OCC explains its approach to federal preemption under Dodd-Frank

How the federal agency that charters national banks interprets standards for federal preemption of state law under the 2010 financial consumer protection statute is detailed in a new interpretive letter.

The letter, issued Friday by the Office of the Comptroller of the Currency (OCC), notes that under section 25b of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Congress codified preemption standards and established procedural requirements that apply when the OCC concludes that certain state laws are preempted.

The letter details the standards (related to state law’s potential discriminatory effects on or interference with the powers held by national banks, or preemption contained in federal law) as well as the OCC’s framework for compliance. Among the points offered is that an OCC action that has only indirect or incidental effects on a state consumer financial law is not a preemption determination. “In addition, the OCC does not make a preemption determination, and thus is not subject to the procedural requirements of section 25b [the Dodd-Frank section on preemption], when it concludes that (1) a state consumer financial law is preempted pursuant to the discriminatory effect or other federal law standards or (2) a state law other than a state consumer financial law is preempted,” the letter states.