WASHINGTON - The Comptroller of the Currency's office is slated to propose rules today that would make it easier for banks to do business across state lines and to march into new product areas.
"We are trying to comprehensively modernize the framework for how national banks are allowed to do their business," said Julie L. Williams, the agency's chief counsel.
The changes come in an 85-page proposal that would revise the agency's interpretive rulings on a grab bag of banking issues. The agency's plan is to "weed out the rulings that are outdated and to try to clarify some and update others," Ms. Williams said.
Part of the proposal would make it easier for banks to do business interstate. This change would come from defining the place a bank makes a loan as where it disburses the funds.
The Comptroller's office had never before issued a definition on the issue. Its doing so now means that bank offices that take loan applications but don't accept deposits would not be subject to branching restrictions.
Banks could move into new product lines under some provisions of the OCC plan.
For instance, the plan would allow banks to sell their excess data- processing capabilities, something banks have been seeking for years.
The move "signals increased OCC flexibility in looking at broader data- processing and technology services," Ms. Williams said.
"Technological sophistication of banks makes it very conducive for banks to provide a range of technological services for their customers," Ms. Williams said. "It meshes very well with the other sorts of services that they provide."
The agency also requested comments on whether to issue rules forbidding states to bar national banks from engaging in activities permitted by federal rules through the use of restrictive licensing laws. If the Comptroller's office codifies its current position in new rules, it would bolster the ability of banks to sell insurance in states that now resist the moves.
"That is apt to be controversial in a number of states," said James D. McLaughlin, director of agency relations at the American Bankers Association. The ABA supports the Comptroller's position. "The state licensing laws should not be used to restrict authorities granted to the national banks," he said.
In a proposal that may draw fire from consumers, the Comptroller's office offers an expansive definition of what makes up the interest rates banks may charge. The agency would include annual fees, over-the-credit- limit fees, late fees, insufficient funds fees, or cash advance fees in the definition of allowable interest charges for national banks.
National banks may charge customers the highest rate permissible in the state in which the bank is located. In the past, consumers have argued that banks have engaged in usury by charging more than their state allows for certain fees. The proposed agency rules could help banks weather court challenges, and should make it easier for banks to offer credit on the same terms to customers in different states.
The issue "is one that is important to get resolved as banks move into interstate operations," Ms. Williams said.
Nevertheless, the agency has not yet addressed the question of where a bank is located for purposes of the rule. With more and more national banks forming multistate banks by moving their headquarters up to 30 miles across state lines, that question is important.
"That is a big question - whether you are able to pick and choose" which state's interest rate limits to abide by, Ms. Williams said. The Office of Thrift Supervision decided to allow institutions to choose which state rules to follow when Ms. Williams served in its legal department.
The proposal would also streamline banking rules by dropping several rules OCC believes are outdated, such as one allowing national banks and their subsidiaries to make mortgage loans another giving national banks permission to have employment contracts.
The rewrite of Part 7 of OCC's regulations shows the agency is "continuing its effort to try to get its regulations to match with the reality of how the banking business is being conducted," Ms. Williams said. Comments are due May 2.
