The Arkansas Banking Department is suing the Comptroller's Office over its use of the controversial "30-mile rule."

In a lawsuit filed Nov. 8 in federal district court, Arkansas Bank Commissioner Bill J. Ford said the OCC broke the law when it allowed Union Planters National Bank, West Memphis, Ark., to relocate its headquarters to Memphis, Tenn., while retaining its Arkansas office as a branch. Arkansas law prohibits interstate branching.

The OCC approved Union Planters' request on Aug. 28 by using an interstate banking loophole that allows a national bank to move its headquarters anywhere within a 30-mile radius.

Two states have been successful in challenging the federal agency's use of the 30-mile rule. The Texas Banking Department has won two such cases. The latest came last month when a U.S. district court judge ruled that national banks may not branch into the Lone Star State while retaining branches in adjoining states.

Connecticut won a similar legal challenge in August, when a federal judge ruled that the OCC overstepped its authority in allowing Fleet Financial Group to consolidate branches in three states using the 30-mile rule.

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