{
  "id": "R45726",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R45726",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 598402,
      "date": "2019-05-17",
      "retrieved": "2019-05-20T22:09:23.329643",
      "title": "Federal Preemption in the Dual Banking System: An Overview and Issues for the 116th Congress",
      "summary": "Banks play a critical role in the United States economy, channeling money from savers to borrowers and facilitating productive investment. While the nature of lawmakers\u2019 interest in bank regulation has shifted over time, most bank regulations fall into one of three general categories. First, banks must abide by a variety of safety-and-soundness requirements designed to minimize the risk of their failure and maintain macroeconomic stability. Second, banks must comply with consumer protection rules intended to deter abusive practices and provide consumers with complete information about financial products and services. Third, banks are subject to various reporting, recordkeeping, and anti-money laundering requirements designed to assist law enforcement in investigating criminal activity. \nThe substantive content of these requirements remains the subject of intense debate. However, the division of regulatory authority over banks between the federal government and the states plays a key role in shaping that content. In some cases, federal law displaces (or \u201cpreempts\u201d) state bank regulations. In other cases, states are permitted to supplement federal regulations with different, sometimes stricter requirements. Because of its substantive implications, federal preemption has recently become a flashpoint in debates surrounding bank regulation.\nIn the American \u201cdual banking system,\u201d banks can apply for a national charter from the Office of the Comptroller of the Currency (OCC) or a state charter from a state\u2019s banking authority. A bank\u2019s choice of chartering authority is also a choice of primary regulator, as the OCC serves as the primary regulator of national banks and state regulatory agencies serve as the primary regulators of state-chartered banks. However, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) also play an important role in bank regulation. The Federal Reserve supervises all national banks and state-chartered banks that become members of the Federal Reserve System (FRS), while the FDIC supervises all state banks that do not become members of the FRS. This complex regulatory architecture has resulted in a \u201csymbiotic system\u201d with both federal regulation of state banks and state regulation of national banks. In the modern dual banking system, national banks are often subject to generally applicable state laws, and state banks are subject to both generally applicable federal laws and regulations imposed by their federal regulators. The evolution of this system during the 20th century caused the regulation of national banks and state banks to converge in a number of important ways. \nHowever, despite this convergence, federal preemption provides national banks with certain unique advantages. In Barnett Bank of Marion County, N.A. v. Nelson, the Supreme Court held that the National Bank Act (NBA) preempts state laws that \u201csignificantly interfere\u201d with the powers of national banks. The Court has also issued two decisions on the preemptive scope of a provision of the NBA limiting states\u2019 \u201cvisitorial powers\u201d over national banks. Finally, OCC rules have taken a broad view of the preemptive effects of the NBA, limiting the ways in which states can regulate national banks. \nCourts, regulators, and legislators have recently confronted a number of issues involving banking preemption and related federalism questions. Specifically, Congress has considered legislation that would overturn a line of judicial decisions concerning the circumstances in which non-banks can benefit from federal preemption of state usury laws. The OCC has also announced its intention to grant national bank charters to certain financial technology (FinTech) companies\u2014a decision that is currently being litigated. Finally, Congress has recently turned its attention to the banking industry\u2019s response to state efforts to legalize and regulate marijuana.",
      "type": "CRS Report",
      "typeId": "REPORTS",
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      "topics": []
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  "topics": [
    "Domestic Social Policy",
    "Economic Policy"
  ]
}