Federal Deposit
Insurance Corporation

Yesterday, Pat Vredevoogd, First Vice President of the National Association of REALTORS® (NAR), represented NAR at the FDIC's hearing on the Financial Services Roundtable Petition. One of the members of the FDIC panel, John F. Bovenzi, asked about the statement in NAR's written testimony that FDIC lacks authority to interpret the Riegle-Neal Act. In particular, he asked who could interpret it if FDIC could not. Because this involves a legal question and Ms. Vredevoogd is not an attorney, she suggested replying to his question by letter.

NAR believes that there are serious questions concerning the authority of the FDIC to interpret Riegle-Neal. Issues relating to preemption under Riegle-Neal have not been expressly delegated by Congress to the FDIC. Moreover, nowhere in the legislative history of Riegle-Neal or in the Amendments is there any mention of Congress conferring authority on the FDIC to interpret Riegle-Neal.

NAR believes that the interstate branching provisions of Riegle-Neal are self-executing and do not contemplate or authorize any agency, including the FDIC, to interpret its provisions. Even if the FDIC proceeds to interpret Riegle-Neal, its interpretation would not be entitled to Chevron¹ deference because the Act could also be interpreted by the OCC and the Federal Reserve Board.² Accordingly, FDIC action to grant the relief requested by the Petition would impermissibly expand the scope of the Act without Congressional approval and could be subject to serious challenge. In a similar fashion, the FDIC's general authority to prescribe implementing rules to carry out the Federal Deposit Insurance Act cannot be used by the FDIC as a basis for restructuring the financial system by preempting state law.

In this connection, we note that an FDIC interpretation of the Riegle-Neal Act as applied to insured state banks would intrude on and conflict with the authority of the Federal Reserve to supervise and regulate activities of state member banks.³ Action by the FDIC that encroaches on the jurisdiction of the Federal Reserve over state member banks is inappropriate and very likely unsustainable.

Please let me know if any other questions arise.

¹ Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

² See Proffitt v. FDIC, 200 F.3d 855, (D.C. Cir. 2000) (when a statute is administered by more than one agency, a particular agency's interpretation is not entitled to Chevron deference).

³ 12 U.S.C. §§ 321 et seq.