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1.5.13 Federal Credit Union Act Preemption of State Law

The National Credit Union Administration has been less aggressive than the OCC and the OTS in preempting state laws. Nonetheless, the Federal Credit Union Act and NCUA regulations under it preempt some state laws governing deposit accounts. The Dodd-Frank Act did not revise the preemption standard governing the Federal Credit Union Act, but the same Barnett Bank preemption standard should apply to state laws that apply to federal credit unions.256

In credit union parlance, deposits are called “shares” of the credit union of which a customer is a member. NCUA has stated that, consistent with federal law and its contractual obligations, a federal credit union may “determine the types of fees or charges and other matters affecting the opening, maintaining and closing of a share, share draft or share certificate account. State laws regulating such activities are not applicable to federal credit unions.”257

NCUA has also issued letters preempting state laws governing check-cashing fees258 and other issues.259

However, NCUA has made clear that federal credit union subsidiaries, referred to as credit union service organizations (CUSOs), must comply with state law.260


  • 256 {244} See § 1.5.2, supra.

  • 257 {245} 12 C.F.R. § 701.35(c). See Whittington v. Mobileoil Fed. Credit Union, 2017 WL 6988193 (E.D. Tex. Sept. 14, 2017) (applying this regulation and holding that claim that credit union imposed overdraft charges unfairly and unconscionably is preempted); NCUA Legal Opinion Letter No. 06-1214 (Apr. 11, 2007) (FCUA preempts state restrictions on dormant account fees); NCUA Legal Opinion Letter No. 04-0259 (Mar. 12, 2004) (FCUA preempts state law that would prohibit a federal credit union from charging dormant account fees).

    Preemption of state law governing loans and interest rates is in another NCUA regulation, 12 C.F.R. § 701.21(b). See National Consumer Law Center, Consumer Credit Regulation § 3.3 (2d ed. 2015), updated at

  • 258 {246} NCUA Legal Opinion Letter No. 07-0743 (Aug. 7, 2007) (preempting Georgia law’s prohibition on charging fees to non-accountholders cashing share drafts drawn on federal credit unions).

  • 259 {247} NCUA legal opinion letters are available at

  • 260 {248} 12 C.F.R. § 712.3(e) (“A CUSO must comply with applicable Federal, state and local laws.”). See generally National Consumer Law Center, Mortgage Lending § 5.15.5 (3d ed. 2019), updated at