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1.5.12 Application of Preemption to State-Chartered Banks, Non-Bank Entities

OCC preemption regulations can also have an impact on whether state laws apply to state-chartered institutions. In the bank’s home state, the question requires analysis of the state’s parity law (a law that, in some areas, gives state-chartered banks parity with other banks).238 If the bank is chartered in a different state, then federal law governing the out-of-state activities of state-chartered banks can extend preemption to those banks.239 Courts have found that state laws prohibiting check cashing fees are preempted as to out-of-state branches of state-chartered banks.240

State laws should be applicable to non-bank entities that are not covered by bank preemption regulations,241 such as convenience stores that own ATMs242 or employers who pay with payroll cards.243

Footnotes

  • 238 See National Consumer Law Center, Consumer Credit Regulation § 3.6 (2d ed. 2015), updated at www.nclc.org/library.

  • 239 See § 1.5.1, supra.

  • 240 See Pereira v. Regions Bank, 752 F.3d 1354 (11th Cir. 2014) (since Florida “at par” law—which prohibits fees for cashing on-us checks—would be preempted as to a national bank, Florida branch of Alabama state-chartered bank need only comply with Alabama, not Florida, law pursuant to 12 U.S.C. § 1831a(j)); Wells Fargo Bank v. James, 321 F.3d 488, 490, n.1 (5th Cir. 2003) (state at-par law does not apply to either state or federally chartered banks). But see Braham v. Branch Banking & Trust Co., 170 So. 3d 844, 846–847 & n.2 (Fla. Dist. Ct. App. 2015) (distinguishing and disagreeing with Pereira and holding that 12 U.S.C. § 1831a (j)(2) does not preempt state law); Baptista v. PNC Bank, Nat’l Ass’n, 91 So.3d 230 (Fla. Dist. Ct. App. 2012) (12 U.S.C. § 1831a (j)(1) does not preempt a host state law that prohibits check-cashing fees).

  • 241 12 U.S.C. § 25b(2), (e), (h)(2). See generally National Consumer Law Center, Mortgage Lending § 5.10 (2d ed. 2014), updated at www.nclc.org/library.

  • 242 Non-bank ATM operators have to be sponsored into the debit card system by a financial institution, which could raise preemption questions. But even if an ATM operator were deemed to be an agent of a financial institution, agents are not generally entitled to preemption. See § 1.5.3, supra. See also § 1.5.8, supra (bank’s right to establish ATMs).

  • 243 See § 7.3.6, infra.