[Congressional Record Volume 141, Number 6 (Wednesday, January 11, 1995)]
[Extensions of Remarks]
[Page E74]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


           CLARIFYING THE RIEGLE-NEAL INTERSTATE BANKING ACT

                                 ______


                            HON. BILL ORTON

                                of utah

                    in the house of representatives

                      Wednesday, January 11, 1995
  Mr. ORTON. Mr. Speaker, I rise to provide clarification of the 
Riegle-Neal Interstate Banking and Branching Act of 1994.
  Last year, I was proud to be an original cosponsor of H.R. 3841, the 
House version of interstate banking legislation which became law. I 
participated both in subcommittee and full committee consideration of 
this important legislation. I worked hard to see this legislation work 
its way through the House to become law. I believe passage of this bill 
was an important step toward the modernization and full development of 
our banking system.
  Therefore, I was disturbed to see a recent appellate court decision 
that, in my opinion, misinterprets the provisions of this interstate 
banking bill. The decision I am referring to is Mazaika v. Bank One 
Columbus, N.A. No. 00231 (Pa. Superior Court 1994) (en banc). 
Incidentally, other courts have reached the opposite conclusion.
  The Mazaika 6 to 3 majority ruled that a national bank located in 
Ohio was not authorized by section 85 of the National Bank Act to 
collect certain credit card charges from Pennsylvania residents. 
Collection of such charges is permitted under Ohio State law, but not 
under Pennsylvania State law. This decision relied on the applicable 
law provision of last year's interstate banking act in reaching the 
conclusion that Pennsylvania State law applies in such a case, 
notwithstanding
 section 85.

  Based on my involvement in the legislative consideration of this 
bill, and on my understanding of its specific provisions, I believe 
that the conclusion reached in the Mazaika case is wrong. First, the 
applicable law provision in the interstate bill applies only when a 
bank branches into a second State. In such a case, the provision 
subjects the branch of a bank to the State laws of this second State 
unless those laws are preempted. In the case in point, however, no 
branching is involved. Therefore, section 85 is preemptive. In the case 
in point, the Ohio bank should not be subject to Pennsylvania 
limitations on credit charges.
  Second, there is a savings clause in the interstate law that provides 
that nothing in the interstate law affects section 85 of the National 
Bank Act. As a result, the interstate law effectively preserves the 
lending authority of a national bank or State bank to collect lending 
charges on interstate loans from borrowers nationwide in accordance 
with the bank's home State limits.
  Finally, while it is not relevant to legislative language or intent, 
it is my opinion that the Mazaika opinion, if upheld, could have a very 
detrimental effect on free-fettered banking activities. 
Philosophically, I believe in States rights. I believe that Federal 
laws should be preemptive only where there is an overriding need to 
provide national uniformity.
  However, this is one such case where national rules should be 
preemptive. Subjecting lending activities of a bank in another State, 
where there are no branches, to that other State's limitations on 
credit card charges or usury limits would have a dampening effect on 
important interstate lending activities. This would also be contrary to 
the spirit and intent of the interstate banking bill, which is to 
expand lending activities nationwide.
  Mr. Speaker, many Members of Congress spent countless hours last year 
crafting an interstate banking bill that increases credit availability 
and moves us into the 21st century. The Mazaika decision threatens this 
progress. It is my hope that this can be corrected .


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