[Federal Register Volume 61, Number 25 (Tuesday, February 6, 1996)]
[Notices]
[Pages 4515-4516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-2387]
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DEPARTMENT OF THE TREASURY
[Docket No. 96-01]
Preemption Determination
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Notice and request for comments.
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SUMMARY: The Office of the Comptroller of the Currency (OCC) is
publishing for comment a written request for OCC reconsideration of its
prior determination that Federal law preempts the application of a New
Jersey law that requires all depositories in the State which offer
regular checking accounts to offer low-cost or consumer checking
accounts. It is intended to provide interested persons with an
opportunity to provide comments on the preemption request prior to the
OCC's issuance of a final opinion letter responding to the request.
DATES: Comments should be submitted on or before April 8, 1996.
ADDRESSES: Comments should be sent to the Communications Division, 250
E Street, SW., Third Floor, Washington, DC 20219. Attention: Docket No.
96-01. Comments will be available for inspection and photocopying at
the same location. Appointments for inspection of comments can be made
by calling (202) 874-4700. In addition, comments may be sent by
facsimile transmission to FAX number 202-874-5274 or by electronic mail
to [email protected].
FOR FURTHER INFORMATION CONTACT: Susan L. Blankenheimer, Senior
Attorney, Bank Activities and Structure Division (202) 874-5300.
SUPPLEMENTARY INFORMATION:
Background
Section 114 of the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (section 114), Pub. L. 103-328 (12 U.S.C. 43),
generally requires the OCC to publish in the Federal Register a
descriptive notice of certain requests that the OCC receives for
preemption determinations. The OCC must publish this notice before it
issues any opinion letter or interpretive rule concluding that Federal
law preempts the application to a national bank of a State law in the
areas of community reinvestment, consumer protection, fair lending, or
the establishment of intrastate branches (the four designated areas).
The OCC must give interested persons at least 30 days to submit written
comments, and must consider the comments in developing the final
opinion letter or interpretive rule. The OCC must publish in the
Federal Register any final opinion letter or interpretive rule that
concludes that Federal law preempts State law in any one of the four
designated areas.
Section 114 also provides certain exceptions to the Federal
Register publication requirement, however. Notice or comment is not
required where the opinion letter or interpretive rule: (1) addresses
an issue essentially identical to one previously resolved by the courts
or on which the agency has previously issued an opinion letter or
interpretive rule; (2) responds to a request that contains no
significant legal basis on which to make a preemption determination; or
(3) is prepared for use in judicial proceedings, by Congress, or for
intragovernmental use.
While it is not clear that the standards of section 114 require
that the OCC apply the section 114 notice procedures to this request
for reconsideration, the OCC has elected to do so because of the
concern raised during Congressional consideration of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994 about the
particular OCC preemption opinion at issue. See H.R. CONF. REP. NO.
103-651, 103d Cong., 2d Sess. 53-54 (1994).
Specific Request for OCC Preemption Determination
On November 13, 1995, the State of New Jersey Department of Banking
(Department) requested that the OCC reconsider whether New Jersey's
Consumer Checking Account Act (NJCCAA), codified at N.J.Stat. Ann.
section 17:16N-1 et seq., is preempted by Federal law. In a 1992 letter
to the Department, the OCC concluded that the NJCCAA and its
implementing regulation, N.J. Admin. Code section 3:1-19.4, are
preempted by Federal law and that national banks doing business in New
Jersey are not required to comply with any of the provisions of the
NJCCAA or its implementing regulation. See Interpretive Letter No. 572
(January 15, 1992), reprinted in [1991-1992 Transfer Binder] Fed.
Banking L. Rep. (CCH) para. 83,342.
The NJCCAA requires every depository institution that maintains
regular checking accounts in New Jersey to make available to consumers
a New Jersey Consumer Checking Account at all offices of that
institution where regular checking accounts are offered or available.
N.J. Stat. Ann. section 17:16N-3.a.1 The NJCCAA does not require a
depository institution to offer a New Jersey Consumer Checking Account
at a cost below its actual cost of providing the account. The NJCCAA's
implementing regulation sets forth procedures for closing or refusing
to open a New Jersey Consumer Checking Account if a depository
institution's fees and revenues derived from the account are less than
its costs. N.J. Admin. Code section 3:1-19.4.
1 The term depository institution is defined to include
national banks doing business in New Jersey. Id. at section 2.
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The principal features of a New Jersey Consumer Checking Account,
as set forth in the regulation (N.J. Admin. Code Sec. 3:1-19.2(a)),
include the following:
1. The initial deposit amount necessary to open the account is
$50.00 and the minimum balance necessary to maintain the account is
$1.00;
2. The customer may make at least eight free withdrawals from the
account by check within a periodic cycle (for each transaction in
excess of this number, the regulation imposes a maximum charge of
$0.50);
3. The customer may make an unlimited number of free deposits and
withdrawals using deposit and withdrawal slips;
4. The amount that may be charged per periodic cycle for
maintaining the account may not exceed $3.00 per periodic cycle; and
5. A customer may not be charged for printing checks an amount
greater than that charged for regular checking account holders. In
addition, the depository institution may charge fees for automated
teller machine (ATM) usage and banking services if the fees are the
same as those for regular checking account holders for the same
services.
