US preemption rules risk bank restructures

Author: Danielle Myles | Published: 25 Aug 2011

Federal preemption rules codified by Dodd-Frank may force national banks to restructure to avoid a jurisdictional split between the parent company and its operating subsidiaries.

The Comptroller of the Currency (OCC) has amended regulations to roll back the broad national preemption of state bank laws, as mandated by the financial overhaul law. These changes limit the circumstances in which nationally-chartered banks are able to comply with federal law as opposed to numerous states’ laws.

Among the most concerning of the July 21 changes is the reversal of...