OCC 2003-35
OCC Bulletin

Subject:      Bank Activities and Operations; and Real Estate 
              Lending and Appraisals
Description:  Notice of Proposed Rulemaking

Date:         August 7, 2003 

TO:  Chief Executive Officers of All National Banks, Federal Branches 
     and Agencies, Department and Division Heads, and All Examining 
     Personnel

The Office of the Comptroller of the Currency (OCC) published the 
attached notice of proposed rulemaking (NPRM) in the Federal 
Register on August 5, 2003.  The NPRM invites comments on proposed 
amendments to 12 CFR 7 and 34 of its regulations.  Comments on the 
NPRM will be due by October 6.

Proposed revisions to parts 7 and 34 would add provisions clarifying 
the applicability of state law to national banks.  These provisions 
would identify types of state laws that are preempted, as well as 
types of state laws that generally are not preempted, in the context 
of national bank lending, deposit-taking, and other authorized 
activities.

In recent years, the OCC has received numerous inquiries concerning 
the applicability of state law to national banks and the extent to 
which state law applies to a national bank’s exercise of powers 
authorized by federal law.  This issue has been the subject of 
litigation in different contexts.  Due to the number and significance 
of the questions that continue to arise with respect to the 
preemption of state laws in these areas, the OCC believes it is now 
timely to provide more comprehensive standards regarding the 
applicability of state laws to lending, deposit-taking, and other 
authorized activities of national banks.

The proposal would add an explicit safety-and-soundness-based, 
anti-predatory-lending standard to the general statement of 
authority concerning real estate lending in 12 CFR 34 and other 
lending in 12 CFR 7.  As proposed, the standard would prohibit a 
national bank from making a loan based predominantly on the 
foreclosure value of the borrower’s collateral, rather than on the 
borrower’s repayment ability, including current and expected income, 
current obligations, employment status, and other relevant financial 
resources.

For further information, contact Andra Shuster, counsel, Legislative 
and Regulatory Activities Division at (202) 874-5090.


						
Julie L. Williams
First Senior Deputy Comptroller and Chief Counsel

Attachment—68 FR 46119
[http://www.occ.treas.gov/fr/fedregister/68fr46119.pdf]