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5500 - General Counsel's Opinions
GENERAL COUNSEL'S OPINION NO. 11, INTEREST CHARGES BY
INTERSTATE
STATE BANKS
Background
Section 27 of the Federal Deposit Insurance Act ("FDI Act")
(12 U.S.C.
1831d) 1
("section 1831d") establishes the maximum rates that insured
state-chartered depository institutions and state-licensed insured
branches of foreign banks (collectively, "State banks") may
charge their customers for most types of loans. Section 1831d is
patterned after and has been construed in pari materia with
section 5197 of the Revised Statutes (12 U.S.C. 85) ("section 85"
of the National Bank Act ("NBA")). Like section 85, section 1831d
has been construed to provide State banks with "most favored
lender" status and to permit State banks to "export" interest
charges allowed by the state where the lender is located to
out-of-state borrowers.
Since the enactment of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994, Pub. L. 103--328, 108 Stat. 2338
(1994) ("Riegle-Neal Act") and the Riegle-Neal Amendments Act of
1997, Pub. L. 105--24, 111 Stat. 238 (1997) ("Riegle-Neal Amendments
Act") (collectively, "Interstate Banking Statutes") questions
have arisen regarding the appropriate state law for purposes of section
1831d that should govern the interest charges on loans made to
customers of a State bank that is chartered in one state (the bank's
home state) but has a branch or branches in another state (the host
state) (an "Interstate State Bank"). These questions have not
previously been addressed by the Legal Division. Therefore, this
General Counsel's Opinion sets forth the Legal Division's
interpretation of section 1831d as it relates to the Interstate Banking
Statutes to provide guidance in this area to State banks and the
public. 2
{{6-30-98 p.5552}}
The Riegle-Neal Act established, for the first time, a comprehensive
federal statutory scheme for interstate branching by state and national
banks. In doing so, Congress recognized the potential efficiencies to
be gained by an interstate branch banking structure as well as the
complications that could arise in determining when an interstate bank
should look to the laws of its home state or a host state to determine
the interest rates that the bank may permissibly charge its customers.
1. Where May an Interstate State Bank Be Located for
Purposes of Section 1831d?
Section 1831d(a) establishes the maximum interest charges that State
banks may charge their customers for most types of loans. The interest
charges are established by reference to the location of the lender. The
statute provides:
In order to prevent discrimination against State-chartered insured
depository institutions, including insured savings banks, or insured
branches of foreign banks with respect to interest rates, if the
applicable rate prescribed in this subsection exceeds the rate such
State bank or insured branch of a foreign bank would be permitted to
charge in the absence of this subsection, such State bank or such
insured branch of a foreign bank may, notwithstanding any State
constitution or statute which is hereby preempted for purposes of this
section, take, receive, reserve, and charge on any loan or discount
made, or upon any note, bill of exchange, or other evidence of debt,
interest at a rate of not more than 1 per centum in excess of the
discount rate on ninety-day commercial paper in effect at the Federal
Reserve bank in the Federal Reserve district where such State bank or
such insured branch of a foreign bank is located or at the
rate allowed by the laws of the State, territory, or district where the
bank is located, whichever may be greater. (Emphasis
added.) 3
While the FDI Act does not specifically address where a lender is
located for purposes of section 1831d, the same reference to interest
rates where the bank is located is contained in section 85 of the NBA,
upon which section 1831d is based. 4
Prior to the enactment of section 1831d, the United States Supreme
Court recognized that a national bank, pursuant to section 85, could
"export" interest charges allowable in the state where the bank
was located to debtors domiciled outside the bank's home
state. 5
In Marquette the Court determined that the national bank was
"located" for purposes of section 85 in the state designated in
its organization certificate and could charge interest to residents of
other states at rates permitted under the laws of the state so
designated. 6
Section 85 has been recognized to be the "direct lineal ancestor"
of section 1831d, which was enacted as part of the Depository
Institutions Deregulation and Monetary Control Act of 1980, Pub. L.
