On October 7, 2004, Representative Barney Frank (D-Mass.) introduced in the United States House of Representatives H.R. 5251 to limit the preemption of state law for national banks. [A companion bill was introduced in the U.S. Senate by Senator Corzine (D.-N.J). See S.B. 2973 (introduced on October 9, 2004).] H.R. 5251 was referred to the House Committee on Financial Services.

Regarding national bank preemption, H.R. 5251 provides that, notwithstanding other provisions of federal law, state consumer laws of general application (including laws relating to unfair of deceptive acts or practice and consumer fraud laws) will apply to national banks. The bill also provides that, notwithstanding other provisions of federal law, state laws that (i) apply to state banks and (ii) are enacted pursuant to or in accordance with, and consistent with, a federal law that permits states to exceed or supplement the requirements of federal law will apply to national banks. The bill further provides that state laws that (i) discriminate against national banks or (ii) are inconsistent with federal law (to the extent of such inconsistency) will not apply to national banks.

Regarding visitorial powers, the bill provides that the visitorial powers provision of the National Bank Act will not be construed as limiting or restricting the ability of state authorities, specifically state attorney generals, to enforce any federal or state law as authorized by such law or to seek other relief on behalf of residents of a state against national banks.

Regarding national bank operating subsidiaries, the bill provides that no provision of federal law will be construed as preempting state law unless the preemption is explicitly provided by an Act of Congress.

The bill also specifies that federal preemption of state law is not a right, privilege, or immunity of national banks that is actionable under 42 U.S.C. § 1983.

Finally, the bill imposes significant direct and indirect data collection, monitoring, classification and reporting requirements on the Office of the Comptroller of the Currency with regard to consumer complaints and complaint resolution. The bill does not define the term “complaints” but lists a number of federal statutes for tracking. The bill also imposed consumer complaint tracking requirements by state and by state statute.

The bill is the latest congressional effort to influence the ongoing debate over national bank preemption. Previous efforts have been thwarted by congressional leadership.

Michael C. Tomkies and Elizabeth L. Anstaett