The NJCCAA further provides, in general, that a depository
institution may not discriminate against the holder of a New Jersey
Consumer Checking Account by furnishing fewer mail or electronic
banking services, or assessing higher fees, compared to the services
furnished to or fees assessed against regular checking account holders.
NJCCAA section 3.f. Section 3.h of the NJCCAA and section 3:1-19.4(a)
of the regulation set forth the limited conditions (including fraud and
a record of unpaid checks) under which a depository institution may
close or refuse to open a New Jersey Consumer Checking Account for a
customer.
The NJCCAA also prohibits a depository institution from requiring
that a holder of a New Jersey Consumer
[[Page 4516]]
Checking Account have another account or a credit card at that or any
other depository institution as a condition to opening or maintaining
the New Jersey Consumer Checking Account. NJCCAA section 3.i. Section 5
of the NJCCAA prescribes requirements for providing public notice of
the availability and features of a depository institution's New Jersey
Consumer Checking Account. Section 6 of the NJCCAA provides a private
right of action for violations of the NJCCAA, including injunctive
relief, and monetary damages. Finally, section 7 of the NJCCAA gives
the New Jersey Commissioner of Banking administrative enforcement
powers over institutions which fail to comply with the NJCCAA or any of
the Commissioner's regulations or orders thereunder. These powers
include the authority to issue a cease and desist order and assess a
civil money penalty.
The purpose of the Bank Enterprise Act is to provide Federally
insured depository institutions (including national banks) with an
incentive (e.g., a reduced Federal deposit insurance rate for deposits
attributable to lifeline accounts) to offer lifeline accounts,2
and to make loans and provide other financial assistance in distressed
communities. The term lifeline account is defined in section 232 of the
BEA (12 U.S.C. 1834) as a transaction account which meets certain
minimum requirements. The BEA does not, however, require depository
institutions to offer these lifeline accounts; that decision is left to
individual depository institutions.
\2\ Appropriations are required, however, to implement this and
other provisions of the BEA. Funds for the BEA have not yet been
appropriated, and the only funding that has been made available to
date is for a program based on the BEA that is administered by the
Administrator of the Community Development Financial Institutions
Fund (Administrator). See Appropriations Act for FY 1995, Pub. L.
No. 104-19, 109 Stat. 237 (July 27, 1995). The Administrator is
precluded by law, however, from using the amount of the deposit
insurance assessment as an incentive to participate in the program.
Riegle Community Development and Regulatory Improvement Act of 1994,
Pub. L. No. 103-325, section 114, 108 Stat. 2179 (Sept. 23, 1994)
(12 U.S.C. 4713).
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The Interpretive Letter No. 572 noted that the factors established
in section 232 of the BEA (12 U.S.C. 1834) for the purpose of
determining whether a transaction account qualifies as a lifeline
account eligible for reduced Federal deposit insurance assessment rate
are virtually identical to those listed in the NJCCAA for the purpose
of determining whether an account qualifies as a New Jersey Consumer
Checking Account. The Letter concluded, among other things, that since
the NJCCAA requires Federally insured depository institutions doing
business in New Jersey to offer lifeline accounts, the NJCCAA is in
direct conflict with a Federal statute, the BEA, set forth in Title II,
Subtitle C of the Federal Deposit Insurance Corporation Improvement Act
of 1991, Pub. L. No. 102-242, 105 Stat. 2236 (FDICIA), (12 U.S.C.
1834), which expressly makes the offering of such accounts voluntary.
Although Interpretive Letter No. 572 recognized that both Congress and
the New Jersey legislature saw the benefits of widespread use of
lifeline accounts, it concluded that under Federal preemption
principles, the State's method must yield in the face of a directly
contrary Federal treatment of this issue.
The Department's position is that the BEA does not preempt the
NJCCAA, since the two laws are not in conflict. The Department states
that the philosophy of the NJCCAA, to provide basic checking services
to those in need of them, is consistent with that of the BEA. The
Department asserts that it is unlikely that Congress intended to
preclude individual states from requiring depository institutions to
provide basic checking services to those in need. The Department also
states that Interpretive Letter No. 572 did not fully consider
applicable case law in the area of preemption, citing for example, the
case of Best v. United States National Bank of Oregon, 303 Or. 557, 739
P. 2d 554 (1987).
Request for Comments
The OCC requests comments on all aspects of the request for
reconsideration of OCC's prior determination that the application of
New Jersey law to national banks is preempted by Federal law. Comments
should be submitted to the docket number and address indicated in the
ADDRESSES paragraph of this document. The OCC will carefully consider
any comments received and publish its final determination in response
to the request.
Dated: January 22, 1996.
Eugene A. Ludwig,
Comptroller of the Currency.
[FR Doc. 96-2387 Filed 2-5-96; 8:45 am]
BILLING CODE 4810-33-P