96--221, 94 Stat. 132 (1980). Congress made a conscious choice to
pattern section 1831d after section 85 to achieve competitive equality
in the area of interest charges between state and national
banks. 7
{{6-30-98 p.5553}}
Reading the two provisions in pari materia because of
their historical background, the court in Greenwood
determined that section 1831d provided a state bank with the ability to
export interest charges to out-of-state borrowers from the state in
which it was chartered (recognizing the state where the bank was
chartered, Delaware, as the place where the bank was "located"
for purposes of section 1831d). 8
Therefore, prior to the enactment of the Interstate Banking Statutes,
the state where a State bank was chartered had been established as the
state in which a bank was "located" for purposes of exporting
interest rates under section
1831d(a).
Following enactment of the Interstate Banking Statutes it is
possible for an Interstate State Bank to make loans to customers either
from the state in which it is chartered or from an out-of-state branch.
Although the courts do not appear to have addressed the issue of
whether an Interstate State Bank may be located for purposes of section
1831d in the state where it is chartered and in each state where it
maintains one or more branches the OCC has recently issued several
Interpretive Letters indicating that an interstate national bank may be
"located" for purposes of section 85 in the state where its main
office is located, as well as in the state or states where it maintains
branches. See Interpretive Letter Nos. 686, 707, 782 and 822.
Similarly, in my view an Interstate State Bank also may be
"located" for purposes of section 1831d in its home state and in
each state where it maintains out-of-state branches. There are at least
three reasons for this view. First, the Riegle-Neal Amendment Act's
applicable law clause for State
banks 9
discussed in greater detail below, is an indication of Congress'
recognition that maintaining a branch within a state, except as
otherwise provided in section 1831a(j), constitutes a sufficient
presence (i.e., location) in the state to subject the branch to host
state laws, including the host state's consumer protection laws (which
include applicable usury ceilings). Second, the OCC also has observed,
most recently in Interpretive Letter No. 822, that there is a clear and
direct relationship between section 94 of the NBA, addressing the
"location" of a national bank for venue purposes, and section 85,
addressing the "location" of a bank for usury purposes, based
upon court decisions construing the two provisions. The language of
section 1831d, which is based largely upon sections 85 and
86 10
of the NBA, has been recognized to include judicial interpretations of
those provisions. 11
Finally, there is an evident congressional intent to provide State
banks with competitive equality with national banks in enacting section
1831d 12
and to provide parity between State banks and national banks in
enacting the Riegle-Neal Amendments
Act. 13
{{6-30-98 p.5554}}
2. If a State Bank is Located in More Than One State, Which
State's Usury Provisions Govern the Loans From the Bank?
Given that a State bank can be located in more than one state, the
next question is what state's usury provisions should govern loans
made by an Interstate State Bank.
The answer to this question requires reference to the applicable law
and usury savings clauses contained in the Riegle-Neal Act, the
Riegle-Neal Amendments Act, which subsequently amended the applicable
law clause for State banks, and to the legislative history underlying
these provisions.
The Applicable Law Clause for State Banks
With the introduction of nationwide interstate branching, questions
arose as to the appropriate law to be applied to out-of-state branches
of interstate banks. Congress addressed this matter for national banks
in section 102(b)(1) of the Riegle-Neal Act, which amended section 36
of the NBA to add a new subsection (f), which included 12 U.S.C.
36(f)(1)(A) ("the applicable law clause for national banks"), and
addressed this matter for State banks in section 102(b)(3)(B) of the
Riegle-Neal Act, which amended section 1831a of the FDI Act to add a
new subsection(j), which included 12
U.S.C. 1831a(j)(1) ("the applicable law clause for State
banks").
As originally enacted by the Riegle-Neal Act, the applicable law
clause for national banks provided for the inapplicability of specific
host state laws to a branch of an out-of-state national bank under
specified circumstances, including where Federal law preempted such
state laws for a national bank. 14
No similar provision, however, was contained in the applicable law
clause for State banks. 15
This made branches of out-of-state State banks subject to all of the
laws of the respective host state. In contrast, a national bank
operating with branches in various states benefitted from preemption,
and hence greater uniformity than a State bank, with regard to those
host state laws specified in section
36(f)(1)(A) 16
that affected their operations. This led to concerns that the nation's
dual banking system might be jeopardized because State banks might opt
to convert from state to national bank charters to avoid compliance
with a multitude of different state laws in each state in which State
banks wished to operate through interstate branches.
