[Federal Register Volume 65, Number 207 (Wednesday, October 25, 2000)]
[Notices]
[Page 63917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27348]



[[Page 63917]]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

[Docket No. 00-22]


Notice of Request for Preemption Determination

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Notice and request for comment.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
publishing for comment two written requests for the OCC's opinion about 
whether Federal law would preempt certain provisions of the Michigan 
Motor Vehicles Sales Finance Act (MVSFA) as interpreted by the Michigan 
Financial Institutions Bureau (FIB), that limit the ability of banks to 
make loans to finance motor vehicle sales. The purpose of this notice 
and request for comment is to provide interested persons with an 
opportunity to submit comments on this matter prior to the OCC's 
issuance of an opinion.

DATES: Comments must be received on or before November 24, 2000.

ADDRESSES: Comments should be sent to the Communications Division, 
Office of the Comptroller of the Currency, 250 E Street, SW., Third 
Floor, Attention: Docket No. 00-22, Washington, DC 20219. You may 
submit comments electronically to [email protected] or by 
facsimile transmission to (202) 874-5274. You can inspect and photocopy 
the comments at the OCC's Public Reference Room, 250 E Street, SW., 
Washington, DC, between 9 a.m. and 5 p.m. on business days. You can 
make an appointment to inspect the comments by calling (202) 874-5043.

FOR FURTHER INFORMATION CONTACT: Michele Meyer, Senior Attorney, or 
Mark Tenhundfeld, Assistant Director, Legislative and Regulatory 
Activities Division, (202) 874-5090.

SUPPLEMENTARY INFORMATION:

Background

    The requesters are national banks headquartered in Ohio that would 
like to conduct motor vehicles sales financing through automobile 
dealers in Michigan. The banks would enter into agreements with the 
dealers under which the dealers would act as the banks' agents for the 
purpose of soliciting loans to finance motor vehicles, taking 
applications for the vehicle loans, preparing the loan documentation, 
and obtaining the buyers' signatures on all required documents. The 
banks would prescribe the terms of the loan, including the minimum 
interest rate, and fund the loans.
    This method of conducting business is inconsistent with a 
Declaratory Ruling issued by the FIB on January, 1, 2000, concerning 
this proposed practice.\1\ The FIB concluded that, under the MVSFA, the 
proposed arrangement between the banks and Michigan motor vehicle 
dealers would result in ``installment sale contracts'' subject to the 
MVSFA.\2\ In order for a motor vehicle installment sale contract to 
comply with the MVSFA: (1) The dealer must originate the loan as a 
licensed installment seller of motor vehicles; and (2) the bank may 
only purchase the loan, as a licensed sales finance company.\3\ The 
transaction must also comply with the several other requirements of the 
MVSFA that apply to installment sale contracts.\4\ Thus, a national 
bank cannot originate motor vehicle loans through a dealer agent.
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    \1\ In the Matter of: Request by Rodney D. Martin on Behalf of 
National City Bank for a Declaratory Ruling on the Applicability of 
the Motor Vehicle Sales Finance Act to Certain Transactions (January 
1, 2000).
    \2\ Section 2 of the MVSFA defines an ``installment sale 
contract'' as one ``for the retail sale of a motor vehicle, or which 
has a similar purpose or effect, under which part or all of the 
price is payable in 2 or more scheduled payments subsequent to the 
making of the contract * * *'' MCL 492.102(9); MSA 23.628(2)(9).
    \3\ MCL 492.103(a) and (b); MSA 23.628(3)(a) and (b).
    \4\ These include, for example, provisions concerning the form 
and contents of an installment sales contract, disclosures that must 
be made to the buyer, the amount and computation of fees and finance 
charges, and prohibited charges. See MCL 492.112-492.134.
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    The requesters have asked our opinion whether the National Bank Act 
preempts the provisions of the MVSFA described in this notice, as those 
provisions have been interpreted by the FIB, with respect to national 
banks. The requesters assert that the FIB's construction of the 
proposed financing transactions as installment sale contracts under the 
MVSFA impairs a national bank's authority under the National Bank Act 
to make loans and determine the interest rates on those loans.\5\ The 
requesters contend that the FIB's construction of the proposed 
financing transactions as installment sale contracts subject to the 
MVSFA is an impermissible state restriction of a national bank's 
exercise of its authority under 12 U.S.C. 24(Seventh) to originate 
loans directly to the bank's customers through third-party agents 
without having to obtain state licenses. The requesters further assert 
that the FIB's interpretation, which required the dealer, rather than 
the bank, to originate the loans unlawfully restricts a national bank's 
authority under 12 U.S.C. 85 to charge interest on loans at the rate 
allowed by the bank's home state.
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    \5\ The requesters contend that the proposed financing 
transactions would not result installment sale contracts under the 
meaning of the MVSFA because the banks and their customers would be 
contracting for loans and not ``for the retail sale of * * * motor 
vehicle[s].'' The FIB, as indicated in its Declaratory Ruling, 
disagrees with this interpretation and considers the transactions 
installment sale contracts subject to the requirements of the MVSFA.
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Request for Comment

    Section 114 of the Riegle-Neal Interstate Banking and Branching 
Efficiency Act of 1994 (Pub. L. 103-328, 108 Stat. 2338) generally 
requires the OCC to publish in the Federal Register a descriptive 
notice of certain requests that the OCC receives for preemption 
opinions.\6\ Under section 114, the OCC must publish notice before it 
issues any opinion letter or interpretive rule opining that Federal law 
preempts the application to a national bank of any State law in four 
designated areas: community reinvestment, consumer protection, fair 
lending, or the establishment of intrastate branches. Pursuant to 
section 114, interested persons have at least 30 days to submit written 
comments. Without making a determination as to whether section 114 
applies to this request, the OCC has decided that it is appropriate to 
use notice and comment procedures.
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    \6\ 12 U.S.C. 43.
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    The OCC requests comments on the issues described above. The OCC 
will publish in the Federal Register any final opinion letter we issue 
in response to the requests.

    Dated: October 16, 2000.
John D. Hawke, Jr.
Comptroller of the Currency.
[FR Doc. 00-27348 Filed 10-25-00; 8:45 am]
BILLING CODE 4810-33-P