The FDIC today proposed a new rule to prevent states from imposing certain regulations on state banks chartered in other states.
Currently, states can opt out of the federal Depository Institutions Deregulation and Monetary Control Act, or DIDMCA, allowing them to establish restrictions on loans made by state-chartered banks. Colorado and Oregon have used the provision to impose interest rate caps on loans from out-of-state state-chartered financial institutions, prompting lawsuits and a proposed bill in Congress to prevent this use of DIDMCA.
The FDIC’s proposed “parity” rule specifies that when a host state’s laws do not apply to a national bank, they also would not apply to an out-of-state state bank, regardless of whether the bank has a physical branch within the state’s borders.
American Bankers Association President and CEO Rob Nichols said the proposal recognizes that modern banking activities do not stop at state borders.
“It also supports what we have long advocated — state-chartered banks should not face a structural disadvantage simply because they serve customers in a state where they do not maintain a physical branch,” Nichols said. “The FDIC’s actions will strengthen our nation’s dual banking system by allowing state banks to compete nationally while maintaining state chartering and state supervision’s central role, ensuring banks of all sizes and charter types can better serve their customers, clients and communities.”
The FDIC will take public comment on the proposed rule for 60 days following publication in the Federal Register.
