Federal Deposit
Insurance Corporation

Conference of State Bank Supervisors
 
December 13, 2005 

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

Dear Mr. Feldman: 

The FDIC’s Notice of Proposed Rule Making regarding the preemption of certain state laws is an effort 
to address the competitive inequities between state-chartered banks and national banks. This inequity 
was created by the actions of the Comptroller of the Currency to exempt national banks from state laws 
which are designed to protect consumers. For a states’ rights organization like the Conference of State 
Bank Supervisors, supporting this type of proposal does not come easily. CSBS, as a matter of policy, 
remains opposed to the broad federal preemption of state laws. We continue to believe that 
Congress is the appropriate venue for determinations that result in the broad scale preemption of state 
laws, and would prefer that Congress act to redress the competitive imbalance and threat to consumer 
protection resulting from the Comptroller’s action. 

In the absence of action by Congress, the proposal advanced by the FDIC board attempts to remedy the 
current competitive disparity in order to restore balance to the banking system. Balance between state 
and national banks has been the historical goal of Congress. 

State bank commissioners have diverse views on the approach proposed by the FDIC. Not all state bank 
commissioners agree that the authority of section 27 should be extended to a state bank subsidiary. 
While we agree that the FDIC needed to define “activity conducted at a branch,” not all commissioners 
agree with the proposed definition. We have left those issues for individual states to address. 

The definition applied to “activity conducted at a branch” clarifies the statutory provisions of section 
24(j)(1). Unfortunately, paragraph C of subpart F goes well beyond the language and intent of federal 
law by placing an additional burden on state-chartered banks. This provision does not require the 
Comptroller to respond in writing to a preemption inquiry on a “particular host state law” by a state-
chartered institution. Without this written opinion, the Comptroller’s amendment would force state 
banks to seek remedies from the courts on each “particular host state law.” This is a daunting prospect 
for any business and would create costly regulatory burden for financial institutions. 

Paragraph C of the rule must be constructed to parallel federal law and provide true parity between state 
and national banks. 

We commend the FDIC board and staff for recognizing and attempting to remedy the present imbalance 
in the dual banking system. 

Best regards, 

Neil Milner, CAE 
President & CEO 
CONFERENCE OF STATE BANK SUPERVISORS