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FDIC Federal Register Citations

Capital One Financial Corporation

December 13, 2005

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

Via E-mail: comments@FDIC.gov

Re: Proposed Rule: Interstate Banking; Federal Interest Rate Authority RIN 3064-AC95

Dear Mr. Feldman:

Capital One Financial Corporation (“Capital One”) is pleased to submit comments regarding the Federal Deposit Insurance Corporation’s proposed rule responding to a portion of the Petition for Rulemaking filed by the Financial Services Roundtable on March 4, 2005.

Capital One Financial Corporation is a financial holding company whose subsidiaries Capital One Bank (a state member bank), Capital One, F.S.B., and Capital One Auto Finance, Inc., offer a variety of consumer lending and deposit products. Capital One’s subsidiaries collectively had 49.2 million accounts and $84.8 billion in managed loans outstanding as of September 30, 2005. Capital One is a Fortune 500 company and, through its subsidiaries, is one of the largest providers of MasterCard and Visa credit cards in the world.

In addition, last month Capital One completed its acquisition of Hibernia Corporation, a full-service commercial bank holding company that, as of September 30, 2005, had $23.2 billion in assets and 326 locations in Louisiana and Texas. Hibernia Corporation was the holding company for Hibernia National Bank.

Capital One applauds the FDIC for its leadership on this important initiative. The FDIC’s process on this initiative, including a public hearing held last May 24, has provided regulatory agencies and the industry the opportunity to initiate an open discussion regarding the challenges facing the dual banking system. It is our hope that this dialogue will continue, and that additional steps will be taken to address the growing disparities between state-chartered banks and their federally chartered counterparts. The success of the American banking system owes much to the stability and innovation fostered by the dual banking system. Its continued health, therefore, remains vital.

We concur with the Financial Services Roundtable's comment letter regarding the proposed rule and express support for that letter's various proposals.

Interstate Banking

Capital One continues to believe that any final rule should make clear that the governing law applicable to activities conducted by a state bank in a state in which that bank does not have a branch is its home-state law to the same extent that host-state law is preempted for national banks by the National Bank Act. The modern financial services industry often operates across state borders through non-branch means, and thus, the proposed rule falls short of achieving parity on this important dimension. For the reasons stated in the Roundtable’s petition, we believe that the FDIC has the requisite authority to enact a more comprehensive rule to create parity for state-chartered banks vis-à-vis their national bank competitors, and we strongly believe that a more comprehensive parity regime for state banks is a critical component of a viable and robust dual banking system. We urge the FDIC to continue to address this important subject.

Federal Interest Rate Authority

Capital One strongly endorses the FDIC’s proposed regulatory provisions interpreting the federal statute addressing interest charged by FDIC-insured state banks, section 27 of the Federal Deposit Insurance Act. In particular:

• By incorporating these interpretations in regulations, the FDIC will greatly strengthen their legal status, as compared with General Counsel opinions, by ensuring that they receive the full deference to which they are entitled under the Supreme Court’s Chevron doctrine.

• We endorse the proposed rule that these statutory and regulatory provisions will be interpreted in the same manner as section 85 of the National Bank Act and its implementing regulations; this will ensure continuing parity in this important regulatory area between state and national banks, as the dynamic regulatory environment evolves.

• We commend the FDIC for recognizing, in this part of its proposed regulations, the importance of banks that conduct an interstate business without establishing branches in host states, and for providing a rule establishing where such a bank is located for purposes of section 27.

• We agree that it is desirable for state banks to disclose to consumers the law governing the interest rate of a loan – i.e., federal law and the law of the relevant state – just as the OCC has recognized that it is desirable for national banks to do so. Banks should be allowed flexibility in how they make that disclosure, in the context of the other disclosures and business terms that are being communicated to the consumer. The customer agreement, for example, is an appropriate location for a disclosure of this type.

These provisions will significantly strengthen the legal framework under which interstate state banks operate.

Capital One appreciates the opportunity to comment on the proposed rule. If you have any questions about this matter and our comments, please call me at (703) 720-2255.

Sincerely,

Christopher T. Curtis
Associate General Counsel
Policy Affairs

 


Last Updated 12/14/2005 Regs@fdic.gov

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