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THe baNKING laW JourNal

determined that a federal statute which authorized national banks in small towns to act as insurance agents preempted a Florida law that prohibited banks from selling most types of insurance.14 In addition to explicit preemp- tion and field preemption,15 the Court noted that state laws may be preempt- ed where they are in “irreconcilable conflict” with federal statutes.16 This may occur where compliance with both laws is impossible, or where the state law is “an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”17

The Court explained that the state law appeared to be “an obstacle to the accomplishment” of the purposes of the federal statute because the state law prohibited banks from selling insurance — an activity authorized by the statute.18 Where federal law grants “powers” to national banks, such grants of authority generally preempt state law.19 Courts normally presume that Congress does not intend for states to impair the exercise of powers granted to national banks.20 This presumption does not prevent states from regulat- ing national banks where “doing so does not prevent or significantly interfere with the national bank’s exercise of its powers.”21 However, because the state law in Barnett significantly interfered with a power granted to national banks, and because there was no indication that the federal statute was intended to be subservient to state law, the state law was preempted.22

Note that the section of the Act referenced above only mentions national banks. The same section states that the National Bank Act and Section 24 of the Federal Reserve Act (codified at 12 U.S.C. § 371) do not preempt or affect the application of state laws to national bank subsidiaries and affili- ates.23 This provision effectively overturns the Supreme Court’s decision in

atters

v.

achovia

Bank,

N.A.24

In

atters,

the

Court

reiterated

that

states

may regulate national banks “where doing so does not prevent or significantly interfere with the national bank’s or the national bank regulator’s exercise of its powers.”25 It affirmed that national banks may engage in mortgage lend- ing subject to regulation by the Office of the Comptroller of the Currency (“OCC”) under 12 U.S.C. § 371 and that this provision would preempt inconsistent state laws for national banks.26 Freedom from significant inter- ference by the states is a condition of “the business of banking” for national banks, and this “security should adhere whether the business is conducted by

the

bank

itself

or

is

assigned

to

an

operating

subsidiary

licensed

by

OCC.”27

12

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