FDIC proposes extending national-bank state-law protections to out-of-state state banks
The FDIC proposed extending national-bank protections from host-state laws to out-of-state state banks in a Federal Register filing.
Under the proposal, a host state's laws would apply to an out-of-state state bank only as far as they apply to an out-of-state national bank, whether or not the state bank has a branch there. Home-state law would govern where the host law does not apply.
Illinois prompted the action. Its law prohibits interchange fees on the tax or gratuity part of a card transaction and limits use of transaction data. Its effective date has been delayed to July 1, 2027, and it carries a civil penalty of $1,000 per electronic payment transaction.
A federal court blocked enforcement against the entities covered by its order. The parties still disagree over whether federal protection reaches branchless state banks, which is the question the FDIC proposal seeks to settle.