On June 1, 1997, the interstate branching provisions of the
Riegle-Neal Act became fully effective. Shortly thereafter, on July 3,
1997, section 1831a(j) was amended by the Riegle-Neal Amendments Act to
revise the applicable law clause for State banks. As amended by the
Riegle-Neal Amendments Act, section 1831a(j)(1) provides:
The laws of a host State, including laws regarding community
reinvestment, consumer protection, fair lending, and establishment of
intrastate branches, shall apply to any branch
{{6-30-98 p.5555}}in the host State of an
out-of-State State bank to the same extent as such State laws
apply to a branch in the host State of an out-of-State national bank.
To the extent host State law is inapplicable to a branch of an
out-of-State State bank in such host State pursuant to the preceding
sentence, home State law shall apply to such branch. (Emphasis
added.) 17
As explained by the legislation's sponsor, Representative Roukema,
the purpose of the legislation was to provide parity between State
banks and national banks. In describing the amendment's effect on host
state consumer protection laws, she indicated:
***Moreover, it recognized the importance of host State laws by
requiring all out-of-State banks to comply with host State laws in four
key areas, community reinvestment, consumer protection, fair lending,
and intrastate branching, unless the State law has been preempted (with
respect to) national banks. In that instance the law of the State which
issued the charter will prevail. 18
Therefore, under section 1831a(j)(1), the laws of a host state apply
to branches of out-of-state State banks to the same extent such state
laws would apply to a branch of an out-of-state national bank. If the
laws of the host state would be inapplicable to a branch of an
out-of-state national bank they are equally inapplicable to a branch of
an out-of-state State bank and the home state law will generally apply
to the branch of an out-of-state State
bank. 19
The Usury Savings Clause
The next question is when the host state interest provisions will
apply to a branch of an out-of-state State bank. For that issue, it is
necessary to consider the Riegle-Neal Act's usury savings clause and
the pertinent portions of the statute's legislative history.
Section 111 of the Riegle-Neal Act (the usury savings clause), was
added to the legislation prior to its enactment by an amendment
sponsored by Senator Roth to address the effect of the Riegle-Neal Act
on sections 85 and 1831d. The amendment was introduced by Senator Roth
in response to uncertainty expressed by the Acting Chairman of the FDIC
and one of the Governors of the Federal Reserve Board regarding the
effect that pending drafts of the interstate banking legislation might
have on the exportation of interest rates by a bank to borrowers
residing in states where the bank also operated an out-of-state
branch. 20
See 140 Cong. Rec. S12789 (daily ed. Sept. 13, 1994)
(remarks of Senator Roth).
The usury savings clause provides, in pertinent part:
No provision of this title and no amendment made by this title to
any other provision of law shall be construed as affecting in any way--
* * * * *
(3) The applicability of (section 85) or (section 1831d) of the
Federal Deposit Insurance Act. 21
Therefore, Congress did not intend for the Riegle-Neal Act to affect
the applicability of section 1831d to State banks.
{{6-30-98 p.5556}}
Harmonization of the Applicable Law Clause for State Banks
with the Usury Savings Clause
While the usury savings clause could conceivably be read to conflict
with the language of the applicable law
clause, 22
reference to the Riegle-Neal Act's legislative history allows the
provisions to be harmonized and placed in proper
context. 23
In discussing the usury savings clause, the Conference Report
states:
Section 111(3) specifically states that nothing in Title 1 affects
sections (85) or (1831d). Accordingly, the amendments made by the
(Riegle-Neal Act) that authorize insured depository institutions to
branch interstate do not affect existing authorities with respect to
any charges under section (85) or (1831d) imposed by national or state
banks for loans or other extensions of credit made to borrowers outside
the state where the bank or branch making the loan or other
extension of credit is
located. 24
(Emphasis added.)
