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THe DoDD-FraNK aCT aND FeDeral PreemPTIoN

Although the OCC attempted to preempt state law by regulation, the Court did not rely on the OCC determination to decide the case.28 Instead, the Court held that because national banks have “the power to engage in real estate lending through an operating subsidiary…that power cannot be sig- nificantly impaired or impeded by state law.”29

The Act implicitly rejects the Court’s holding.

atters dealt with the

power to conduct mortgage lending — a power granted to national banks by 12 U.S.C. § 371. The Court held that, because states may not interfere with national bank mortgage lending powers, and because national banks may exercise their powers through subsidiaries, states may not interfere with mortgage lending by national bank subsidiaries. The Act, however, states that 12 U.S.C. § 371 does not preempt state law for national bank subsidiaries and affiliates unless the subsidiaries or affiliates are also national banks.30 Thus, it appears that national bank subsidiaries no longer have access to federal preemption of state regulation with respect to real estate lending. Although this conclusion subjects subsidiaries to “surveillance under rival oversight re- gimes,” a result that the Court noted would interfere with the business of banking,31 it is the only plausible reading of the statute. The same dichotomy is created with respect to all other powers under the National Bank Act; state laws may be (and probably are) preempted for national banks, but not for any

of their subsidiaries or affiliates unless they are also national banks.

Procedure for making and reviewing Preemption determinations

In addition to codifying a separate preemption standard for national banks, the Act vests authority to make preemption determinations in a dif- ferent regulator: the OCC. Recall that the Bureau is generally responsible for deciding whether state consumer financial laws are preempted. The Act relegates the Bureau to a supervisory role when it comes to national banks. Instead, it authorizes courts to determine whether state consumer financial laws are preempted for national banks and allows the OCC to make such de- terminations “on a case-by-case basis.”32 This limitation prohibits the OCC from making general and sweeping preemption decisions by requiring that the OCC make separate determinations with respect to (1) particular state consumer financial laws and (2) whether a particular preempted state law is


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