OCC Endorsement of a Texas Rule Seen as Good Omen by States

WASHINGTON - The Office of the Comptroller of the Currency's recent decision to let a Texas regulation cover national banks may signal a conciliatory attitude toward states' rights.

Then again, it may not.

The Comptroller's office's "preemption determination" letter, published in the Federal Register June 20, won't have any immediate practical effect.

The Texas regulation it addresses - which banned banks from advertising or identifying their branches as separate banks - has been eliminated by a change in the state's banking laws.

The letter is still important, however, because it "contrasts markedly with the bullying image attributed to the OCC by self-styled states' rights advocates," said David Roderer, a partner at the law firm of Winston & Strawn here.

Mr. Roderer said the letter may provide some insight into future actions by the agency if it has to decide whether to accept state laws governing the insurance powers of national banks.

One critic said he saw the letter last month as a good omen.

"We were delighted," said James Watt, president and chief executive of the Conference of State Bank Supervisors. "I hope it's a sign that the OCC, rather than just making a knee-jerk preemption, really looks at each of these on its own merits."

It's possible, however, that the letter does not indicate any change in course. Congress has made it clear that banks' names are a matter of state law, not federal regulation, Mr. Roderer said, which means the Comptroller's office really had no choice in the Texas case.

In the letter, Julie L. Williams, chief counsel for the Comptroller's office, wrote, "State law applicable to national banks will generally be presumed valid unless it conflicts with federal law, frustrates the purpose for which national banks were created, or impairs their efficiency to discharge the duties imposed upon them by federal law."

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