Senator Roth explained this section of the Conference Report as
follows:
The statement of the managers expressly refers to the potential of
a "branch making the loan or other extension of credit ***" This
language underscores the widespread congressional understanding that,
in the context of nationwide interstate branching, it is the office of
the bank or branch making the loan that determines which state law
applies. The savings clause has been agreed to for the very purpose of
addressing the FDIC's original concerns and making clear that after
interstate branching, section (85) and section (1831d) are applied on
the basis of the branch making the
loan. 25
According to Senator Roth, for purposes of determining where a loan
is "made" the managers of the Conference Committee recognized
that in the new interstate banking environment banks with a branch or
branches in other states could involve those branches in some but not
all aspects of a loan transaction without the state law where the
branch was located becoming applicable to the loan. In explaining the
provisions Senator Roth distinguished "ministerial
functions" 26
from other functions (subsequently referred to as "non-ministerial
functions" 27
) related to the loan. To further explain the importance of these
distinctions, in the context of the appropriate state law to apply to
an interstate bank loan, Senator Roth indicated:
(It) is clear that the conferees intend that a bank in State A that
approves a loan, extends the credit, and disburses the proceeds to a
customer in State B, may apply the law of State A even if the bank has
a branch or agent in State B and even if that branch or agent performed
some ministerial functions such as providing credit card or loan
applications or receiving
payments. 28
{{2-28-01 p.5557}}
Senator Roth's comments, considered in the context of the
applicable law clause for State banks, are indicative of congressional
intent to recognize a parallel between existing law and the law that
should be applied if a loan was made in a branch or branches of a
single host state. Existing law already recognized the effect of home
state law on the state laws of a borrower's residence when loans were
made by national banks and State banks, respectively, to out-of-state
borrowers. In the context of interstate branching, however, Congress
intended to strike a balance between the application of host state and
home state interest provisions by applying the same exportation
principle previously recognized by the courts to loans made in a host
state because the three non-ministerial functions occurred in a branch
or branches of the host state.
Therefore, under the Riegle-Neal Act's usury savings clause the
ability of an out-of-state State bank to export the interest charges
that are permissible in the home state are preserved, even if a branch
or branches of the same bank is located in the same state as the
borrower. If all of the non-ministerial functions involved in making
the loan are performed by a branch or branches located in a host state,
however, the host state's interest provisions should be applied to the
loan.
Non-Ministerial Functions Occur in Multiple States or Outside
of Banking Offices
There are some situations that are not addressed by the Interstate
Banking Statutes. These include loans where the three non-ministerial
functions occur in different states or where some of the three
non-ministerial functions occur in an office that is not considered to
be the home office or branch of the bank (collectively, "banking
offices"). The OCC recently addressed these issues in Interpretive
Letter 822. With regard to loans where the three non-ministerial
functions occur in banking offices located in different states and the
loans cannot be said to have been "made" in a host state under
the criteria discussed in the legislative history of the Riegle-Neal
Act; the OCC concluded that the law of the home state could always be
chosen to apply to the loans because such a result will avoid throwing
"confusion" into the complex system of modern interstate banking
by having no rate to apply and because the bank is always the lender,
regardless of where certain functions occur.
The other situation addressed in Interpretive Letter 822 is where
any of the non-ministerial functions occur in a host state but not in a
branch. This could occur, for example, where a loan is approved in a
back office but the proceeds of the loan are disbursed in a branch in a
host state.
In these and similar situations, the OCC concluded that home state
rates may be used. Alternatively, in those situations the interest
rates permitted by the host state where a non-ministerial function
occurs may be applied, if based on an assessment of all of the facts
and circumstances, the loan has a clear nexus to the host
state. 29
I agree with the OCC Chief Counsel's analysis on these issues and
her observations in Interpretive Letter 822 regarding the significance
of an appropriate disclosure to customers that the interest to be
charged on the loan is governed by applicable federal law and the law
of the relevant state which will govern the transaction.
