currency still maintains it should have the final say when it comes to supervising and regulating national banks and their subsidiaries, according to Raymond Natter, deputy chief counsel for OCC.

Last week, Mr. Natter joined individuals from both sides of the issue to discuss federal vs. state-charter pre-emption, a topic that has made recurring headlines in the press and before Congress. The panel session was part of the Strategic Research Institute's conference, "Broadening Opportunities with the Banking Charter."

"State law cannot interfere with a national bank's power to do business," Mr. Natter said. "State supervisors cannot use discovery in the court system to get employee records and loan files from national banks. That is pre-empted."

Like the speakers who followed Mr. Natter, "choice" was the one word that was reiterated from the panel. "A charter decision should not be based on pre-emption but on the quality of supervision," he said. "New York State has one of the best supervisors of financial institutions. A state charter is a good option here. For many, a national bank will not be the correct charter."

The OCC issued its final pre-emption rule in February stating that state laws do not apply to national banks or its subsidiary if they "obstruct, impair, or condition" a national bank's powers dealing with lending, deposit taking and other national bank activities. The rule also clarified what the OCC calls its "exclusive visitorial authority" over the content and conduct of national bank activities authorized under federal law.

According to the OCC, laws that regulate loan terms, require state licenses, or impose conditions on deposit or credit relationships do not apply to national banks and are pre-empted by federal law. Under the rule, state laws that deal with taxation or zoning are not pre-empted by federal law.

Historically, Congress has declared that states have an interest in ...