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FDIC Federal Register Citations

North Carolina Bankers Association

December 6, 2005


Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429


Re: Notice of Proposed Rulemaking, 70 Fed. Reg. 198, 60019 (Oct. 14, 2005); RIN 3064-AC95

Dear Mr. Feldman:

The North Carolina Bankers Association (NCBA) is pleased to comment on the FDIC’s
proposed rules which would preempt certain state laws for the purpose of establishing
parity between national banks and state-chartered banks in interstate activities and
operations, and would implement federal statutory provisions on interstate interest rates.
The NCBA is a trade association representing all 146 banks, savings associations, and
trust companies headquartered or doing business in North Carolina.

As noted by the Financial Services Roundtable when it submitted its rulemaking petition,
the regulations adopted by the Office of the Comptroller of the Currency and the Office
of Thrift Supervision provide for broad preemption of state laws that might appear by
their terms to apply to federally chartered banks and thrifts. This preemption is founded
upon the OCC’s and OTS’s interpretation of federal law, and their interpretation has been
supported by the federal courts.

By contrast, state-chartered banks must confront a great deal of uncertainty over which
state laws apply to them when they branch into or conduct operations in another state.
The proposed rules would eliminate much of the uncertainty that currently surrounds
interstate banking activities by state-chartered banks. By providing, in general, that when
a federal court or the OCC preempts a state law, it is deemed to be preempted for
interstate state-chartered bank branches operating in that state, the proposed rules provide
much-needed predictability and uniformity. Where preemption has occurred, the
proposed rules make it clear that the law of a bank’s chartering state will control.

In enacting the Riegle-Neal Amendments Act of 1997, Congress established the
framework for the proposed rules. We support the rules, as set out in proposed form in
12 CFR § 362.19, and consider them to be consistent with the FDIC’s rulemaking
authority and necessary to maintain the continued vitality of the dual banking system.

We also support the proposal to implement the federal statutory provisions on interstate
interest rates. However, we have some concerns about the proposed language for the
rules to be codified in 12 CFR §§ 331.1 through 331.5. In particular, we ask that you
examine proposed § 331.4, “Location and interest rate for interstate state bank,” to
determine if there is a way to improve its readability. FDIC General Counsel Opinion 11
(GC-11), on which the conditions in subsection (c) of § 331.4 are modeled, is in some
respects easier to understand when it summarizes how the appropriate state usury
provisions for a loan are determined. If subsection (c)(2) were amended so that it more
closely tracked the language used in GC-11, this could improve overall clarity. One
possibility would be to state in subsection (c)(2) that the appropriate interest rate “[m]ay
be determined by reference to the laws of the home state of the state bank, where the non-
ministerial functions occur in different states or in offices other than a bank’s main office
or branches
.”

In addition, we recommend that the FDIC amend proposed § 331.5. The Depository
Institutions Deregulation and Monetary Control Act of 1980 permitted states to opt out of
certain requirements of the act. Several states exercised that authority by opting out
during the specified time period. We recommend that the FDIC amend § 331.5 to
include a list of those states that have opted out of the provisions of the act. Having a list
included with the rules along with appropriate language indicating the date that the list
was created or last revised would be a useful resource for bank compliance officers.

The North Carolina Bankers Association appreciates being given the opportunity to
submit these comments. If you have any questions, please do not hesitate to contact me.


Sincerely,
Nathan R. Batts
Associate Counsel


Last Updated 11/17/2005 Regs@fdic.gov

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