{{2-28-01 p.5558}}
The Non-Ministerial Functions
The OCC identified three non-ministerial functions for national
banks in Interpretive Letter No. 822 based upon the Riegle-Neal Act's
legislative history. An inquiry is required to determine the location
where each of the non-ministerial functions occur. Briefly stated, the
OCC determined that "approval" (i.e., the decision to extend
credit) occurs where the person is located who is charged with making
the final judgment of approval or denial of credit, and the site of the
final approval is the location where it is granted. "Disbursal"
means actual physical disbursal of the proceeds of a loan, as opposed
to the delivery of previously disbursed funds to the customer.
Disbursal can occur in various ways, including delivery to the customer
in person or crediting proceeds to the customer's account at a branch,
but does not include delivering the funds to an escrow or title agent
who, in turn, disburses them to the customer or for the customer's
benefit. "Extension of credit" means the site from which the
first communication of final approval of the loan occurs.
While the need for such inquiries as to non-ministerial functions
may not be initially apparent, I believe that Senator Roth's
distinction for purposes of the "disbursal" function between
"the actual disbursal of proceeds" and "delivering previously
disbursed funds to a customer" is indicative of the type of inquiry
Congress intended in order to identify non-ministerial functions which
effect where a loan is made for purposes of determining the state law
to be applied to a loan. The same definitions should be equally
applicable to State banks under section 1831d.
Conclusion
An Interstate State Bank can be "located" for purposes of
section 1831d in the state in which it is charterd, as well as the
states where the bank's out-of-state branch or branches are located.
The Interstate Banking Statutes do not affect the ability of an
Interstate State Bank to export interest rates on loans made to
out-of-state borrowers from that bank's home state, even if the bank
maintains a branch in the state where the borrower resides. If an
out-of-state branch or branches of an Interstate Bank in a single host
state performs all the non-ministerial functions (approval of an
extension of credit, extension of the credit, and disbursal of loan
proceeds to a customer) related to a loan, it "makes" the loan to
the customer for purposes of the Interstate Banking Statutes and the
loan should be governed by the usury provisions of the host state. If
the three non-ministerial functions occur in different states or if
some of the non-ministerial functions occur in an office that is not
considered to be the home office or branch of the bank, then home state
rates may be used. Alternatively, in those situations the interest
rates permitted by the host state where a non-ministerial function
occurs may be applied, if based on an assessment of all of the facts
and circumstances, the loan has a clear nexus to the host state. To
avoid uncertainty regarding which state's interest rates apply to a
loan Interstate State Banks should make an appropriate disclosure to
the customer that the interest to be charged on the loan is governed by
applicable federal law and the law of the relevant state which will
govern the transaction.
[Source:
63 Fed.
Reg. 27282, May 18,
1998]
1For the convenience of the reader, the initial reference to a
provision of the FDI Act or interstate branching legislation will be
made to the citation, as enacted, followed by the United States Code
citation. Thereafter, the provision will be referred to by the section
number contained in the United States Code. For example, the initial
citation of section 27 of the FDI Act will be followed by the United
States Code citation (12 U.S.C. 1831d) and the section will
subsequently be referred to as "section 1831d". Go Back to Text
2This opinion is not intended to address these issues with
regard to national banks. The Office of the Comptroller of the Currency
("OCC"), which has regulatory jurisdiction over national banks,
has issued several Interpretive Letters addressing these issues, in the
context of national banks and section 85. See, OCC
Interpretive Letter No. 686, September 11, 1995, reprinted
in (1995--1996 Transfer Binder) Fed. Banking L. Rep. (CCH) P
81--001 ("Interpretive Letter No. 686"); OCC Interpretive Letter
No. 707, January 31, 1996, reprinted in (1995--1996 Transfer
Binder) Fed. Banking L. Rep.2continued (CCH) P 81--022 ("Interpretive Letter No.
