Increased State Regulation: Should Federal Preemption Be Invoked?

Federal appellate courts are split on preemption. While a federal court in New York held that OCC regulations preempt state requirements on interest for mortgage escrow accounts, courts in Rhode Island and California reached the opposite conclusion. Now, national banks operating across those jurisdictions have to decide whether, and how far, to invoke federal preemption.

Former OCC examiner Travis Nelson lays out the three options available to national banks, explaining the cost and revenue tradeoffs of each, and the one thing every bank needs in the file regardless of which path it takes.