707"), OCC Interpretive Letter No. 782, May 21, 1997,
reprinted in (Current Binder) Fed. Banking L. Rep. (CCH) P
81--209 ("Interpretive Letter No. 782"); OCC Interpretive Letter
No. 822, February 17, 1998, reprinted in (Current Binder)
Fed. Banking L. Rep. (CCH) P 81--265 ("Interpretive Letter No.
822"). Go Back to Text
3The alternative interest rate that is tied to the discount
rate on 90-day commercial paper in effect at the Federal Reserve Bank
is not tied to state law but it, like the rate allowed by state law,
also requires a determination of where the lender is "located". Go Back to Text
4Section 85 states, in relevant part: "Any association may
take, receive, reserve, and charge on any loan or discount made, or
upon any notes, bills of exchange, or other evidence of debt, interest
at the rate allowed by the laws of the State, Territory, or District
where the bank is located, or at a rate of 1 per centum in
excess of the discount rate on ninety-day commercial paper in effect at
the Federal reserve bank in the Federal reserve district where the bank
is located, . . . ." (Emphasis added.) Go Back to Text
5Marquette Nat'l Bank v. First Omaha Serv. Corp.,
439 U.S. 299 (1978) ("Marquette"). Go Back to Text
6See also Cades v. H & R Block, 43 F.3d 869 (4th
Cir.), cert. denied, 515 U.S. 1103 (1995):
Christiansen v. Beneficial Nat'l Bank, 972 F. Supp. 681
(S.D. Ga. 1997); Basile v. H & R Block, 897 F. Supp. 194
(E.D. Penn. 1995). Go Back to Text
7See Greenwood Trust Co. v. Commonwealth of
Massachusetts, 971 F.2d 818, 826--827 (1st Cir.),7continued cert. denied, 506 U.S. 1052 (1993)
("Greenwood"). Go Back to Text
8Greenwood, at 829; see also Venture
Properties, Inc. v. First Southern Bank, 79 F.3d 90 (8th Cir.
1996) (Arkansas bank located in Arkansas for purposes of section
1831d). Go Back to Text
912 U.S.C.
1831a(j)(1). Go Back to Text
10Section 86 of the NBA provides the remedy for violations of
section 85. Section 1831d(b) is the statutory counter-part contained in
the FDI Act. Go Back to Text
11See Greenwood, at 827; Hill v. Chemical
Bank 799 F.Supp 948, 952 (D. Minn. 1992) ("Hill") ("The
key language of (section 1831d) is substantially identical to language
in sections 85 and 86 of the National Bank Act, the federal usury
provisions governing national banks. Generally, similar language should
be interpreted the same way, unless context requires a different
interpretation. Further, Congress is presumed to be aware of judicial
interpretations of statutory language when it intentionally
incorporates the language of one statute into another statute.") Go Back to Text
12See 126 Cong. Rec. 6900 (1980) (statement of Senator
Proxmire); 126 Cong. Rec. 6907 (1980) (statement of Senator Bumpers);
see also, Hill, at 952 ("Given the similarity in language
and clearly expressed intent of Congress to create parity between state
and national banks, (section 1831d) should be interpreted consistently
with sections 85 and 86.") Go Back to Text
13See 143 Cong. Rec. H3089 (daily ed. May 21, 1997)
(statement of Representative Roukema). Go Back to Text
14Section 36(f)(1)(A)(ii) also provided for preemption of host
state law where the Comptroller determines that state law discriminates
between an interstate national bank and an interstate state bank. Go Back to Text
15Section 36(f)(1)(A) reads in relevant part as follows:
The laws of the host State regarding community reinvestment,
consumer protection, fair lending, and establishment of intrastate
branches shall apply to any branch in the host State of an out-of-State
national bank to the same extent as such State laws apply to a branch
of a bank chartered by that State, except--
(i) when Federal law preempts the application of such State laws
to a national bank * * *
In the context of the law applicable to branches of out-of-state
State Banks, however, section 1831a(j)(1) read in relevant part as
follows:
The laws of a host State, including laws regarding
community reinvestment, consumer protection, fair lending, and
establishment of intrastate branches, shall apply to any branch
in the host State of an out-of-State State bank to the same extent as
such State laws apply to a branch of a bank chartered by that
State. (Emphasis added.) Go Back to Text
16The reference to "applicable usury ceilings" in the
Riegle-Neal Act Conference Report's ("Conference Report")
discussion of host state consumer protection laws clearly indicates
that the statute's reference to consumer protection laws of host
states included any applicable host state usury ceilings.
See H.R. Rep. No. 651, 103d Cong., 2d Sess., 51 (1994). Go Back to Text
17Pub. L. 105--24, 111 Stat. 238 (1997). Go Back to Text
18143 Cong. Rec. H3089 (daily ed. May 21, 1997). Go Back to Text
19Section 1831a(j)(3)(B), however, requires that the applicable
law clause for State banks not be construed to affect the applicability
of Federal law to State banks and State bank branches in a home or host
state. Therefore, the reference to home state law in the applicable law
clause for State banks may not dictate the result in all circumstances
regarding interest charges on loans to bank customers if reference to
other federal law, such as section 1831d, the usury savings clause, or
the rules regarding exportation of interest charges, would lead to a
different result. Go Back to Text
20See Nationwide Banking and Branching and the Insurance
Activities of National Banks: Hearings Before the Senate Committee on
Banking, Housing, and Urban Affairs, 103d Cong., 1st Sess. 272
(1993) (Response to Written Questions of Senator Roth from Andrew C.
Hove, Jr.); (Response to Written Questions of Senator Roth from John P.
LaWare), id. at pp. 280--81. Go Back to Text
2112 U.S.C. 1811 (note). Go Back to Text
22As enacted by the Riegle-Neal Act, as indicated earlier, the
applicable law clause for State banks made branches of out-of-state
State banks subject to the laws of the host state. Also, as indicated
earlier, concerns had been expressed over the impact that the
application of host state laws regarding consumer protection might have
on the ability of an out-of-state bank to export interest charges
authorized by its home state to a state where the bank maintained a
branch. Go Back to Text
23In this respect, the analysis tracks that employed by the
courts. See Weinberger v. Hynson, 412 U.S. 609, 631--32
(1973) ("It is well established that our task in interpreting
separate provisions of a single Act is to give the Act the most
harmonious, comprehensive meaning possible' in light of the
legislative policy and purpose. (Citations omitted).");
Dierksen v. Navistar Internat'l Transportation Corp., 912
F. Supp. 480, 486 (D. Kansas 1996) ("A primary rule of construction
of a statute is to find the legislative intent from its language, and
where the language used is plain and unambiguous and also appropriate
to an obvious purpose the court should follow the intent as expressed
by the words used. (citation omitted). It is the duty of the court,
insofar as practical, to reconcile different statutory provisions so as
to make them consistent, harmonious and sensible. (Citation omitted).
Allegedly repugnant statutes are to be read together and harmonized, if
at all possible, to the end that both may be given force and effect.
(Citation omitted).") Go Back to Text
24H.R. Rep. No. 651, 103d Cong., 2d Sess., 63 (1994). Go Back to Text
25140 Cong. Rec. S12789 (daily ed., Sept. 13, 1994). Go Back to Text
26These include providing loan applications, assembling
documents, providing a location for returning documents necessary for
making a loan, providing loan account information, and receiving
payments. Go Back to Text
27The non-ministerial functions are the decision to extend
credit, the extension of credit itself, and the disbursal of the
proceeds of the loan. Go Back to Text
28140 Cong. Rec. S12789--12790 (daily ed. Sept. 13, 1994). Go Back to Text
29The non-ministerial functions, according to Senator Roth's
discussion of the Conference Report, are factors to be considered in
determining which state's law should be applied to a loan.
See Roth statement, at S12789:
The rationale for this conference amendment (substituting loan
servicing for disbursal of loan proceeds in the agency authority
contained in section 101) is that the actual disbursal of proceeds--as
distinguished from delivering previously disbursed funds to a
customer--is so closely tied to the extension of credit that it
is a factor in determining, in an interstate context, what State's law
to apply. (Emphasis added.) Go Back to Text
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